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The win capped a big day for Alaska Gov. Bill Walker, who earlier flew with President Barack Obama from Washington, D.C., to Anchorage.
"The Alaska Supreme Court's ruling today brings final assurance that thousands of working Alaskans will have access to health care tomorrow," Walker said in a statement issued Monday evening.
Walker earlier this summer announced plans to accept federal funds to expand Medicaid coverage after state legislators tabled his expansion legislation for further review.
The Legislative Council, acting on behalf of lawmakers, sued to stop expansion.
Thirty other states and the District of Columbia have expanded Medicaid, or plan to do so, to include all adults with incomes at or below 138 percent of the federal poverty level.
The federal government agreed to pay all costs for the new enrollees through 2016, but it will begin lowering its share in 2017. States will pay 10 percent of the costs by 2020.
Some Alaska legislators have expressed concern with adding more people to a system they consider broken. Administration officials have acknowledged the current Medicaid program isn't sustainable, but they see expansion as a way to get federal dollars to help finance reform efforts.
On Friday, Superior Court Judge Frank Pfiffner denied the request from lawmakers to halt expansion while a lawsuit moves forward. The Alaska Supreme Court on Monday agreed, saying lawyers for the lawmakers failed to show Pfiffner erred when denying the motion for a preliminary injunction.
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