Gov. Tim Pawlenty has vowed to veto the bill, calling the reductions inadequate and the expansion of Medicaid too costly.
The House approved cutting $164 million from health and human services Tuesday night after hours of spirited debate that also delved into such topics as abortion, offshore tax havens, constitutional challenges, sex offenders and the right to bear firearms.
The vote was 79 to 54.
But the matter could be moot. While the debate was underway, Gov. Tim Pawlenty announced that he will veto the bill -- or a similar one the Senate could approve Wednesday -- if it reaches his desk.
Pawlenty said the budget cuts should be far steeper and the bill should drop a plan to replace the revamped General Assistance Medical Care (GAMC) state program for very poor residents with a richer but costlier expansion of Medicaid.
"The bill's going to be vetoed the moment it hits my desk," he said at a news conference. "It adds hundreds of millions of dollars, if not billions of dollars, to future state deficits. It raises taxes when we are trying to reduce spending on health care."
Under the new federal health law, Minnesota could pull in $1 billion in federal money over the next three years to cover health care for more than 90,000 people a year earning less than 75 percent of the poverty level, but costing an equal amount in state money.
The bill ignited renewed interest in GAMC among hospitals because it addresses a major concern that led nearly all of them to reject participating in the program.
It would let hospitals negotiate with the state to limit the number of GAMC patients they would treat when the program starts June 1. Current law would pay hospitals a lump sum to take all comers. Most hospitals said they could not afford that unknown risk.
Hennepin County Medical Center in Minneapolis and three Allina hospitals indicated Tuesday that the bill would ease their concerns.
But the picture grew even murkier Tuesday when Hennepin County Board Chairman Mike Opat, leading negotiations for the county hospital, said Human Services Commissioner Cal Ludeman "suggested ... that any further negotiations are likely not going to happen." Opat said he'll try to keep talks going.
Other hospitals said they remain in discussions with Ludeman's department, including Regions Hospital in St. Paul, the only one that has said it likely will participate. But Regions will not participate if it is the only hospital to sign up, a spokesman said Tuesday.
Staff writers Baird Helgeson and Kevin Duchschere contributed to this report. Warren Wolfe • 612-673-7253