Steep Cuts Sought in Welfare, Health Programs for Poor : Benefits: Gov. Wilson’s proposal could take a heavy toll on Orange County’s 87,000 recipients. He also unveils medical plan for uninsured preschoolers.

Stepping up his assault on welfare costs, Gov. Pete Wilson on Thursday proposed steep cuts in basic aid and health care benefits for the state’s poor, but tempered his proposals with a preventive health plan for uninsured preschoolers.

The governor, who last month announced that he will sponsor a November initiative that would drastically reduce welfare payments, surprised advocates for the poor by inserting major elements of the plan into his budget and challenging the Legislature to pass them immediately.

To keep his budget proposal in balance by saving more money, Wilson said, lawmakers would have to pass by March 1 an array of welfare cuts, including a 10% reduction in grants from the Aid to Families with Dependent Children program. His proposal would reduce the basic monthly payment for a family of three from $663 to $597, but the cuts would be offset slightly by an estimated $20-a-month increase in federally funded food stamps.

In Orange County, officials and advocates for the growing local population of welfare recipients warned that the governor’s proposal could take a hard toll at an already difficult time. More than 87,000 Orange County residents are receiving welfare payments--a dramatic increase of more than 25% from just a year ago.

Those county residents would lose about $66 a month, and officials say many can ill-afford to give up that money in the midst of a recession.

“It’s devastating,” said Dave Levy, a member of the Orange County Housing Now! coalition, which advocates creation of more low-income housing. “The amount of money that is available from welfare won’t pay for the rents in Orange County anyway. Taking away even that money will put some people on the street.”

Wilson also called on the Legislature to approve his proposals to eliminate a series of health care benefits offered by Medi-Cal, the state and a federally financed program that provides medical care for the poor. The services targeted for elimination include adult dental care, psychological treatment, chiropractic care, podiatry, occupational therapy, acupuncture and some medical supplies.

But advocates for the poor accused the governor of trying to stifle debate on the welfare issue by pressuring the Legislature to act quickly or face the prospect of budget shortages higher than the $5 billion that has been predicted.

“It’s just fantasyland to think that this is going to be effective March 1,” said Casey McKeever, attorney for the Western Center on Law & Poverty. “I guess he’s assuming there is no legislative committee process to hear these bills, that there’s no analysis, no debate. It’s just done.”

Wilson acknowledged that a large portion of his budget cuts are aimed at services for the poor, but he insisted that the reductions in health and welfare programs are necessary to keep his spending plan in balance and curb what he called runaway costs. With more than 2 million Californians on welfare, costs for the program have skyrocketed, he said, from $3.7 billion in the 1986-87 budget year to $5.6 billion in the 1991-92 year.

“We cannot continue on autopilot spending because eventually you reach a point where you’re . . . consuming the entire tax dollar (for welfare services),” he said.

While some of the increased costs can be blamed on the recession, Wilson said even without the economic downturn, California would have to reduce a welfare caseload that has been growing at a faster rate than the state’s population.

Wilson said he had attempted to moderate the impact of the spending reductions on the poor by proposing a new $30-million program to help welfare recipients get jobs and by recommending a restructuring of job programs so they would place more emphasis on preparing poor mothers for specific types of work.

But in announcing his budget proposals, Wilson put his greatest emphasis on his plan for a new health care program for poor children aged 2 to 5 who are not eligible for Medi-Cal and not covered by private insurance.

The program, to be called CheckUp, would provide subsidized private health insurance initially for an estimated 300,000 children of the working poor. Insurance payments would be based on family income. A family earning 200% of the federal poverty level or less would pay no premiums while those earning between 200% and 300% would make some payment based on their income. Families earning more than 300% of the poverty level would bear the entire cost of the premium, which has yet to de determined. For a family of four, the federal poverty level is $13,400 a year.

Health care advocates praised the proposal, calling it the first step toward providing health care for the working poor who are uninsured.

But while applauding the idea, Maryann O’Sullivan, executive director of Health Access, a coalition of consumer groups advocating health care for all Californians, said she was concerned that the program did not go far enough.

O’Sullivan said it is “misleading” to tell the public that the program would provide medical insurance, when the coverage it provides only includes outpatient services and does not cover hospital care.

State Health Director Molly Coye said state officials had excluded hospital care because it would have made the program too expensive.

Times staff writer Jim Newton in Orange County contributed to this report.