A giant battle over Medicaid is brewing in Minnesota

As Gov. Tim Pawlenty tackles Minnesota's epic budget deficit this year, he faces the huge dilemma with Medicaid. The federal-state health insurance program for the poor, elderly and disabled is growing at a frightening pace in every state. But cutting it could end up costing Minnesota more in lost federal revenue. Moreover, Pawlenty is up against those in the Legislature who want to expand healthcare coverage for the poor. In Minnesota, the state government's $3 billion half of the Medicaid bill represents about one-fifth of its annual budget. That's expected to rise by 12% in each of the next two years.