A three-judge panel of a federal appeals court ruled last month that Texas may exclude groups affiliated with abortion providers from the Medicaid Women's Health Program, which provides cancer screenings, birth control and other health services to more than 100,000 Texas women.

In a filing with the court, Planned Parenthood asked the full court to rehear the matter, saying the rule violates its First Amendment rights to speech and association by barring it from participating in the program because it uses non-government money to engage in constitutionally protected conduct.

Planned Parenthood says it doesn't provide abortions at clinics that participate in the program. The state objects to the family planning group's affiliation with clinics that do provide abortions.

The federal government, which pays 90 percent of the $39 million-a-year program, has said it will stop sending the money because of Texas' new rule. Republican Governor Rick Perry has said the program will continue, relying on state funds.

A hiring freeze on state administrative health positions and reducing overtime in the food stamp and Medicaid enrollment division will help pay the bill, state officials say.

Texas held a hearing on Tuesday to gather public input on the transition from a federal to state program.

Alexis Lohse, 31, a program participant from Fort Worth, told officials on Tuesday that her choice of health care provider is not the business of state lawmakers.

Lohse said she has two small children, two part-time jobs, five college classes and "no patience for stupid political maneuvering that's only going to make my life more difficult."

DISPUTE OVER LAW

State officials said the hearing's aim was not to weigh the merits of excluding Planned Parenthood.

"The law is clear: Abortion providers and affiliates cannot be in the program," state health and human services spokeswoman Stephanie Goodman said. "As a state agency, we cannot change state law."

Planned Parenthood disagrees that the law bars its participation, and Texans in the standing-room-only hearing at the Department of State Health Services saw it as a chance to share their concern on banning the program's largest provider.

Without Planned Parenthood, women will be forced to travel farther and wait longer to get care, delays that "will have devastating health consequences for low-income women," said State Senator Kirk Watson, an Austin Democrat.

But Goodman said that for every "abortion affiliate" in the program, there were 80 other providers.

"We're confident that women will still have access to Women's Health Program services even after we've excluded abortion affiliates from the program," she said.

Opponents of the plan weren't the only people to speak at the hearing. Abby Johnson, a former Planned Parenthood staff member who is now an anti-abortion advocate, said the organization should not be included because it provides only a limited array of health services.

"They are not an organization that can be trusted with our tax dollars," she said.

Meanwhile, Planned Parenthood clinics in Texas are still seeing Women's Health Program patients, though a dozen such clinics have closed since Texas slashed the state's family planning budget by two-thirds last year.

At a clinic in Austin, a huge blue sign makes an unusual announcement for a decades-old facility: "This clinic is open."

(Reporting By Corrie MacLaggan; Editing by Cynthia Johnston and Cynthia Osterman)

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