(Recasts with Michigan Senate approval, quotes from supporters, opponents)
Aug 27 (Reuters) - The Michigan Senate on Tuesday approved a bill to expand the Medicaid health program for the poor under President Barack Obama's healthcare reform law.
Senators voted 20-18 to advance the bill, which has the backing of Michigan Governor Rick Snyder, a Republican. The Senate legislation differs from a House-approved version, so the bill must return to the House for final consideration. House lawmakers are expected to take up the bill next week.
Snyder broke with other Republican governors this year to support a Medicaid expansion that he said would save taxpayers and businesses money while improving the quality of life for Michigan residents currently not covered.
The measure would infuse the state budget with billions of dollars of federal funding to pay for the expanded coverage.
An additional 325,000 people would be covered in fiscal 2013-2014 with $1.7 billion of federal funding, increasing to more than 400,000 people the following fiscal year, according to a Michigan Senate Fiscal Agency analysis.
Republicans hold a 26-12 majority in the Senate. Less than half joined Senate Majority Leader Randy Richardville in supporting the measure. The bill fell one vote shy of approval on an initial vote, but it passed in a second vote after senators adopted another amendment.
Republican Senator Roger Kahn called it "a bipartisan bill that will reform the cost of medicine throughout the state and become the model in the country."
Kahn said the bill provided for "a hand-up not a handout."
Democratic Senate Minority Leader Gretchen Whitmer said the bill would benefit everyone in the state, whether or not they were among those who would become eligible for benefits.
"It's good public policy and it makes good fiscal sense," Whitmer said.
Senator Patrick Colbeck, whose abstention led to Tuesday's initial failed vote, urged senators to vote no, calling the bill "a path to a single-payer system where nobody gets control over their healthcare."
Colbeck said he was concerned about the increasing state contributions in later years. The federal government has pledged to cover the costs for the first three years, with the state gradually paying up to 10 percent of the cost by 2020.
"Hitching our wagon to this Obamacare train is a very high-risk venture," Colbeck said.
Republican Senator Mike Green opposed the bill, saying the expansion would obligate Michigan taxpayers to future spending increases and would not improve access to high-quality care.
The Affordable Care Act expands Medicaid coverage to otherwise ineligible individuals and families who earn up to 133 percent of the federal poverty line, about $15,500 for a single adult and $26,500 for a family of three in 2014.
Medicaid expansion is one of the healthcare law's biggest provisions. But a U.S. Supreme Court ruling last year allows states to opt out. As of Aug. 1, 23 states and Washington had accepted the expansion, while 21 states had turned it down, according to the consulting group Avalere Health. (Reporting by David Bailey; Editing by Barbara Goldberg and Stacey Joyce)