Gov. Phil Bryant and Insurance Commissioner Mike Chaney, both Republicans, disagree about which of them has authority to create a plan and submit it for federal approval.
An exchange is an online marketplace where people can buy private health insurance. Under the health care law President Barack Obama signed in 2010, exchanges are to be set up and run by individual states or by the federal government.
Chaney submitted an exchange proposal to the U.S. Department of Health and Human Services in mid-November.
Bryant objects to the federal health law and has sent two letters to Health and Human Services Secretary Kathleen Sebelius trying to block Chaney's proposal.
The governor's communication with Sebelius brought a strong rebuke Thursday from Chaney.
"The governor's letter questioning our authority is just bogus," Chaney told The Associated Press.
The federal government on Thursday said it has approved insurance exchange proposals from 17 states and Washington, D.C. Four of those states have Republican governors.
Gary Cohen, director of the federal Center for Consumer Information and Insurance Oversight, said the Department of Health and Human Services "is not approving or denying Mississippi's application at this time." The office Cohen heads at the department is responsible for the rollout of the federal health care law.
"We understand there is an ongoing disagreement" among state officials, Cohen said.
Federal officials are trying to better understand the question of legal authority in the Mississippi dispute, but they recognize that the final determination must be based on state law.
In a Nov. 26 letter to Sebelius, Bryant wrote that he believed the creation of a health exchange was a "gateway" for the 2010 law, the Affordable Care Act, to take hold in Mississippi. He said he would support a true state-run exchange not associated with the federal law.
But, Bryant wrote that under the federal law, "It is inevitable that such an exchange will be controlled by the federal government, not by the State. The federal government has never provided funds for a program without ultimately seizing control of it."
In a Dec. 28 letter, Bryant said only the governor — not the insurance commissioner — has the authority to act on behalf of the state. He asked Sebelius to block Chaney's proposal.
Bryant pointed out that in 2011, the insurance commissioner sought permission from the Legislature to create a health insurance exchange, but legislators didn't pass a bill. After that, Chaney said he didn't need legislative permission to create an exchange, and the Mississippi Insurance Department started working on a plan.
Chaney said, however, that the Legislature passed a bill in 2009 — when Bryant was lieutenant governor — that allows creation of a health exchange. Chaney said the 2011 bill would have simply clarified the existing law, but the failure of the bill did not take away the Insurance Department's authority to start an exchange.
"He can rewrite all the history he wants to," Chaney said of Bryant.
Bryant wrote in his Dec. 28 letter that the Mississippi Constitution specifies the chief executive power in the state belongs to the governor, and that the constitution does not mention the Insurance Department. The department was created by a law rather than by the constitution.
"I have concluded that MID lacks authority under Mississippi's Constitution and laws to create an exchange under ACA," Bryant wrote. "Therefore, HHS should not certify an exchange based on MID's application."
Chaney said Thursday that he does not expect to ask a court to settle the dispute between him and Bryant. He said Bryant's objection means the state exchange won't get federal approval because HHS officials told him they want clear proof that the governor will work with the Insurance Department to help implement the plan.
"When the governor pulls the plug on the state-based health exchange, there's not anything I can do to re-establish it," Chaney said.
Chaney has said repeatedly that he doesn't like the federal health law, but he believes Mississippi — not the federal government — should control the state exchange. He said Thursday that Bryant's action will force the federal government to eventually run the exchange in Mississippi.
"The whole goal here is to help the consumer in this state have more information and make an intelligent decision about what they are going to buy," Chaney said Nov. 14, when he said he had completed the exchange proposal and was planning to submit it to Washington.
Under the federal law, Americans who are uninsured can start shopping for coverage through exchanges on Oct. 1 and coverage begins Jan. 1, 2014. About eight in 10 customers in the new marketplaces will be eligible for federal aid to help pay their premiums. Small businesses will have separate access to their own exchanges.
Associated Press Writer Ricardo Alonso-Zaldivar contributed to this report from Washington.