But hospitals and consumer advocates warned the bill risks tying Utah's fate to states with poorer health and higher health costs.
It also would also mean sacrificing $132 million in federal funding by 2014 because the block grants are not designed to keep pace with medical inflation, they said.
Moderate Republicans were swayed to support the "message bill" after it was amended to include a sunset clause and requirement for further study. The compact must be approved by Congress, which some wagered is unlikely.
Herbert has repeatedly voiced support for replacing Medicaid with state-run care, but hasn't said whether he'd risk the same with Medicare.
Herbert's spokeswoman Ally Isom said only, "The Governor supports the concept of block-granting all federal funds to states."
And while the sunset date gave him comfort, she said, "it did not significantly factor into his decision" to sign the bill.
To date, four states have pledged to join the compact: Texas, Missouri, Oklahoma and Georgia. Two governors have vetoed the idea, including Arizona Gov. Jan Brewer.
Recent coverage of the compact