Gov. Jan Brewer is being pulled one way by major business groups and another by fellow conservatives as she faces a fast-approaching deadline to decide whether to implement a key part of the federal health care law.
The decision, due Friday, will determine if Arizona creates a state-run, online marketplace for consumers to use when choosing health plans, or lets the federal government create and run a so-called "exchange" for the state.
Brewer is among the Republican governors who oppose the law, but she has yet to indicate what course she'll take.
Down the road, Brewer will face an equally hot-potato decision on whether to expand the state's Medicaid program — another key aspect of the health care law.
Brewer's administration has spent millions of dollars of federal grant money on planning and preliminary work for creating a health exchange.
Republican legislators and conservatives such as the Goldwater Institute say the requirement for an exchange is an infringement on the rights of states and individuals.
Meanwhile, a coalition of business groups wants Brewer to create a state exchange so Arizona has a say in in its design and funding.
"If we retain that control, we're better able to customize and tweak and make adjustments," said Pete Wertheim, a vice president of the Arizona Hospital and Healthcare Association.
Brewer already has selected a minimum benefits package for a state-run exchange based on current insurance coverage for state employees. She noted in a Sept. 28 letter to the Obama administration that the package excludes abortion coverage.
Brewer has said her administration has done a lot of planning to be prepared but also indicated she was still studying the issue and hadn't made a decision.
"I've got to decide (whether) it's the right thing for Arizona," Brewer said while noting she will need legislative approval.
It's clear that establishing a state-run exchange would put Brewer at odds with many Republicans in the Legislature, with no assurance that she would win the necessary approval.
"I don't believe there are the votes in the House to pass something like this, so I don't think this is going to go anywhere," said House Appropriations Chairman John Kavanagh, a critic of the health care law and its penalties on some employers who don't provide coverage to workers.
Senate Health Committee Chairman Nancy Barto offered a similar assessment of legislative leanings but said Brewer's office "at least on the exchange seems committed to take a chance on Obamacare."
"I would hope she wouldn't do it without consideration of her party," Barto said. "She has a record of standing up to the federal government and standing up for her party's ideals, and this is a big part of that discussion."
Proposing a state-run exchange wouldn't be the first time Brewer has defied the wishes of most GOP lawmakers on a politically dicey issue.
After a year of trying, she was able to get lawmakers to put a temporary sales tax increase on a statewide ballot. Voters overwhelmingly approved it in 2010 to avoid deep cuts to schools and other services during the state's budget crisis.
Brewer spokesman Matthew Benson declined to discuss what legislators' "potential appetite" would be for having a state-run exchange.
On a related health care law issue with similar state-vs.-federal considerations, Brewer decided it was better to have the state run its own program to review health insurance rates than let the federal government handle it. The state has formally approved rules for a rate-review program.
Regarding the exchange, Brewer health policy adviser Don Hughes has said the governor wants to impose as few regulations and requirements on insurers as possible so it doesn't turn into a duplicative regulator of the industry.
Conservative groups such as the Goldwater Institute and Americans for Prosperity are calling for Brewer to stiff-arm the federal law's mandate for an exchange. Meanwhile, social-service advocacy groups are weighing in with calls for the state to create an exchange that is friendly to consumers on affordability, convenience and oversight.
"We're optimistic that consumers will have influence in the design of it," said Stephen Jennings, an AARP Arizona associate director.