"I think it's a good free market approach," Florida state Sen. President Andy Gardiner, R-Orlando, said Tuesday as he explained a compromise proposal to insure 800,000 low-income residents.

BRADENTON, Fla. — In a special session next week, the Florida Legislature will attempt to bridge an impasse over low income healthcare funding that has left the state without a fiscal 2016 budget.

However, the healthcare rift between Republicans widened on Tuesday, increasing the odds that most state government services could shut down on July 1.

Sen. President Andy Gardiner, R-Orlando, unveiled a revised plan for his controversial Florida Health Insurance Exchange that he called FHIX 2.0.

Gardiner outlined the compromise legislation to be considered during the June 1-20 special session that would provide insurance to 800,000 low-income residents who fall in the gap that prevents them from qualifying for insurance under the Affordable Care Act or Medicaid.

Gardiner said Senate Bill 2-A filed Tuesday contained amendments to the Senate's original plan that are designed to resolve criticism of the FHIX plan that resulted in the abrupt end of the regular session when the House adjourned early on April 28, leaving the state without a budget for the coming fiscal year.

The main amendment to the plan, Gardiner said, eliminates one of the more contentious provisions, which would have required the state to implement FHIX by expanding Medicaid to accommodate the 800,000 uninsured.

The new plan would place enrollees directly into the FHIX marketplace on January 1, 2016.

"I think it's a good free market approach," Gardiner said. "What we're trying to do is find a Florida solution to this situation."

Gardiner said FHIX 2.0 provides a sustainable, long-term solution for dealing with the federal government's planned phase out of funding for the Low Income Pool that currently goes to hospitals and other providers to pay for indigent care.

Gardiner also said the Senate fully intends to adopt a spending plan for 2016 budget during the special session, though he stopped short of saying if he would consider dropping FHIX in order to reach agreement on the budget.

Gov. Rick Scott and House Speaker Steve Crisafulli, R-Merritt Island, oppose expanding Medicaid to cover people who fall in the gap. Both immediately objected to the Senate's new proposal.

"The Senate's plan to expand Medicaid under Obamacare will cost Florida taxpayers $5 billion over 10 years," Scott said. "A budget that keeps Florida's economy growing will cut taxes and give Floridians back more of the money they earn, not inevitably raise taxes in order to implement Obamacare and grow government."

Scott has already ordered the preparation of a contingency plan to fund bare-bones government operations starting July 1 if lawmakers fail to reach agreement on a budget in the coming weeks.

The Senate's revisions to FHIX will never be approved by the "inflexible federal government," Crisafulli said.

"When you remove the Senate's 'conservative guardrails' that the Obama Administration fundamentally opposes, all you are left with is a costly and inefficient entitlement program to serve able-bodied working age adults with no children," Crisafulli said. "We would be far better off if Washington, D.C., would allow Florida to create our own plan."

The "guardrails" in FHIX include provisions that require enrollees to prove that they are working or seeking employment and require co-payments for "inappropriate" emergency room visits.

The FHIX legislation also includes a provision that any changes to the plan imposed by the federal government must be approved by lawmakers.

The impasse between Republican leaders has been further complicated by last week's decision by the Obama administration to continue Low Income Pool payments for another two years, albeit at lower levels that the program currently receives.

Under the latest pool funding plan, the federal government would pay $1 billion in 2016 and $600 million in fiscal 2017.

Scott said Tuesday that even the lower amount of federal Low Income Pool funding means the state would have enough flexibility to maintain current indigent hospital coverage in fiscal 2016 without using additional state general revenue.

Scott has also proposed increasing the rates that are paid for Medicaid patients treated in hospitals in order to draw down additional federal money for the Low Income Pool, or LIP.

The federal administration's compromise to extend LIP payments for two years, and allow Florida to transition away from the program, is good news for the state's 2016 budget, according to Wells Fargo Securities senior analyst George Huang.

"Facing a $1.3 billion budget gap left by the pending withdrawal of federal funding for the state's LIP program, Florida's state agencies had begun preparations to shut down non-essential services starting July 1," Huang said.

"While there is still likely to be contentious debate on Medicaid funding mechanisms…the administration's proposal is a much needed federal compromise that not only saves face for Florida's legislators, but also makes a resolution more realistic," he said.

Huang also said the most likely solution to plug a shortfall from phasing out the federal LIP would be for the state to impose an additional tax on providers rather than a new tax on residents or cutting state services.

Any rate increase must be approved by the federal Centers for Medicare & Medicaid Services.

At the same time Scott is requesting the rate increase, his administration is moving forward with a lawsuit filed in April against the U.S. Department of Health And Human Services.

On May 7, Scott filed a motion seeking a preliminary injunction asking a federal judge to order HHS to renew full federal funding for Florida's Low Income Pool program.

"By refusing to continue funding a multibillion-dollar Medicaid program that offsets the costs of uncompensated healthcare provided by safety-net hospitals and trauma centers, children's hospitals, medical schools, and other providers statewide - unless and until Florida agrees to opt into the Affordable Care Act's Medicaid expansion program - the federal government has engaged in unconstitutional coercion," the motion for an injunction said.

A hearing date has not been scheduled.

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