On Samarali Daniels’s wedding night three years ago, her new husband faked a stomach ailment so the two of them and her 15-month-old son could sleep in a hospital rather than spend a cold night outside. “I think they caught on,” she says, “but they let us stay anyway.”

But for Daniels and her family, there would be plenty of other nights in their immediate future spent in homeless shelters, as well as an uncountable number of dead-end job applications for both Daniels and her new husband.

Even today, with Daniels’s husband, Ramon Badillo Perez, working full-time at Sam’s Club and the family—which now includes a toddler daughter—settled in a three-bedroom apartment just west of the Kennebec River, the family is still, “dancing on the edge of 133,” Daniels says.

Those familiar with the mathematics of poverty might understand the reference. Daniels figures her family’s annual income is close to 133 percent of the federal poverty line, which translates into an annual income of $30,657. Maine used to cover parents making up to 200 percent of the federal poverty level, but it now restricts eligibility to parents making up to 133 percent, putting Daniels and Perez on the knife’s edge in terms of receiving health benefits.

Now Maine Governor Paul LePage wants to go even further by cutting off eligibility for parents at the poverty line itself. If he succeeds, the couple would definitely lose their Medicaid coverage.

LePage, a Republican, also wants to limit eligibility for seniors, the disabled and young people. In all, the governor’s cuts would trim the rolls of MaineCare, the state’s Medicaid program, by more than 23,000 people and reduce benefits for nearly 3,800 others.

The governor argues the cuts are necessary because the rapid growth of the program, which is funded jointly by the federal government and the states, is squeezing Maine’s budget. In 2011, Maine spent 28.6 percent of its budget on Medicaid, according to the Council of State Governments. The LePage administration says Maine has been too generous in the past, and that the proposed changes would bring the state closer in line to national averages on Medicaid funding and coverage rates.

Under the Affordable Care Act , beginning in 2014 every state is supposed to expand Medicaid coverage to all adults and children in households earning 133 percent or less of the federal poverty level. But in June the Supreme Court struck down that provision, making Medicaid expansion optional.

LePage, like at least six other Republican governors, has already declared that Maine will opt out of the expansion. But he’s the only governor who is taking his opposition to the federal health law even further by attempting to scale back his state’s Medicaid enrollment. Other states, particularly those led by Republicans, are watching closely to see whether LePage’s proposed cuts, which will likely be reviewed by a federal court, are upheld.

“I assume a lot of people are watching what is happening in Maine,” Mary Mayhew, the commissioner of Health and Human Services under LePage, says with a smile.

The governor’s critics argue that if there is a state budget crisis in Maine, it was caused by LePage himself. Upon taking office in 2011, LePage pushed a $400 million tax cut through the Legislature.

“You create a crisis in order to justify what you want to do” is how state Representative Peggy Rotunda, the lead Democrat on the House Appropriations Committee describes what LePage is doing. Despite Maine’s past generosity, growth in its Medicaid program has been quite modest compared to other states — 4.9 percent between 2007 and 2010, according to the Kaiser Family Foundation.

LePage, a Tea Party-backed insurgent who won the governorship in a five-person general election in 2010, also has targeted other programs for low-income people such as Head Start and child-care assistance. At the Maine’s Republican Party Convention last spring, LePage, whose impoverished childhood is recounted prominently in his official biography, proclaimed that anyone who receives government assistance should “get off the couch and get yourself a job.” Critics accuse of the governor inaccurately referring to Medicaid beneficiaries as being on welfare in order to stigmatize them.

“I think his attitude is unfathomable,” says Daniels, 22, sitting in one of the threadbare chairs in her cramped living room while her two-and-a-half year old daughter Marrianna, shuffles about in a diaper. The living room is dark, with bare wood-paneled walls and windows covered by blankets. As it is, Daniels says she survives on one meal a day to make sure her kids get enough food. The family does without a car in an area with limited public transportation. Perez, 35, walks four miles a day to and from work.

Daniels says she and Perez would have to forego necessary health care if the governor prevails. She is particularly worried about her husband, who suffers from depression and chronic back and knee pain. As to LePage, she says, “He reminds me of Scrooge; if poor people are so poor, they should go to poorhouses. But there aren’t any poorhouses. There’s nowhere to go.”

