Measure Means Major Changes for California

TIMES STAFF WRITERS

Though lauded by Republicans as the cornerstone of their plan to restrain rampant government and wipe out the federal deficit by the year 2002, the gargantuan budget bills passed by the House and Senate would hit California like a freight train, Democratic opponents warned--though sponsors of the legislation brushed aside such gloomy predictions.

For California, the nation's most populous state with the most illegal immigrants and a crushing number of medically uninsured, the federal rollbacks would slice deep into health care for the elderly, disabled and poor, while fundamentally altering the quality of life for hundreds of thousands of children, the bill's detractors said.

"The safety net for poor children will be savaged and millions of people will be added to the numbers of uninsured around the country, a great portion of them in California," said Rep. Henry A. Waxman, the Los Angeles Democrat who crafted much of the landmark health care legislation that the new GOP majority now is attempting to revise.

"My worry is that middle-class Americans, the ones who vote, will turn away and refuse to notice what happens to the poor," Waxman said.

Republican sponsors of the budget legislation, a measure approved by the House on Thursday and a somewhat different bill passed by the Senate late Friday, disagreed.

"The overall spending reductions are going to stimulate the economy and the benefits are going to be felt in California and everywhere else," said Armando Azarloza, spokesman for Rep. Howard P. (Buck) McKeon (R-Santa Clarita). "It will make homes more affordable, cars more affordable. . . . Every single consumer will benefit from the lower interest rates."

GOP Notes New Funds

California Republicans focused on $3 billion approved by the House that would relieve several states of the cost of providing health care to illegal immigrants. About half of that money would go to California over the next seven years.

"The funds approved . . . are an important first step toward restoring fairness to the states who have been wrongly burdened with the cost of the federal government's failure to secure the border against illegal immigrants," said Gov. Pete Wilson.

"What we have created is a pot of money to pay hospitals for the services the federal government requires them to provide," said Rep. Brian P. Bilbray, a San Diego Republican. "It is unprecedented."

In San Diego, House Speaker Newt Gingrich (R-Ga.) recently announced with much fanfare a proposal for a $6-billion fund. The House settled on half that, and area Republicans vowed to try to get more.

"It's a step in the right direction," said Rep. Christopher Cox (R-Newport Beach), "but it still does not put the illegal alien cost issue to rest."

While state officials say they desperately need funds to cope with 1.4 million illegal immigrants--nearly half of the illegal population nationwide--opponents of the Republican budget cuts say that $3 billion will not be nearly enough to offset cuts in other services, most notably in the areas of Medicare, Medicaid and welfare.

"This is an immoral 'reconciliation' bill," Sen. Dianne Feinstein said Friday. "Only in Washington-speak is it any kind of reconciliation. To take cuts as deep as these is unnecessary. . . . The only reason they are this deep is to give [tax cuts] to the very affluent and take away the earned-income tax credit from the very poor."

Bargaining Is Next Step

The legislation is called a "reconciliation" bill because it is designed to reconcile actual federal spending with the budget blueprint that Congress approved in the spring. That blueprint called for a balanced budget by 2002.

The House and Senate budget bills, while identical in their goals, mandate somewhat different packages of spending cuts to get there. A House-Senate conference committee will have to forge a compromise, but President Clinton has said he will veto whatever emerges as too harsh on such social programs as education, health care and job training.

A veto would trigger a round of bargaining between Clinton and congressional Republican leaders. California Democrats are not optimistic about the outcome of any compromise that Congress and the White House might reach.

"I am convinced that whatever differences there may be between the House and Senate bills, California will be a big loser over all," Waxman said.

Some state health officials, however, said they hope the gap between Clinton and congressional Republicans would prove so wide that most of the controversial spending proposals would wither and die.

"With the President threatening to veto the bill anyway, it's hard to take this really seriously," said Vic Huerta, executive director of the California Health Federation in Washington, which represents community health centers in California. "If it would stand in its present form, it would be a disaster."

Among the reverberations that could be felt in California:

* Medicaid cuts would total as much as $18 billion over seven years. Public hospitals could lose $2.3 billion, with children's hospitals falling $900 million short by 2002. More than 1 million children would lose Medicaid coverage. The cuts would also be felt by people with AIDS, and California has among the highest incidence of AIDS in the nation.

* California would lose more than $32.5 billion in Medicare money over seven years. Los Angeles County, with just under 1 million Medicare beneficiaries, would lose $7.5 billion. UCLA Medical Center would lose $113 million in total Medicare payments over seven years.

* The impact on children would reach from the availability of public housing to protection from drugs and drug-related crimes. Some 2,300 homeless children in California would be denied assistance.

* Block grant funds to California for social services, services for the elderly, child care, adoption programs, child-abuse prevention and child welfare would be cut 20%, or $3.3 billion over seven years.

* Taxes would rise for nearly 3 million California families by an average of about $500 each year over seven years because of curtailments in the earned-income tax credit, which benefits the working poor.

* California families would get a $500-per-child tax credit if their annual incomes were under $200,000 under the House version of the legislation and $75,000 for single parents and $110,000 for married couples under the Senate bill. Both bills would reduce the capital gains tax rate from 28% to 19.8%.

* Elimination of the interest subsidy on student loans would cost California students $44.5 million a year over seven years.

"Cuts this deep would have made it impossible for my family to get back on our feet 28 years ago," said Rep. Lynn Woolsey (D-Petaluma), a former welfare mother. "The Gingrich Republicans choose to punish children because they are poor instead of investing in their health and education so they can lead strong, healthy and productive lives."

Health Care Fears

The future of a $364-million Medicaid waiver recently granted by Washington to save the Los Angeles County public health care system from collapse is also up in the air, Waxman said. Because the budget plans propose to convert Medicaid into a state-administered program, the deal would have to be renegotiated in Sacramento.

Even if the waiver is salvaged, looming Medicaid cuts envisioned by Congress could pose a health crisis as bad as or worse than that the one the county just weathered, Waxman predicted.

"We are looking at the possibility of L.A. County Hospital being unable to stay open, of Childrens Hospital in Los Angeles forced to close," Waxman said. "And these health cuts will not just hurt the poor. Everybody is in danger if we don't have trauma and burn centers and emergency hospital care available to us anymore."

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Times staff writers James Bornemeier and Gebe Martinez contributed to this story.

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