Senate Public Health Chairman Alan Nunnelee said the plan is designed to save the state millions of dollars. It will remove about 65,000 disabled and low-income elderly people from the federal-state program.
They will move to Medicare, where the federal government will pay all expenses.
About 5,000 of those removed from Medicaid will not be covered by Medicare right away.
But, Nunnelee said Barbour has promised to ask for federal waivers to get those people some type of coverage.
He said disabled or low-income elderly people who need cancer treatment, dialysis, or drugs to prevent rejection of new organs will still be covered by Medicaid.