Minnesota Governor Tim Pawlenty announced this week that his state will not expand participation in its Medicaid program until 2014.

The health care reform legislation passed three months ago provided for expanding eligibility in Medicaid coverage to persons with higher incomes, with the federal government paying most of the cost of covering new enrollees. 

Some states have moved to expand Medicaid enrollment prior to the 2014 date, while others have chosen to wait, citing increased costs in spite of the enhanced federal match.

But proponents of early expansion counter that it will save money overall by covering people who currently lack health care coverage. The cost of treating those persons is borne by hospitals, local governments, and higher charges to patients covered by insurance.

A recent study showed that states with the highest percentage of uninsured residents would benefit the most by adopting early Medicaid expansion.

Minnesota currently pays some portion of the costs of providing care to persons who qualify for expanded Medicaid, but receives no direct federal assistance for those expenditures. Enrolling those persons under Medicaid could bring the state about $1.4 billion in additional federal funds.