WASHINGTON » The Obama administration is raising serious objections to a new Indiana law that cuts off state and federal money for Planned Parenthood clinics providing health care to low-income women on Medicaid.

The objections set the stage for a clash between the White House and Gov. Mitch Daniels, a Republican, over an issue that ignites passions in both parties.

The changes in Indiana are subject to federal review and approval, and administration officials have made it clear they will not approve the changes in the form adopted by the state.

Federal officials have 90 days to act but may feel pressure to act sooner because Indiana is already enforcing its law, which took effect on May 10, and because legislators in other states are working on similar measures.

If a state Medicaid program is not in compliance with federal law and regulations, federal officials can take corrective action, including "the total or partial withholding" of federal Medicaid money. The mere threat of such a penalty is often enough to get states to comply. Actually imposing the penalty would, in many cases, hurt the very people whom Medicaid is intended to help.

Administration officials said the Indiana law imposed impermissible restrictions on the freedom of Medicaid recipients to choose health care providers.

Indiana is one of at least a half-dozen states that have taken aim at Planned Parenthood because it performs abortions, about one-fourth of those performed in the United States.

Planned Parenthood of Indiana said it provided services last year to 85,000 patients, including 9,300 on Medicaid. Most received contraceptives. In its annual report, Planned Parenthood of Indiana said it also performed 5,580 abortions, 21,150 pregnancy tests, 26,500 Pap tests for cervical cancer and 33,000 tests for sexually transmitted diseases.

Asked for comment on the Indiana law, the federal Centers for Medicare and Medicaid Services provided this statement, cleared by the White House: "Federal law prohibits federal Medicaid dollars from being spent on abortion services. Medicaid does not allow states to stop beneficiaries from getting care they need — like cancer screenings and preventive care — because their provider offers certain other services. We are reviewing this particular situation and situations in other states."

Medicaid is financed jointly by the federal government and the states, which must comply with federal law as a condition of getting federal money.

Planned Parenthood of Indiana and two of its patients have filed suit in Federal District Court in Indianapolis, challenging the new restrictions as "a blatant violation of the ‘freedom of choice’ provision" of federal law. The federal government is not a party in the case, but the administration’s statement sends a signal to the court, which will hold a hearing in two weeks on whether to block the state law.

States can obtain federal permission to waive certain requirements of the federal Medicaid law. But the federal law says that "no waiver" may restrict the choice of Medicaid beneficiaries in receiving family planning services.

For years, federal law has barred the use of Medicaid money to pay for abortion except in certain cases of rape or incest or danger to the life of a pregnant woman.

The Indiana law goes much further. It prohibits state agencies from entering contracts with or making grants to "any entity that performs abortions or maintains or operates a facility where abortions are performed." It also terminates existing state contracts with such entities. The law does not apply to hospitals.

Most of the money at stake is federal. The federal government pays about 66 percent of the cost of most services covered by Medicaid in Indiana, but for family planning the federal share is 90 percent — an indication of the importance historically attached to such services by Congress.

The U.S. House of Representatives voted 241 to 185 on April 14 to cut off federal money for the Planned Parenthood Federation of America and its affiliates. The Senate killed the proposal, 58 to 42.

"It’s morally wrong to take the taxpayer dollars of millions of pro-life Americans and use them to subsidize the largest abortion provider in America," said Rep. Mike Pence, R-Ind.

Other states that have considered legislation to restrict payments to Planned Parenthood, under various programs, include Kansas, North Carolina, Oklahoma, Texas and Wisconsin.

Both houses of the Kansas Legislature have approved a 2012 budget bill that would redirect about $300,000 in federal family planning money from Planned Parenthood to state and local clinics. Gov. Sam Brownback, a Republican, is expected to sign it.

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