If shutting down the state's health-care program for indigents sounds drastic, that's because it's supposed to.

While other states have just talked about it, Arizona on Wednesday became the first to take official action toward killing its Medicaid program.

Senate Bill 1519, approved by the Senate Appropriations Committee on an 8-5 vote, would end the nearly 30-year-old safety-net program, which now covers more than 1.3 million Arizonans, about half of them children.

The state would forego more than $7.5 billion in federal matching funds, and most of the $2 billion in state funding would be redirected to the general fund, with about $1 billion earmarked for the developmentally disabled, behavioral health care and the "medically indigent."

The bill's sponsor, Sen. Andy Biggs, R-Gilbert, and other lawmakers say Arizona and the federal government are far too deep in debt to continue paying for Medicaid, particularly as job losses from a brutal recession sent enrollment soaring and the program threatens to crowd out education, public safety and other state-government responsibilities.

The measure passed after 1 a.m., toward the end of a marathon meeting. It has a dicey road ahead and may not get out of the Senate. But it could find support in the House, where Speaker Kirk Adams has said repeatedly that the Arizona Constitution did not require the state to provide health care.

Gov. Jan Brewer has said that she wanted to preserve the Arizona Health Care Cost Containment System, the state's Medicaid program.

Business leaders, hospitals, health-care advocates and AHCCCS administrators predict a cascade of shuttered hospitals, thousands of job losses and a health-care network in tatters if the bill becomes law.

"The economic devastation that would result from the sudden elimination of $7 billion in federal participation would be crippling," AHCCCS Director Tom Betlach said in written testimony to the committee. "Unemployment would skyrocket."

Betlach said AHCCCS funding would fall short of the $2.2 billion needed to cover the state's 50,000 most fragile residents, including the elderly and disabled, and leave everyone else uninsured.

"This bill does not even provide sufficient funding for our most frail citizens," he said. "How would we care for these citizens?"

The uninsured would continue to seek care when they became sick or injured, leaving hospitals to pick up the tab and dealing fatal financial blows to health-care facilities across the state, said Ted Williams, a former state health director and CEO of the Arizona Behavioral Health Corp.

"If we're only going to provide care to people who can pay for it, we'll be an outlier in the world, not just the United States," Williams said. "It is public health. It's not just indigent health. Ensuring that people have appropriate health care is a public need."

Governors nationwide are looking at ways to slash Medicaid as it consumes an ever-larger share of their deficit-ridden budgets, but are hamstrung by federal eligibility requirements. Thirty-nine states, including Arizona, cut payments to providers in 2010, and 20 states have cut benefits, according to the Kaiser Family Foundation.

Arizona last fall eliminated some optional services, such as transplants and well visits, and is poised to eliminate 250,000 childless adults from the rolls on Oct. 1 to save $541 million and help bridge an estimated $1.1 billion deficit for the coming year. Biggs said he wanted to raise the alarm about the federal deficit and the "unsustainable path" of entitlement programs.

"We built this system," he said. "We're pushing one-third of this state to socialized medicine. The alternative is to kick it on down the road for another five years, and then we implode."

Sen. Rich Crandall, R-Mesa voted against the bill. He said it was unlikely to clear the Senate.

"You would see catastrophic consequences," Crandall said. "You'd see every rural hospital close. I think he was throwing a nuclear bomb just to get the conversation started."

Sen. Sylvia Allen, R-Snowflake, said she voted for the bill to echo Biggs' concerns, but she doesn't believe Arizona can dump the entire program. Instead, she wants to see reforms, such as tightening eligibility standards and weeding out people who hide assets to qualify for AHCCCS.

Republic reporter Mary Jo Pitzl contributed to this article.