Topeka ? A committee working on establishing a health insurance exchange in Kansas decided on Wednesday to continue its efforts even though Gov. Sam Brownback rejected a $31.5 million federal grant to set up the exchange, and many in the Legislature want nothing to do with it.

Kansas Insurance Commissioner Sandy Praeger said that under federal health reform, Kansas will have to implement an exchange by 2014. The question is whether Kansas will have one that is developed by the state or the federal government, she said.

Praeger argued that planning should continue despite Brownback’s decision. “I still think the best course of action is trying to be ready,” she said.

Kansas had received an “early innovator” grant from the federal government to work on putting in place the exchange, which is designed to help consumers access health insurance, and will be key in providing subsidies for people to buy coverage. Most of the work in developing the health exchange, Praeger said, is overhauling the state’s Medicaid enrollment system.

The health insurance exchange is major part of the Patient Protection and Affordable Care Act signed into law by President Barack Obama.

Praeger, a Republican, had argued that Kansas could use the federal grant to put in place an exchange better suited to Kansas needs.

Brownback, also a Republican, signed off on Kansas’ grant application earlier this year, but two weeks ago he announced that he was rejecting the grant, saying there were too many strings attached and there was too much uncertainty about future federal funding. Critics said Brownback bowed to political pressure from those within his party who want no part of the federal health reform law, which many consider Obama’s signature piece of legislation.

In a meeting Wednesday of the health benefit exchange steering committee, Kansas insurers, health care providers and others argued that the committee should continue working on the initiative.

Some expressed frustration with Brownback’s actions.

Brenda Sharpe, president and chief executive officer of Merriam-based REACH Healthcare Foundation, said Brownback’s refusal of federal funds, was disappointing.

Sharpe rejected the idea that health care foundations may be able to help fund the state’s effort to set up an exchange, saying foundations were stretched thin trying to patch budget shortfalls for safety net clinics and mental health centers.

“We are not going to supplant dollars that were accepted and then rejected,” she said.

Sheldon Weisgrau, director of the Health Reform Resource Project, said while the federal reform law comes under constant attack many forget why it was approved. “We have serious problems in our health system,” he said. He said critics of the bill seldom come up with a viable alternative.

In Kansas, more than 300,000 people are uninsured. More than 500,000 Kansans are expected to benefit from health insurance exchange to purchase coverage, and nearly half of those will receive premium subsidies, officials said.

Several other committee members said that although it was important to push on with planning for the exchange, they didn’t expect Brownback or the Republican-dominated Legislature to budge on the issue.

“With the political structure as it is now, I don’t think it’s realistic they’re going to change their minds,” said Robert Stephan, who is a former Kansas attorney general. “I’m very pessimistic,” he said.

Stephan said when he heard of Brownback’s rejection of the grant, “My first reaction was to hell with it, but I don’t cuss.”

Praeger is scheduled to appear before legislative committees in September and October to brief legislators on the status of health care reform.