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TALLAHASSEE, Fla. (CBSMiami/AP) — Florida Governor Rick Scott dropped his lawsuit against the Obama administration on Medicaid expansion and hospital funds.

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State and federal health officials reached an agreement in principle earlier this week to continue funding Florida’s hospital low-income pool for two more years, but at a lower cost. Florida will receive $1 billion this year — about half of what the state had been receiving — and $600 million next year. In a statement Thursday, Scott said his lawsuit was essential to getting the funds extended.

The moves comes the same day as the Supreme Court upheld “Obamacare” subsidies. This means millions including those in Florida who have insurance through the federal health insurance marketplace will continue to get subsidies.

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Earlier this month, the Obama administration and Florida officials were in ongoing discussions.

Gov. Scott had requested for mediation but the administration said it was not needed.

Scott was suing the administration, alleging they were withholding federal hospital funds because Florida won’t expand Medicaid. The administration wanted Florida to expand Medicaid, but says it will not deny the funds based on the state’s Medicaid decision. However, federal health officials would not give the state any hospital funds for those who would receive insurance if the state expanded Medicaid.

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