* Obama administration will intervene in states where progress falters
* Health official says latecomers face the biggest challenges
* Exchanges scheduled to be up and running on Jan. 1, 2014
WASHINGTON, March 14 (Reuters) - The U.S. government could have to run more state health insurance exchanges than expected under President Barack Obama's healthcare law, if U.S. states pursuing their own marketplaces cannot complete them on time, a senior official said on Thursday.
The Obama administration has given 17 of the 50 states conditional approval to set up online exchanges where working families would purchase private plans at subsidized rates. The remaining 33 states will all have federally run markets, at least in the early years of the coming reform era.
But Gary Cohen, who spearheads exchange implementation for the U.S. Department of Health and Human Services, said some of the approved states face hurdles that could require Washington to step in with federal exchanges before open enrollment starts on Oct. 1.
"I'm absolutely confident that every state will have an exchange that will be functioning and ready," said Cohen, who declined to elaborate on the number or identity of states that could be in for difficulties.
"The type of exchange may be different," he told reporters. "(But) there will be an exchange of one kind or another in every state."
Obama's Patient Protection and Affordable Care Act requires Washington to provide an exchange in any state that cannot or will not set up their own.
The exchange initiative is expected to insure 26 million Americans, many of whom currently have no coverage, according to the nonpartisan Congressional Budget Office. A planned expansion of the Medicaid program for the poor is likely to cover another 12 million people.
Both the exchanges and the Medicaid expansion are due to begin providing coverage on Jan. 1, 2014.
Republicans and other healthcare reform critics have warned of potential problems for states, saying the administration has been slow to release rules governing implementation.
Many states also held off on implementation in 2012 until after the law survived a U.S. Supreme Court ruling in June and last November's Republican presidential election challenge to Obama's re-election.
Cohen said the main hurdles for states are development of information technology systems for applicant enrollment eligibility and continued legal and political challenges from reform opponents.
"The biggest challenges are for states that started later. Obviously, they have less time," he said.
New Mexico and Idaho, two of the few Republican-led states to move toward establishing their own marketplace, are still awaiting final approval from their respective legislatures.
But even in Connecticut, one of the first states to embrace the healthcare exchange model, media reports have described implementation problems linked to vague or changing federal guidance.