Perry said in a statement Monday that he was sending a letter to the U.S. Health and Human Services secretary to tell her of the state's decision. Most of the federal health care law was upheld by the Supreme Court last month.
Perry says expanding Medicaid would force the state to add millions of Texans "into the already unsustainable Medicaid program."
He says, "I will not be party to socializing health care and bankrupting my state in direct contradiction to our Constitution."
If states chose not to implement an exchange, the federal government will implement it.