Under the new federal healthcare law, states must expand the eligibility limits of Medicaid for children, ages 6 to 19, beginning in 2014, though the Pennsylvania program already provides coverage to those children.
Community Legal Services of Philadelphia, a nonprofit advocacy group for the poor, estimates that 40,000 children out of about 187,000 covered by the Children's Health Insurance Program, or CHIP, must be moved to Medicaid beginning in 2014.
The group and other advocates say children are better off under Medicaid anyway because its coverage is more comprehensive than CHIP.
But a spokeswoman for the Republican governor said the Corbett administration favors CHIP because private insurance companies play a larger role in shaping policies, and it will cost the state "a little more" overall to cover children in Medicaid than in CHIP.
Also, while reimbursements to doctors are higher under CHIP, Corbett has said he is concerned that doctors who accept CHIP may not accept Medicaid, thus forcing some children who must switch from CHIP to Medicaid to find a new doctor.
Still, Corbett can simply require doctors who accept CHIP to also accept Medicaid, advocates for the poor say. In any case, children routinely switch between CHIP and Medicaid, they say.
The state government gets more money from the federal government to cover a child under CHIP than it does under Medicaid, but the federal government is supposed to maintain that higher reimbursement under the new law.
Judy Solomon, vice president for health policy for the Center on Budget and Policy Priorities in Washington, D.C., said Friday she is not aware of any other governor resisting the switch, and noted that governors have known about the issue since the law passed in 2010.
"You can certainly figure out a way to do it without disruption," Solomon said.
A Sebelius spokesman did not immediately respond Friday to questions about the agency's position.
Corbett said he believes denying the exemption goes against last year's Supreme Court decision upholding the 2010 federal healthcare law, but a Corbett spokeswoman said the administration is not looking at suing if Sebelius refuses an exemption.