Ohio Governor Kasich backs Medicaid expansion in proposed budget By Kim Palmer CLEVELAND (Reuters) - Ohio's Republican governor on Monday endorsed the expansion of Medicaid under President Barack Obama's healthcare reform law, raising expectations that political opposition to the plan may be starting to thaw among GOP leaders in so-called Red states. Gov. John Kasich, the fifth Republican state governor to support the Medicaid expansion, made his announcement as part of a press briefing on his $63.3 billion 2014-15 budget proposal. He emphasized that he is not a supporter of "Obamacare," but believes the Medicaid plan "makes sense for the state of Ohio." "Ohio taxpayer dollars are coming back to Ohio to support a significant need we have," Kasich said. The state's Medicaid program for the poor would be extended to about 366,000 uninsured Ohioans. But Kasich also said that state officials stood ready to repeal the expansion if the federal government were to alter the reimbursement plan. The decision by Kasich, a leading voice in Republican politics, could encourage similar moves among more than a dozen other state governors who are still considering whether to embrace the Medicaid expansion. It also follows new assurances that the Obama administration will defend federal funding for the program in upcoming deficit reduction talks with Congress. "It's a great step forward," said U.S. Health and Human Services Secretary Kathleen Sebelius, who told reporters in Washington that administration officials recently discussed Medicaid funding in a conference call with Republican and Democratic governors. Obama's Patient Protection and Affordable Care Act calls on states to expand Medicaid to most Americans earning up to 133 percent of the poverty line. The expansion would revolutionize the program, which in many states is now limited mainly to children, pregnant women and the very old. Under the reform law, Washington would fund more than 90 percent of the expansion. Republican governors have balked at the plan's potential impact on strained state budgets, fearing that Congress could act to reduce funding in future years as lawmakers look for ways to control the federal deficit. "The president has made it very clear that he understands that this framework of payment is essential to giving governors the confidence, that he would oppose any change in that framework and that he intends to keep the deal," Sebelius said. "That has given a number of folks who were understandably nervous ... some real confidence," she added. The Obama administration has taken other steps to make the expansion more palatable, proposing rules that give states greater flexibility to set charges for Medicaid beneficiaries and removing from the deficit negotiating table proposals that would have shifted costs onto states for coverage of people who already receive Medicaid benefits. Analysts say pressure on states from local healthcare industries, combined with a new Republican interest in appealing to minority voters in the wake of Obama's re-election, has also nudged some governors toward acceptance. "Gov. Kasich's decision will not only help hundreds of thousands of Buckeyes, but it will also help to break the logjam among Republican governors," said Ron Pollack of Families USA, a Washington-based consumer healthcare advocacy group. "We can expect other Republican governors to follow suit," Pollack added. The Medicaid expansion is intended to bring 16 million uninsured people into the $2.8 trillion U.S. healthcare system. But many states, which would pay less than 10 percent of the cost under the law, have balked at the potential budget impact or rejected the prospect of participating in a new government program. Kasich joins more than 20 other U.S. governors, including four other Republicans so far, in expanding Medicaid. Since Obama's re-election, at least nine governors have chosen to support the Medicaid expansion, including the Republican governors of Arizona, Ohio, Nevada, New Mexico and North Dakota. Five Republicans have chosen to oppose it. Another 15 governors - 13 Republicans and two Democrats - remain undecided, but experts say many are likely to reach decisions in the coming weeks as they propose new budgets for the fiscal year beginning July 1. The Ohio Hospital Association supported the decision to enhance Medicaid eligibility and "strengthen the healthcare safety net for thousands of Ohio families," said OHA president and CEO Mike Abrams. The association said, however, it is "disappointed" that the Kasich administration is also proposing cuts to patient care in its state budget. Reporting By Kim Palmer in Cleveland, Mary Wisniewski in Chicago and David Morgan in Washington; editing by Andrea Ricci, G Crosse