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TALLAHASSEE (NSF) – In a move that creates a $5 billion divide with the House, the Senate released a budget proposal Thursday that banks on expanding health-care coverage for low-income Floridians and extending a critical funding program for hospitals.

The Senate proposal, approved by a key budget panel and touted by President Andy Gardiner, reinforces that health-care funding could be the most-vexing issue facing lawmakers during the rest of this year’s legislative session.

Senators included $2.8 billion in the budget proposal to pay for an expansion of health-care coverage that is an outgrowth of the federal Affordable Care Act, better known as Obamacare. House Republican leaders have rejected such proposals during the past two years — and have shown no willingness to go along with a revised Senate expansion plan this year.

If the expansion ultimately is approved, the federal government would cover the $2.8 billion first-year costs of the plan, which the Senate has dubbed the Florida Health Insurance Affordability Exchange Program, or FHIX.

The Senate budget proposal also includes nearly $2.2 billion for the continuation of the Low Income Pool program, which in recent years has funneled additional money to hospitals and other health providers that serve large numbers of poor and uninsured patients. The program, known as LIP, is scheduled to expire June 30 unless the state can reach agreement with the federal government on an extension. Amid such uncertainty, a House budget proposal released this week did not include the money.

Senate Health and Human Services Appropriations Chairman Rene Garcia, R-Hialeah, said the Senate has put together a revised formula for distributing the LIP money to hospitals. Garcia, whose subcommittee approved the budget proposal Thursday, said he hopes the formula would address concerns raised by the federal government about the program.

“We’re assuming that LIP is going to continue,” Garcia said.

But Garcia’s counterpart, House Health Care Appropriations Chairman Matt Hudson, R-Naples, said this week it would be premature to include the LIP money in initial budget plans. Officials from the state Agency for Health Care Administration and the Obama administration have been in negotiations about an extension, but it remains unclear what changes might be needed to continue the program past June 30.

Hudson and House Speaker Steve Crisafulli, R-Merritt Island, said lawmakers are in a similar position as last year, when the program also was slated to expire. The House and Senate did not include LIP money in their initial budget proposals last year but added the money after an agreement was reached for a one-year extension of the program.

“We’re in the same scenario this year,” Hudson said.

The House and Senate in the coming weeks will hammer out an overall state budget for the fiscal year that starts July 1. Committees in both chambers this week released initial spending proposals, which will be a basis for later talks.

The Senate’s health-and human services proposal released Thursday totals $35.2 billion, while a House proposal released earlier in the week totals $30.2 billion. While the proposals likely have myriad differences about details, the overall $5 billion gap is driven by the health-expansion and LIP issues.

Under the Affordable Care Act, the federal government would pay the vast majority of costs for states that expand Medicaid coverage. A proposal (SB 7044) moving through the Senate would accept the federal money but offer expanded coverage through private insurers.

The federal government would have to sign off on the Senate proposal. While Washington would pay the entire $2.8 billion during the upcoming 2015-16 fiscal year, the state would have to pay relatively small portions of the expansion costs in later years.

Though the House and Senate have disagreed about plans to expand coverage, they both want an extension of the LIP program. Under the program, Florida uses money put up by local governments — primarily from areas such as Miami-Dade and Broward counties — and draws down federal matching funds. Money is then distributed to hospitals and other providers in various parts of the state.

In granting an extension last year, federal officials made clear they wanted changes in the way LIP is constructed. Among the issues has been devising a new formula for distributing money to hospitals.

In a memo Thursday to senators, Gardiner described LIP funding as the “single greatest unknown factor influencing our decision-making” as lawmakers work to put together an overall state budget. Gardiner wrote that the Senate health proposal is aimed at avoiding “brinksmanship negotiations with the federal government.”

“Gaining federal approval of the new Senate LIP model, as well as federal authority to fully implement the FHIX, are ambitious goals,” Gardiner, R-Orlando, wrote. “I am confident, however, that our federal partners will recognize how the Senate plan benefits everyone involved.”

The News Service of Florida’s Jim Saunders contributed to this report.

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