toledoblade.com --

COLUMBUS - Ohio's plan to significantly expand government health insurance to as many as 35,000 more lower-income children has been dealt a serious blow by the federal government.

The U.S. Department of Health and Human Services told the state late Thursday that it was rejecting its request for a Medicaid waiver to raise the income eligibility threshold from the current 200 percent of the federal poverty level to 300 percent. That would translate into about $62,000 a year for a family of four.

The expansion under the federal-state health insurance program of last resort had been a highlight of the state's bipartisan $52.9 billion, two-year budget that passed with a single negative vote in the Republican-controlled General Assembly and took effect in July.

Gov. Ted Strickland said he was "appalled" by the decision. "Sadly, this is an indication that the President and his advisers are totally out of touch with the struggles faced by so many Ohio families," the former Democratic congressman said. "Let me be clear. What this means is that thousands of needy Ohio children will be deprived of access to critical health-care coverage."

The federal department did not respond to requests for additional information on its decision. The letter sent Thursday indicated only that Ohio's request was rejected because it asked for "federal matching funds at a rate other than the rate set forth in the Social Security Act."

Mr. Strickland said the state will submit a new proposal that would expand eligibility from 200 percent to 250 percent to be paid from the State Children's Health Insurance Program. That could cover nearly 21,000 children, according to Strickland spokesman Keith Dailey.

If funded under SCHIP, 70 percent of the expansion would be financed by federal dollars and 30 percent by state money. If funded under Medicaid, it would have involved a 60-40 match.

Mr. Dailey said federal Human Services Secretary Michael Leavitt has indicated this scaled-back approach likely would win approval. The governor is leaving the door open to possible legal action to try to force the federal government's hand when it comes to the other 50 percent expansion.

Karen Stivers, spokesman for House Speaker Jon Husted (R., Kettering), said the GOP-controlled Ohio House would continue to work to maximize federal programs to expand healthcare coverage for children.

"As recently as the end of November, the governor's office had indicated they were having positive discussions and that the programs would be ready to go at the beginning of the year," she said. "Unfortunately, that has not been the case. We knew it was a long shot, but they assured us all signs were go."

U.S. Sen. Sherrod Brown (D., Ohio) of the Senate Health, Education, Labor, and Pensions Committee, blasted the decision: "The Bush Administration has once again displayed a stunning indifference to the well-being of children from working families," he said. "It's both far-fetched and offensive that this administration thinks they know better than Ohioans when it comes to the needs of our kids."

Contact Jim Provance at:
jprovance@theblade.com
or 614-221-0496.

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