Kansas Governor Sam Brownback said he will return a $31.5 million federal grant aimed at helping implement the new federal health care law.
He had asked for the funds last year to integrate the state's complicated health insurance databases and policy networks into a user-friendly system.
The governor has cited the federal government's debt obligations as the reason for his refusal of aid saying, "There is much uncertainty surrounding the ability of the federal government to meet its already budgeted future spending obligations. Every state should be preparing for fewer federal resources, not more. To deal with that reality Kansas needs to maintain maximum flexibility. That requires freeing Kansas from the strings attached to the Early Innovator Grant."
The "early innovator" grant had been awarded to Kansas and six other states in February to help pay for an online exchange system where people could compare health insurance policies and buy one that best fits their needs.
Kansas had proposed to build a model system that could be adopted by other states striving to meet the 1 January 2013 deadline for developing an exchange system.
The deadline is part of the health care reform law approved by Congress and signed by President Obama. The Health and Human Services (HHS) will operate exchange systems in states that don't create their own.
Kansas officials say the state will still find ways to lower health insurance costs and simplify the process of choosing the right plan.