BY CHELYEN DAVIS

THE FREE LANCE-STAR

RICHMOND

--The Virginia Senate took further steps Thursday to approve Medicaid expansion in Virginia, contingent upon federal approval of reforms that would let the state have greater control over costs in the program.

The Senate amended its budget to give permission for the expansion under the Affordable Care Act--with the contingency language--in order to get Democratic support needed to pass the budget.

But the House budget language on expansion is much more limited, and it remains to be seen if the expansion will survive the budget negotiation process between the two houses.

Democrats had voted against the Senate's budget Sunday in the Finance Committee, citing Medicaid expansion as the reason. Their vote telegraphed a repeat of last year, when all 20 Democrats voting together were able to block several budget bills in the evenly split Senate.

For months, many Republicans, including Gov. Bob McDonnell, have objected to the expansion of Medicaid, which would provide health insurance to about 400,000 of Virginia's 1 million uninsured people.

While the federal government has promised to fully pay for the expansion at first, and then pay for 90 percent of it thereafter, McDonnell and others mistrust that promise given the federal government's mounting debt and deficit issues.

But recent reports indicate that the expansion could save Virginia money and create up to 30,000 jobs. Business, health industry and health care advocate groups have been pushing lawmakers to support the expansion.

Some Senate Republicans have come to agree, and support the expansion, if Virginia can get the federal government to relax certain rules.

The amendment made Thursday to the Senate's budget says that Virginia will do the expansion if the federal government agrees that services provided under the expansion will be similar to those provided to commercial insurers, and allow Virginia to put "reasonable limitations" on non-essential benefits, such as transportation. State lawmakers also want to require a level of patient responsibility, including "reasonable cost-sharing" and "active engagement" in health and wellness programs.

If the state can get those authorizations from the federal government, the amendment gives permission for expansion to move forward.

It also creates a special reserve fund for any money saved by the state as federal dollars replace state dollars, because the cost of expansion to the state is expected to increase over time.