The Republican-led chamber, on a 20-18 vote, approved expanding the government health insurance program to nearly a half-million Michigan residents within a few years. Many are expected to be eligible in 2014 depending on when the state receives federal approval.
The legislation now returns to the GOP-led House, which passed the bill in June and is expected to send it to Gov. Rick Snyder next week for his signature. The GOP governor, who strongly supports Medicaid expansion, had struggled for months to win backing in a Senate where many conservatives opposed to "Obamacare" have philosophical objections to expanding government.
The Senate did not get enough votes to give the bill immediate effect, which may complicate how quickly the expansion can occur in 2014.
Medicaid expansion is part of a strategy to ensure nearly all Americans have health insurance under the 2010 Affordable Care Act. It was designed to cover the neediest uninsured people but became optional for states because of a Supreme Court decision last year.
Many GOP-led states have declined the expansion, despite the U.S. government promising to cover the entire cost for the first three years and 90 percent later. Michigan is poised to become the seventh state led by a Republican governor to sign up.
The legislation passed three hours after the Senate fell one vote short on its first attempt, when Republican Sen. Tom Casperson of Escanaba surprised by voting "no." That allowed one of the fiercest opponents of the federal health care law, Sen. Patrick Colbeck from Canton Township, to not vote, preventing Republican Lt. Gov. Brian Calley from breaking a tie.
Casperson voted "yes" the second time around after the bill was amended to limit how much hospitals can charge the uninsured for medical care.
Pressure from advocates of Medicaid expansion had been building in order for the state to receive federal approval before Michigan residents can enroll beginning Oct. 1.
Medicaid already covers 1.9 million, or one in five, Michigan residents — mainly low-income children, pregnant women, the disabled and some poorer working adults. The legislation would cover almost a half-million more adults making up to 133 percent of the poverty level, or $15,500 for an individual and $26,500 for a family of three.
The bill includes GOP-written requirements that nondisabled new enrollees pay some of their medical expenses after being on the program for six months and pick up more costs after getting Medicaid for four years. They could lower their costs by not smoking or adhering to other healthy behaviors.
The newly eligible also would no longer be covered if savings from the expansion — primarily from shifting state mental health expenses to the federal government — do not cover the state's cumulative costs in the future. The nonpartisan Senate Fiscal Agency estimates the expansion would stop in 2027 under the measure.
Supporters contend that offering health insurance to more poor people will make them healthier and minimize their expensive trips to the emergency room, saving money throughout the health care system and also helping businesses meet requirements under the health law.
"This is not Obamacare or the Affordable Care Act. This is our bill, our bipartisan bill that will reform the cost of medicine throughout the state and become the model in the country," said Sen. Roger Kahn, a cardiologist from Saginaw Township. "This bill becomes a hand up, not just a handout."
Opponents question such a large government expansion when the U.S. is trillions of dollars in debt and are suspicious of money-saving claims. Tea party and conservative activists say they will oppose Snyder's expected re-election bid because of his push to expand Medicaid coverage.
"The bottom line is we're spending more money," Colbeck said, calling the expansion "a path to a single-payer system where nobody gets control of their health care."
After the Senate adjourned in June without voting on Medicaid expansion, Snyder spent the summer traveling to Republican senators' districts to push publicly for the House bill, and pro-expansion allies paid for billboards calling out GOP senators to support the expansion.
But Senate Majority Leader Randy Richardville held firm on his timeline, asked a workgroup to study the issue and held hearings that resulted in changes to the legislation — none considered deal breakers with Democrats or the House.
Eight Republican senators and all 12 Democrats voted for the bill Tuesday. Eighteen Republicans opposed it.
"It's a benefit to every person in the state of Michigan, whether you're in that expanded Medicaid population or you're lucky enough to be one of us, who has taxpayer-funded health care," said Senate Minority Leader Gretchen Whitmer, an East Lansing Democrat. "We know we all pay for uncompensated care in this state."
Two other GOP governors supporting the expansion are Rick Scott in Florida and John Kasich in Ohio. It was blocked in Florida but remains a possibility in Ohio.