The plan, passed by a 95-0 vote late Thursday night, will head to the Senate on Friday.

Compared to Gov. Ernie Fletcher's proposal, the plan would lower premiums, deductibles and out-of-pocket expenses for active and retired teachers and state workers, Rep. Harry Moberly, chairman of the House appropriations committee, said.

"We believe this is what our state employees and our educators want, and this is what they deserve," said House Appropriations Committee Chairman Harry Moberly.

The governor called the General Assembly into a special session last week, hoping it could improve upon the administration's 2005 health insurance plan. Fletcher's plan has been met with a huge public outcry and a threatened teachers' strike later this month if current benefits aren't restored.

The state's health insurance plan covers 229,000 retired and active public school and state employees. Participants have argued the governor caught them by surprise with expensive changes including higher premiums and higher out-of-pocket costs. For example, under one family plan, the monthly premium would increase by $60 to $490, and the employee would be responsible for more prescription drug costs.

Teachers have threatened to strike Oct. 27 - less than a week before the November elections - if the current benefits aren't restored.

But, teachers would likely not strike if the House plan maneuvers through the Senate unscathed and largely intact, said Kentucky Education Association President Frances Steenbergen.

"It's a wonderful testimony to their desire to solve the issue for health insurance for school employees," Steenbergen said after the vote. "It's a good bill to address the issues for this period of time."

Jefferson County Teacher's Association President Brent McKim said it was a "model bill" in its current form.

"It meets their needs, it addresses the issues we're facing and moves us toward where we need to be," McKim said.

Among other things, the plan lowers what participants would pay for doctor visits, prescription drugs and out-of-pocket expenses. Participants would also pay set co-pays rather than percentages on those expenses under the plan.

The proposal essentially offered one of the plans most popular among state insurance participants again next year. It maintained the lowest insurance plan offered by the administration and offered another plan with richer benefits.

Employee premiums under the House proposal would be standardized across the state, and would not be based on salary, as the Fletcher plan was. Rates are higher for smokers.

It also preserves a 2 percent retroactive pay increase from July 1, and an extra 1 percent pay raise starting Jan. 1, which was proposed by the governor. Flexible spending accounts for people who waive coverage, which had been cut down under the administration's plan, would be restored to $234 annually, under the House plan.

The package passed by the House would cost the state about $160 million more than the original plan proposed by the Fletcher administration, which cost about $495 million, Moberly said. The four insurance companies awarded state contracts by the Fletcher administration - CHA Health, Anthem Blue Cross, Bluegrass Family Health and United Healthcare - would still carry the state's health plan next year.

Rep. Paul Marcotte, R-Union, said he thought the plan was a bipartisan accomplishment that helped teachers and state workers. Lawmakers were able to provide a richer plan than the governor, because Fletcher's spending was restricted by the state not having an enacted budget, Marcotte said.

"I really think that everybody won," Marcotte said, "including the governor."

Senate President David Williams, R-Burkesville, said the Senate would begin reviewing the plan Friday.