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Appeals court rules California healthcare limits invalid

By Dan Levine

SAN FRANCISCO (Reuters) - California's state law ending government coverage of adult dental, podiatry, optometry, chiropractic care and other healthcare services for the poor cannot stand, a federal appeals court on Friday.

The 9th U.S. Circuit Court of Appeals ruled that the federal Medicaid program for the poor prohibits the changes imposed by a California law.

The decision could have budgetary implications for the nation's most populous state. California Department of Health Care Services spokesman Norman Williams said the ruling covers patients at certain federally funded health centers, not all Medicaid recipients in the state, though Williams could not estimate the specific number of people affected.

"DHCS is examining this ruling and considering its potential next steps," Williams said.

Medicaid benefits are funded jointly by the federal government and individual states. Faced with a budget crisis in 2009, California state lawmakers limited a variety of healthcare services covered by Medicaid, a decision ultimately approved by the federal agency that oversees the program.

An association of rural health clinics sued to block the changes.

A lower court ruled that the limits were not in conflict with Medicaid, but a three-judge panel of the 9th Circuit Court unanimously reversed that decision on Friday.

Federal law "unambiguously defines" those benefits as among the healthcare that Medicaid must provide, 9th Circuit Judge Dorothy Nelson wrote.

Recently, California lawmakers restored some of the dental benefits in a state budget that represented a turnaround from several years of cutting. More than $130 million in healthcare benefits had been eliminated in 2009. The dental benefit restorations comprise about $77 million, said Anthony Wright, executive director of Health Access California, an advocacy group.

The case in the 9th Circuit is California Association of Rural Health Clinics vs. Douglas, 10-17574.

(Reporting by Dan Levine; Editing by Gerald E. McCormick, John Wallace and David Gregorio)

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