It's Iowa's response to Obamacare's promise to give states federal money for expanding Medicaid to cover more of the uninsured.
It's also a rare example of compromise between Republicans and Democrats in Des Moines.
Governor Brandstad signed the measure into law in Mason City today.
Under its provisions, about 150,000 more Iowans will be able to receive health care coverage.
But they'll be required to get regular check ups and follow doctor's orders - like losing weight or quitting smoking - or they'll face penalties.
Providers like Unity Point - St. Luke's say the plan is good news for some of the state's neediest people.
"It could mean new coverage, new eligibility for coverage, whether it's premium support, or whether it's full premium cost to up to 10,000 residents of Woodbury County," says Mike Stiles of St. Luke's College.
Another compromise reached on this measure gives the Governor the final say on whether the state will fund medically necessary abortions for poor women.