In addition to eliminating from Medicaid those parents with incomes above the federal poverty line, LePage proposes to remove all 19-and 20-year-olds who are not parents from the Medicaid rolls—regardless of their income—and to reduce the number of seniors and disabled people who qualify for benefits under the Medicare Savings Program, a state Medicaid program that helps low-income people pay their Medicare premiums, deductibles and co-pays.

The federal Centers for Medicare and Medicaid Services (CMS) must approve LePage’s cuts. In August, Maine asked CMS to grant that approval and to do so by September 1 in time for the state’s fiscal year, which begins in October. When CMS didn’t respond by early September, LePage went to court to force an immediate decision by the federal agency. The federal district court in Boston quickly dismissed the lawsuit, noting that CMS had 90 days, or until the end of October, to reach a decision.

(A loophole in the federal law enabled LePage this year to reduce Medicaid eligibility for parents from 200 percent of poverty to 133 percent without CMS approval.)

If CMS ultimately rejects LePage’s Medicaid cuts, he is expected to return to court. “We will certainly contemplate what our options are at that point,” Mayhew says. Other states, particularly those with Republican governors and Republican legislative majorities, are undoubtedly anxious to see how LePage fares. If he’s successful, they too may seek to cut Medicaid eligibility in their states.

LePage argues that that the Affordable Care Act’s so-called “maintenance of effort” requirement went out the window with June’s Supreme Court decision. The provision prevented states from changing Medicaid eligibility levels before the Medicaid expansion occurred in 2014. (The concern was that states would remove beneficiaries from the Medicaid rolls knowing that when expansion occurred, those people would be allowed back on but the federal government would pay a much larger share of their expenses under the new law.) Now that the court has made that Medicaid expansion optional, LePage argues, Maine is no longer locked into the state’s Medicaid eligibility levels that were in effect when the federal health law was passed in 2010.

Kathleen Sebelius, the U.S. Secretary of Health and Human Service, holds a different view. In July, she wrote to all the governors warning that the Supreme Court ruling left all parts of the Affordable Care Act intact except the portion relating to the Medicaid expansion. LePage’s opponents believe Sebelius’s letter signals that she is not going to grant the sorts of eligibility waivers that LePage is seeking.

LePage’s Democratic opponents in Maine believe that if he is successful, the consequences would be dire. Rotundo argues that Medicaid and the other programs LePage is targeting actually help people stay in the workforce rather than keeping them out of it. “These are the very programs that stabilize families and keep people working,” she says.

Michael Brennan, the mayor of Portland, points out that even people without health insurance need health care. He predicts many will show up in emergency rooms, while others will elect to pay for health care instead of housing and will end up in public shelters. Ultimately, Brennan says, the public, and cities and towns in particular, will bear the costs. “The amount it would take the state to cover 20,000 people is negligible,” says Brennan, “but the cost to a community or a city like Portland, where thousands will lose health insurance, is huge.”

Although there would be no immediate relief for those falling out of Medicaid under LePage’s plan, if the Affordable Care Act remains on track, some low income people will be eligible for federal tax credits to help pay for health insurance starting in 2014.

Meanwhile, the Medicaid fight has unsettled many in Maine. “We’re getting a lot of panicked calls,” says Carol Rancourt, the Medicare Educator in the Southern Maine Agency on Aging. “They ask what’s going to happen to them.”

One of those nervously following the twists is Jeff Barnes, a one-time teacher and town manager living in Bangor, who has been unable to work since his early forties because of his bi-polar disorder. Now 62, his ailments have piled up over the years: a herniated disc, type two diabetes, angina. “I take 14 different medications,” he says.

Barnes sits in a recliner in his sunny living room on this afternoon, the floor in front of him spread with files, newspapers, and letters he has written, all related to the brewing Medicaid fight. If, as he believes, he is bumped from the Medicare Savings Plan under LePage’s proposal, he would have to pay as much as $4,700 more a year out of his pocket to purchase the medications he needs. That would represent more than a quarter of his income.

“It’s like a death sentence when you start playing with people’s medications,” he says. Nevertheless, he finds himself starting to contemplate which medicines he could do without.