County Seeks to Avert Fiscal Meltdown : Budget: Supervisors meet with U.S. officials in effort to obtain health care funds. Local legislators unveil unified state bailout effort.

Federal health officials met privately with Los Angeles County supervisors Tuesday to discuss providing at least $200 million in desperately needed health care funds, while local Democrats unveiled a unified legislative effort in Sacramento to help bail out the troubled county.

But there was no assurance that the package of state bills--which include a local cigarette tax and diverting hundreds of millions of dollars in transportation funds to the county--will win Republican support despite efforts to tie it to a bailout package for bankrupt Orange County.

As legislators bickered over the bailouts at the state Capitol, a high-level delegation of federal officials made the rounds at the county Hall of Administration responding to the county’s pleas for help from Washington.

County officials are aggressively seeking a waiver of federal regulations that would provide more money if the county moves from expensive treatment of patients in hospitals to less costly outpatient care at clinics and health centers.

Although the supervisors heard encouraging words about the Clinton Administration’s interest in helping the county restructure its health system, they were told that they must still clear many hurdles, including state and federal approval.

“We did not approve anything per se today,” said a federal official familiar with the daylong talks behind closed doors.

The official, who asked not to be identified, said the Administration would “look favorably” on a recalculation of highly complex federal funding mechanisms that could ultimately give the county the additional money.

That federal money, however, would come with many strings attached. For instance, the supervisors were told that no federal funds can be used to provide health care for illegal immigrants--as the county now does--except in emergencies and some other circumstances.

But county officials were upbeat after the meetings. They said they hope that guarantees of the money will come in time to avert a further meltdown of the health care system, including closing hospitals.

“I didn’t get them to sign in blood yet,” Board of Supervisors Chairwoman Gloria Molina said of the federal delegation, which included top officials from the U.S. Department of Health and Human Services. “But they gave me as many assurances as I could get in a verbal meeting.”

Although the details were far from clear, including how much money the county would receive, Molina and other county officials said they were optimistic.

“But one never knows,” Molina said. “Until I get the President to swear his life on this . . . there is always some bureaucrat who can stand up at the end and say you can’t do this.

“If they don’t give us the money, guess what we do on Tuesday?” Molina added, alluding to the hospital closure that could be ordered at next week’s Board of Supervisors meeting.

Last month, the supervisors voted to close all six county comprehensive health centers, as well as 28 of 39 health clinics. The federal money would do nothing to change that since it was already included in the county’s $12-billion budget passed Aug. 1, nor would it interfere with an effort to have private health care providers run some of the health clinics.

Supervisor Zev Yaroslavsky said the meeting was “encouraging and positive” but that the federal funding must be used to “restructure the way we deliver health care in a more effective and more efficient manner consistent with what’s happening in health care elsewhere in the United States.”

His colleague, Supervisor Yvonne Brathwaite Burke, said such change would be controversial. “They are requiring a number of things of us in terms of restructuring that will probably cause a lot of discussion, and a lot of people will not be happy,” Burke said.

Already, the county’s biggest employee union staged another demonstration at the supervisors’ board meeting Tuesday, demanding that the board save county jobs by forcing private health care providers now negotiating to take over county clinics and health centers to hire union workers.

“We should not have to try to beg or force our way into any partnership,” said Gilbert Cedillo, general manager of the Service Employees International Union, Local 660. The partnership proposal spearheaded by health czar Burt Margolin, he said, “should not be utilized as a union-busting maneuver.”

Cedillo, whose union represents half the county’s 85,000 workers, said such partnerships must have public oversight and accountability, to prevent them from becoming commercial businesses whose only concern is making money from the sick and injured poor.

Keeping the county workers, he said, would ensure a smooth transition from public to private operations, and would allow a continuity of care for people used to seeing specific nurses and other health care providers familiar with them and their community.

Although they did not address Cedillo’s comments at the supervisors’ meeting, Chief Administrative Officer Sally Reed and several supervisors responded that such conditions could torpedo the entire privatization effort.

No matter how much they want the county employees to stay on the job, they said, the private agencies will not enter into an agreement containing such a condition of acceptance.

Also, they said, county lawyers have concluded that they are legally prevented from forcing the private health care providers to hire county workers, a contention Cedillo and several labor lawyers disputed.

“To the extent we can protect our own employees, it’s a good thing to do,” said Yaroslavsky, who said his staff met with union leaders Monday and was told there would be no compromise.

“There was no give; it was honor our contracts as is,” Yaroslavsky said. “I’m sure there is a middle ground, but I haven’t heard that from them.”

While hundreds of union members protested in Los Angeles, a dozen Democratic legislators in Sacramento promised to spend the last three days of the legislative session in a final push to bail out the county.

Assuming that all of the measures become law, the county would pull in $869 million over the next five years, with more than $200 million made available this year to shore up its teetering public health system.

The most controversial of their bills would transfer to the county hundreds of millions of dollars from the Metropolitan Transportation Authority--which the MTA as recently as last week declared it opposed, except for $50 million. Other components in the package call for more federal funds for hospitals, a new county tax on tobacco products and a reduction in county matching funds needed to receive state tobacco tax revenues.

But they did not appear to be swaying critics who called most of the proposals unattainable, unwise and unwanted, among them Gov. Pete Wilson.

Wilson is threatening to oppose linking relief measures in Los Angeles County to similar measures being pursued for Orange County.

“Those are two separately created problems,” said Paul Kranhold, the governor’s press secretary. “L.A. County is experiencing a long-term, year-after-year failure to make expenditures meet revenues. And Orange County is experiencing what is in effect the result of an overnight exodus of hundreds of millions of dollars.”

The attempt by Los Angeles County Democrats to tie together the fate of rescue proposals for both counties, Kranhold said, “will only complicate passage of both of them.” Already, some Orange County legislators are concerned that efforts to bail out Los Angeles County could jeopardize their financial rescue plan.

Kranhold, however, said the governor would veto a joint proposal for the two counties if the Los Angeles plan remained in the form that the Democrats unveiled Tuesday. Wilson’s approval of any new tax, including levies on tobacco, introduced by Assemblywoman Barbara Friedman (D-North Hollywood), is “out of the question,” Kranhold said.

Times staff writers Jeffrey L. Rabin and Jack Cheevers contributed to this story.