At Gov. John Kasich's urging, the Republican-led state Controlling Board voted unanimously Monday to continue funding for taxpayer-financed health insurance for more than 3 million poor Ohioans.

The legislative panel agreed to release $264 million in state funding to draw $638 million in federal matching money for Medicaid. The program provides health care to more than 1 in 4 residents.

Rep. Scott Ryan, R-Granville, said lawmakers want to keep close tabs on Medicaid, which eats up the biggest portion of the state budget.

"With this being the largest expenditure in our budget and the volatility in Washington ... it's prudent and necessary that we maintain the level of communication and cooperative efforts" with the administration, Ryan said.

The Kasich administration warned that without the money, payments to doctors, hospitals and other Medicaid providers would need to be cut 16 percent effective Jan. 1 or the program would run out of money in May; officials were recommending the latter.

Such deep cuts "would be devastating to all providers," Medicaid Director Barb Sears told the panel during a 30-minute discussion before the vote.

State budget director Tim Keen said the administration operates Medicaid in a manner that is as "effective and efficient as possible."

Sen. Bill Coley, R-West Chester, said majority lawmakers want to see work requirements and other Medicaid waivers submitted in a serious way, and soon.

Asked why he’s pressing on waivers that are already part of the budget, Coley said the administration can fulfill a legal obligation by checking some boxes, but he’s confident the administration will "push for real waivers and real change."

"The program, as it’s currently running, it can’t support itself," Coley said. "The waivers are key to getting this whole thing turned around. More than a fourth of Ohioans are on this program. We have to get the cost containments in there."

Under the legislature's directive, Keen said, the administration intends to ask federal regulators by early next year to approve two requests: to eliminate a mandate that employers provide health coverage to employees, and to impose work requirements on adults without dependent children covered under the 2014 expansion of Medicaid.

Work requirements are key to getting people feeling better about themselves and having fewer on public assistance, Coley said.

"We’ve got to get more people rowing the boat rather than just sitting in the boat," he said, adding that he also still wants to see the legislature override Kasich’s veto of a provision freezing Medicaid enrollment starting in July 2018.

The administration was going to submit its proposal to the state spending oversight panel last month but heard it might be turned down.

Shortly after the vote, panel member Rep. Jack Cera, D-Bellaire, issued a news release condemning the legislative GOP for holding health-care money hostage.

"Putting politics over public policy at the Ohio Statehouse creates uncertainty in the marketplace and puts thousands and thousands of good-paying jobs at risk," he said.

"This kind of political brinkmanship injects uncertainty into our economy, for health-care professionals and for the 3 million Ohioans who access health care through Medicaid. Taxpayers want certainty and stability in their everyday lives, not more politics."

Sen. Charlete B. Tavares, a Columbus Democrat who also is on the board, added, "Rather than holding the Medicaid program hostage with unnecessary votes, we as legislators should be examining ways to make sure that all Ohioans have access to high-quality health care so that they are ready to learn and ready to earn."

Lingering opposition to Kasich's 2014 Medicaid expansion prompted lawmakers to add a provision to this year's state budget giving the Controlling Board greater authority over Medicaid spending. Specifically, the Medicaid director must come before the board for the release of funds each fiscal year.

Next year, the Kasich administration must come back to ask for the release of another $311 million in Medicaid funding that would draw down $750 million in federal money.

The dispute dates to 2013 when the Controlling Board voted 5-2 to approve Medicaid expansion, which eventually provided coverage to more than 700,000 adult Ohioans making less than 138 percent of the federal poverty level, or about $16,000 a year for an individual. Since then, some Republicans have tried to upend the move, complaining that Kasich used the Controlling Board to get around a legislature that was unlikely to approve the expansion.

GateHouse Media Ohio reporter Jim Siegel contributed to this story.