After months of fending off criticism from the national Democratic establishment over his health care plans, Senate Finance Chairman Max Baucus (D-Mont.) is now facing some friendly fire from two powerful Big Sky Democrats.

Sen. Jon Tester and Gov. Brian Schweitzer have taken issue with the section of Baucus’ health care package that calls for the states to contribute to the cost of expanding Medicaid eligibility as a means to provide coverage to millions of uninsured, middle-income Americans who are not poor enough to qualify.

Tester is withholding a direct appeal to Baucus to strike the proposal pending the outcome of the forthcoming merger of Baucus’ Finance bill and legislation previously approved by the Health, Education, Labor and Pensions Committee. But Tester is prepared to press his case to Baucus and Sen. Chris Dodd (D-Conn.) if the Medicaid expansion survives.

“We’ve got to determine how much Montana’s going to be on the hook, in the end, if at all. We’ll just analyze it. I don’t want to transfer any cost down to the states. It’s not what I want to do,— Tester, a former state legislator, said Tuesday.

Schweitzer’s office did not respond to a request for comment. But the Democratic governor has been on the record for months in opposition to his state being stuck with an unfunded mandate as a part of federal health care reform. Tester said Schweitzer has made his opposition clear in their conversations.

“Well, they’re concerned about it, same as I am. Gov. Schweitzer’s concerned about the impacts on the budget. Our budget’s in pretty good shape in Montana right now, and if those costs have to be reimbursed, it could break the bank in Montana,— Tester said. “I just want to make sure all states are held as harmless as they possibly can.—

In drafting his health care reform bill with bipartisan input, Baucus held extensive discussions with Democratic and Republican governors to discuss the effect of expanding access to Medicaid, a joint state-federal program that provides health insurance to the poor. Not all governors are opposed to Baucus’ plan.

But many are — on both sides of the aisle. For Baucus, the challenge was to craft a way to lower the number of uninsured Americans without writing a bill that would lead to deficit spending. It was determined that the best way to do that was to widen Medicaid’s net and to have the states help pay for it.

Baucus indicated that he doesn’t see this component of his bill as a looming political problem. And he said Schweitzer has yet to come to him with any complaints.

“I’m not concerned. [Gov.] Schweitzer and I talk about this stuff. We’re on board. Last time we talked about it, he [said]: ‘Fine. Great,’— Baucus said. “We spent a lot of time talking to governors about that. And some governors are OK, and some are not OK.—

In fact, Schweitzer, chairman of the Democratic Governors Association, was one of 22 Democratic governors who recently signed a letter expressing support generally for the Finance Committee’s health care reform bill, which included a statement about the need for states to contribute to health care reform.

“We recognize that health reform is a shared responsibility and everyone, including state governments, needs to partner to reform our broken health care system,— the Oct. 1 letter reads.

Baucus spokesman Tyler Matsdorf said: “Sen. Baucus has always fought for Montana in everything he has done, and health care reform is no different. Health care reform legislation will significantly help Montana and states across the county.—

Complicating this issue is a temporary waiver from four states — Michigan, Nevada, Oregon and Rhode Island — from paying for their share of the proposed Medicaid expansion. Some Senate Democrats are very supportive of the proposal, including Majority Leader Harry Reid (Nev.), but others are wondering why their state was excluded.

In consultation with several governors, Baucus developed this proposed waiver for states meeting two criteria: An August 2009 unemployment rate of 12 percent or higher, and a Medicaid program that currently covers less than 20 percent of the population. This waiver was created to ensure that state budgets hit particularly hard by the economic downturn would not be asked to absorb a crippling blow in the form of coming up with additional Medicaid funds.

Sen. Debbie Stabenow (D-Mich.), a Finance member who supports the waiver, defended the proposal, saying the Wolverine State can ill afford another unfunded mandate from Washington, given its poor economic climate. Stabenow said she has backed similar exemptions for other states in the past.

“The concern was, for the states that are hardest hit right now, even though they want to expand Medicaid, they wouldn’t have the funding to be able to do that,— Stabenow said. “For me it was very easy.—

The Finance bill would expand Medicaid so that all single adults nationwide under the age of 65 who earn up to 133 percent of poverty would become automatically eligible, with the federal government paying for 89 percent of this new mandate and the states paying for 11 percent.

This mandate would go into effect beginning Jan. 1, 2014, and is projected by the nonpartisan Congressional Budget Office to result in 11 million new Medicaid recipients nationwide.

On average, most states currently cover parents with children earning around 100 percent of poverty, with the federal government picking up around 57 percent of the tab and the states 43 percent.

Senate Republicans are using the proposal as yet another reason to oppose the Democratic health care overhaul. GOP Conference Chairman Lamar Alexander (Tenn.) said he has spoken to Tennessee Gov. Phil Bredesen (D) and has been told that the Medicaid expansion would be a financial disaster for their state.

“This is a huge problem for Tennessee,— said Alexander, a former governor. “As Gov. Bredesen says, I don’t see how Tennessee could possibly afford to pay this.—