(Columbus) - A Republican-controlled legislative panel will drop Gov. John Kasich's proposal to expand the Medicaid program from the state's two-year budget plan, The Associated Press has learned, as advocates for extending the health care coverage to thousands more low-income Ohioans prepared to rally against the move.

A person with knowledge of the budget negotiations confirmed to the AP on Monday that House lawmakers will strip the idea from their version of the state spending blueprint. The person requested anonymity because the information had not yet been made public.

The House version of the Republican governor's $63.2 billion, two-year spending blueprint is expected to be unveiled Tuesday afternoon by the chamber's budget-writing committee.

The House Finance and Appropriations Committee is also expected to include an additional $50 million per year for mental health and addiction services, the person said.

House lawmakers were also expected to strip a tax increase on oil and gas drillers and sales taxes on professional services out of Kasich's budget and to significantly rewrite his proposed school-funding formula.

The Medicaid expansion is one of the key components of the federal Affordable Care Act. Of the nearly 30 million people expected to gain insurance coverage under the law, about half would get it from the Medicaid expansion. A Supreme Court ruling allowed states to decide for themselves whether to expand the program.

Kasich in February proposed going forward with expansion, contending that Medicaid expansion was the way for the state to recapture Ohio taxpayers' federal money to provide medical care for those who were most vulnerable.

Roughly 366,000 Ohio residents would be eligible for health coverage under the expansion beginning in 2014. And the state would see $13 billion from the federal government over the next seven years to cover those newly eligible for Medicaid.

The federal law is using health insurance exchanges to allow higher-income people to buy health plans. But without the expansion, there would be a group of people who would likely go uncovered. With the expansion, an adult without children earning up to $15,415 can be added to Medicaid.

The federal government offers a major incentive: It has agreed to pay the entire cost of the expansion for three years and gradually phase down to paying 90 percent of the cost, still well above the Ohio's current level of 64 percent.

Even at those generous rates, however, some state lawmakers have said they fear being stuck with long-term costs. Many are averse to Democratic President Barack Obama's law and resistant to expanding government programs.

Advocates for Medicaid expansion were gearing up to defend the proposal at a rally Thursday at the Statehouse.

One supporter said the House's decision makes use of state dollars when federal ones are available, potentially cutting into money that could have gone for education, child welfare and other needs.

"We are glad that members of the House understood that a very important population that would have been assisted by the Medicaid expansion needed these dollars," said Gayle Channing-Tenenbaum, co-chair of Advocates for Ohio's Future. "However, these dollars do not do anything to address the needs of veterans, or those who have lost their jobs and are in that land between 50 and 65 (years old) with no insurance whatsoever and nowhere to turn but emergency rooms for their health care."

An organizer with the Ohio Alliance for Health Transformation said the coalition of religious and business groups, insurers, community organizations and others planned to try to persuade GOP lawmakers to reconsider their decision.

"We're going to focus on people not politics in hopes that our final pleas to the House will make a difference," said Jon Allison, an attorney working on behalf of the coalition.

Allison said he hadn't heard firsthand that the expansion was being removed. But he said, "I've spoken with others who have had direct conversations with House Republicans and all indications are that expansion will not be a part of their version of the budget."

The loss of the federal funds could mean less health care services, especially for the poor, said John Alfano, chief executive of LeadingAge Ohio, a trade group representing Ohio's nonprofit nursing homes and assisted living centers.

Health care providers may be forced to cut employees or services, he said.

"If caregivers have to be cut that means level of care goes down," Alfano said. "Somebody has to be connecting these dots."

The federal-state health Medicaid program already provides care for one of every five residents in the state. Currently, 2.3 million people in Ohio are covered under the nearly $19 billion program.

(Copyright © 2013 by the Associated Press, all rights reserved.)