Governor undecided about returning federal health cash $14.7 MILLION: State funds would go to programs, he says.

JUNEAU -- Gov. Sean Parnell hasn't decided whether to return at least $14.7 million the state received to implement provisions of the federal health care reform law he believes to be unconstitutional.

But he said Tuesday that if the federal government asks for the money back, he'd be happy to return it.

Parnell told reporters the state would continue with programs it believes should move forward as a matter of policy and would do so with state money.

The challenge now facing the administration is how best to do that, in light of conflicting court rulings and no clear indication of when any one of the cases will reach the U.S. Supreme Court.

Parnell angered some lawmakers with his decision to refuse federal funds for a health care benefit exchange, a veritable marketplace for coverage options, The decision prompted at least one Senate Democrat to suggest Parnell was putting politics over what's best for Alaskans. An estimated 14 percent of Alaskans are uninsured.

Parnell dismissed that criticism, saying it's not a novel concept for a governor to heed a court ruling.

Last month, a federal judge in Florida struck down the federal health care law as unconstitutional. Alaska was among 26 states that were party to the case. In spite of conflicting court rulings in other cases, Parnell, who sought the opinion of his attorney general, considers the Florida ruling the law of the land as it pertains to Alaska.

The administration plans to proceed accordingly until the matter is resolved by the courts. That includes not accepting additional federal money under the law, said William Streur, commissioner of Alaska's Department of Health and Social Services.

While the administration in some ways is "trying to wing it," Streur said the governor has also provided clear directions in areas where he wants the state to press ahead -- including looking at ways to better manage cases for Alaskans with high-cost health care and looking at how the state can benefit from an exchange.

Parnell also expressed a willingness to work with the Legislature, a prospect Sen. Hollis French, D-Anchorage, welcomes. French has introduced legislation to establish a health benefit exchange and questioned Parnell's openness to meaningful reform.

Streur said that even if the portions of the law are ultimately determined to be unconstitutional, he believes some provisions will survive. He cites as examples the ability to have children covered under a parent's health insurance policy until age 26 and an insurance plan for those unable to get coverage on their own because of pre-existing conditions.

He couldn't say whether the state would fight efforts to allow public employees to add older children to their coverage, beginning July 1.

"I think that we are going to cross that bridge when we come to it," he said, adding that he wasn't trying to be evasive but wasn't sure what the administration's stance would be.

"Since it's federal law at this point, I don't know how we can avoid it," he said.