Monday's ruling affects the federal-state program that covers nearly 60 million low-income and severely disabled people. President Barack Obama's health care law expanded Medicaid to cover people up to 138 percent of the federal poverty line, or about $15,400 for an individual.
But the Supreme Court gave states the right to opt out, and some Republican-led states have been asking whether they can do a partial expansion.
The administration's ruling puts the ball back in the states' court, with officials saying states can expand Medicaid part way, but they wouldn't get the three years of 100 percent federal funding provided under the law.
(Copyright 2012 by The Associated Press. All Rights Reserved.)