We're very clear we have to pass the baton to states, Cindy Mann, director of the Center for Medicaid and State Operations, told a meeting of state legislators last week. The federal center works with state governments on many of the national healthcare policies.

President Barack Obama signed the sweeping healthcare legislation into law in March. It requires all Americans to have health insurance, while subsidizing coverage for low and middle-income workers.

Because the U.S. Congress used a maneuver known as reconciliation to pass the final healthcare bill, it could not change dates included in the original draft from months ago, Mann told a meeting of the National Conference of State Legislatures.

That means states and the U.S. government have missed deadlines they must now address retroactively. Guidance on the supplemental drug rebate, which was supposed to start in January, will be released this week, said Mann.

States must also brace for another key date -- after January 1, 2014, the U.S. government will fine individuals who do not have healthcare coverage.

Under the plan, state-run exchanges will provide opportunities to purchase insurance to those who do not qualify for Medicaid or Medicare, the healthcare programs for the poor and elderly, and do not have health coverage from employers.

States are free to decide how many exchanges they operate, whether they create exchanges on their own or in concert with others, and how they administer those exchanges.

The major federal demand is that the exchanges come on-line by 2014.

By that time, too, criteria for qualifying for Medicaid will be simplified to encompass a larger share of the population. While states will receive 100 percent federal reimbursements for new Medicaid participants, they will not receive additional funding for the accompanying administrative cost increases, Mann said.

The date is also the deadline for creating other programs, said NCSL Legislative Director Joy Wilson. By 2014, states must pass laws establishing reinsurers, creating rules for electronic transactions, as well as expanding access to healthcare for children.

Many states are steaming toward the deadlines. Connecticut said last week it asked the U.S. government to put 45,000 people on Medicaid using the new criteria. It currently covers those citizens with a state assistance program and expects to save at least $53 million over the next 15 months.

Michigan Governor Jennifer Granholm and Washington Governor Chris Gregoire, both Democrats, appointed groups to identify any needed regulatory changes.

Washington is going to lead the nation in implementing healthcare reform, we're going to help more people get coverage, make sure our healthcare industry is ready and save taxpayer dollars, Gregoire said in a statement.

LAWSUITS UNLIKELY TO STOP THE CLOCK

States where legislatures meet every other year worry they will have to call special sessions in order to implement reforms in time, although Mann said Congress could pass a bill to create a more accommodating timeline.

Attorneys general in nearly 20 states have filed lawsuits contending that it is unconstitutional to require individuals to buy insurance. If the suits succeed, the plan could be halted.

Jay Angoff, a former insurance commissioner advising the U.S. Department of Health and Human Services, said last week the litigation has not affected the reform plan's implementation.

At most, the lawsuits create awkwardness, between states' insurance commissioners and attorneys general, he told the NCSL meeting.

Many scholars say the states' cases are weak because the U.S. Constitution says federal law trumps state law.

Oklahoma said the 100 percent reimbursement for new Medicaid participants runs out in 2016. States will only receive matches of 90 percent of what they pay on new enrollees, adding a large budget burden, according to state representative Ron Peters, a Republican.

Oklahoma's legislature is moving closer to passing a law to force its attorney general to sue Congress, President Barack Obama and the U.S. Health and Human Services Department.

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