The Minnesota House voted to expand Medicaid to more low income and disabled people.
The Legislature is taking the action because the federal government is promising to cover the full cost of the new enrollees through 2016. Democrats say the proposal will save the state millions.
The change brings more than 35,000 low-income Minnesota residents closer to being eligible for a subsidized health insurance program, known as Medical Assistance.
As well as insuring more people, the move will save the state money, state Rep. Tom Huntley, DFL-Duluth, said.
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"The net savings to the state budget, the total net savings are $129 million in the first biennium and $237 million in the second biennium," Huntley said.
Republicans complained that the federal government is already deep in debt and will be unable to pay for the program in the future.
"Minnesota has an unbelievable health care system where we can deliver very high quality care at low cost," state Rep. Matt Dean, R-Dellwood, said. "We are the best-value state in terms of delivering health care. We stand the most to lose from moving forward, particularly from state-based programs to federal programs."
The proposed change to the state's version of Medicaid now heads to the Minnesota Senate, which could pass the measure this week. Gov. Mark Dayton said he'll sign the bill if it reaches his desk.