U.S. Medicaid director Cindy Mann said states will likely spend the next several months analyzing the plan, which under President Barack Obama's healthcare law, would extend health coverage to about 16 million uninsured people based on new criteria that broadens eligibility to people with incomes of up to 133 percent of the federal poverty line.

A Supreme Court ruling that upheld the law in June also allowed individual states to decide whether to accept the Medicaid expansion, sparking an election-year revolt among Republican governors who have opposed the entire reform. The law takes full effect in 2014.

"There's much to consider. But we believe that when states do weigh in ... they'll decide that it's in their state interest to move ahead," Mann told a healthcare forum sponsored by the Bipartisan Policy Center, a Washington-based think tank.

Many Republican governors say the multibillion-dollar 10-year expansion could lead to higher taxes and less education funding for state residents, despite federal subsidies that would cover 90 percent to 100 percent of the cost.

At least five governors have said they would not implement an expansion, and await the outcome of presidential and Congressional elections to see whether their party will have enough power to repeal the law.

The costs and benefits of the expansion include potential administrative spending, savings on state healthcare expenditures for the uninsured, and the financial impact of billions of dollars in federal subsidies on hospitals, clinics and state economies.

Medicaid is jointly funded by the federal and state governments but is overseen by Washington. In most states, current benefits are available only to narrowly defined groups of poor people including parents and pregnant women. But Medicaid spending still accounts for a large portion of cash-strapped state budgets.

The nonpartisan Congressional Budget Office estimates that about 6 million people who are eligible for the expansion will not be covered by Medicaid because of resistance from state governments.

About half of those, with incomes above the federal poverty line, could still receive subsidized health coverage through a state-run exchange. The remaining 3 million would go without health coverage, according to CBO analysts.

The United States pays more for healthcare than any other country. But about 50 million of the roughly 310 million Americans still have no insurance at all.

(Editing by Bernard Orr)

• A Permanent Economic Emergency