WASHINGTON (Reuters) - President Barack Obama is discussing ways to help U.S. states cover costs that are destined to rise under pending healthcare reform legislation, his press secretary said on Monday.

Many governors had protested a special funding allocation for Nebraska in the bill.

We're going to continue to work with governors, White House Press Secretary Robert Gibbs told reporters, referring to the healthcare bill.

When asked if Obama might extend the deal to pay some of Nebraska's Medicaid costs to all states, he added, I think that's certainly part of the discussion.

Many states are outraged by a caveat in the Senate version of the bill that would have the federal government cover increases in Nebraska's obligations for Medicaid, the healthcare program for the poor jointly funded by the 50 states and federal government.

Medicaid already consumes large parts of states' budgets. It would require even more funding under the legislation, which allows greater numbers of people to enroll in the program.

Analyst Kim Monk, however, cautioned that it may be impossible for the federal government to pay for any increase in states' Medicaid costs, estimating in a note that it would add $35 billion to the price tag of healthcare reform.

Healthcare reform, which started as noble and needed legislation, has become a trough of bribes, deals and loopholes, California's Republican Governor Arnold Schwarzenegger said last week as he urged the state's congressional delegation to vote against the bill or fight for the same sweetheart deal that Senator Nelson of Nebraska got for the Cornhusker State.

Senate Democrats, worried they could not pass the healthcare reform that was the cornerstone of Obama's presidential campaign by the end of the year, offered the earmark to Nebraska's Sen. Ben Nelson after he objected to the bill's funding of abortion.

In response to Schwarzenegger's comments, Nelson said he had included the provision not for my vote but to fix the unfunded Medicaid mandate for all states. He said he is aggressively seeking an opt-out (option) or full funding for all states.

Nelson added that he was holding serious discussions with Senate leaders to treat all states equally.

Lawmakers are currently hammering out a single bill for Obama to sign into law.

Gibbs noted the economic stimulus plan passed nearly a year ago included subsidies for states' Medicaid programs.

Unhappy with the healthcare bill, 13 states' attorneys general, led by South Carolina's Henry McMaster, will unveil a review of its constitutionality on Wednesday in Washington. They have threatened litigation if Congress does not remove what they call the Cornhusker Kickback from the final bill.

Nevada Gov. Jim Gibbons has also threatened to sue.

(Reporting by Lisa Lambert; additional reporting by Jeff Mason, Susan Heavey and John Whitesides and by Jim Christie in San Francisco; Editing by Dan Grebler)

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