The Indiana Senate voted Tuesday to expand Medicaid using a state-run program, as lawmakers and Gov. Mike Pence continue negotiating how the state should cover an estimated 400,000 low-income residents.

Pence and the Republican-led General Assembly have beat back efforts by Democrats to expand coverage using the traditional federal-state Medicaid program for the poor. Instead, they say, expansion should be done either through the Healthy Indiana Plan or a similar state-run program, giving the state more control over costs.

Expanding HIP would cost the state roughly 3 percent less than expanding Medicaid, State actuary Milliman Inc. estimated in a Feb. 25. However, supporters say HIP would promote more responsible decisions by enrollees.

HIP currently covers about 40,000 low-income residents who don't qualify for Medicaid. Some Indiana lawmakers want to use HIP to expand Medicaid as part of President Barack Obama's health care overhaul.

The federal government will pick up the full cost of expanding Medicaid for the first three years and 90 percent of the cost after that.

On the table is an expected $10.5 billion in federal aid for the state in the next seven years. But expanding HIP could also cost the state close to $2 billion over that same period.

Pence asked House Republicans to hold off on a similar measure last week, saying he wanted more time for the federal Centers for Medicare and Medicaid Services to sign off on the HIP expansion. House Speaker Brian Bosma, R-Indianapolis, said Tuesday that Pence likes the Senate's request for block grants.

"At least the leadership is all in favor of not using Medicaid expansion as the vehicle here because of the potential for massive cost in the future," Bosma said.

Seven Democratic senators voted with all of the chamber's Republicans Tuesday for the expansion, despite reservations about using HIP.

"We don't agree with the bill the way it was written, but we want to make sure it remains alive," said Sen. Karen Tallian, D-Portage.

Tallian asked lawmakers to approve a temporary expansion of Medicaid, for two years, similar to what Florida Gov. Rick Scott, a Republican, is supporting. But her amendment and similar efforts in the House failed this week.

The Senate bill now moves to the House for consideration as lawmakers hit the halfway point of their four-month session.