Official Calls Bailout for County Dead

A key Bush administration official says the government will not give Los Angeles County the $350-million bailout it seeks to keep hospitals and clinics open, a stance that could trigger a four-front battle among the county supervisors, Gov. Gray Davis, the federal government and private hospitals for increasingly scarce health funds.

A week before county and state officials are slated to fly to Washington to discuss the county’s request for a third bailout for its health system, Tom Scully, the director of the Center for Medicare and Medicaid Services, said the deal is dead on arrival.

“We don’t want to create a meltdown of the L.A. County hospitals, but I have to explain to Houston and New York and St. Louis and Nashville why L.A. County is getting a special deal,” Scully said in an interview with The Times. “I don’t think it’s our responsibility to just write them a check and bail them out.”

Scully said the administration is willing to help with some money and is eager to help the local government retool its health system to grapple with a looming $750-million deficit. But the offers of assistance that Scully described would come with a hitch.

The money Scully proposes giving Los Angeles--apparently too little to keep all county hospitals open--would come from pots of cash that are claimed by Sacramento and private hospitals that treat large numbers of uninsured patients. Scully has identified a long-delayed, $175-million lawsuit settlement with private hospitals over reimbursement rates and a 20-year-long federal program that gives extra money to California hospitals that care for the poor as possible sources of new county money.

The hospitals and the Davis administration are digging in their heels. The Davis administration delayed forwarding Los Angeles County’s bailout request to Washington for more than a month. State officials said they sat on the proposal partly because they feared that the Bush administration response would jeopardize California’s health by shifting around money in an already underfunded system.

Scully’s stance, said Grantland Johnson, Davis’ secretary of health and human services, will “basically jeopardize the viability of the California health-care system.”

Jan Emerson of the California Hospital Assn. said it is improper for Scully to link the matters. “Mr. Scully is trying to tie monies that have nothing to do with L.A. County’s problems,” she said.

One effect of the Bush administration position has been to ratchet up the tension between local officials, who would be at least somewhat helped by it, and state officials, whose programs it would cut.

County officials face a self-imposed Oct. 29 deadline to decide whether to close dozens of clinics and Harbor-UCLA and Olive View-UCLA Medical Centers to balance their budget. For months, they have complained of being unable to secure meetings with Davis or his health and human resources secretary, Johnson.

As a result, Scully’s suggestion to find money in the private hospital system or elsewhere could offer some relief, though at the cost of further political debate.

Supervisors on Tuesday formally asked Davis to call a special session of the Legislature to deal with health issues, and to declare Los Angeles County “medically underserved”--a designation that some supervisors hope could free up more funding for the county’s about 2 million uninsured residents.

“It’s unfortunate the governor has yet to be attentive to this,” Supervisor Gloria Molina, a Democrat, said of fellow Democrat Davis, who is battling Republican Bill Simon Jr. for reelection next month. “He is turning his head away ... from dealing with this.”

Despite Scully’s repeated statements over the last several weeks that he would not give the county a third bailout--it received two under the Clinton administration--county health officials continued to hope for some aid from Washington. They said that Scully and others in the Bush administration had given encouraging signs during meetings in May and that they are confused by his recent statements.

“At some point,” said county health spokesman John Wallace, “the politics are going to have to take a back seat to the fact that we’re going to lose our health system.”

Scully said that he does want to help Los Angeles and be fair to California, but that the county is the only one in the nation that has a direct agreement for additional funds from his agency. All other waivers of Medicaid rules go through states. More appropriate, he said, would be onetime money to help Los Angeles reform its health system without a rocky landing.

“Of course they want us to come and write them a check for a couple of hundred million bucks. That’s not the way it works,” Scully said. “Only Congress can write a check to L.A. County for a couple hundred million dollars.”

Scully said he has ideas about other existing programs that could help Los Angeles but declined to identify them. He added that California has flexibility to help Los Angeles because it spends $24 billion on Medi-Cal. Indeed, Scully has yet to approve the state’s own waiver for the long-standing Select Provider Contracting Program, which provides money to hospitals to care for the poor. The waiver was submitted in September 2001, and Scully said California should use some of that money--which the state estimates at $800 million--to help Los Angeles County.

But California anticipates a deficit of at least $10 billion next year and is not eager to bail out its most populous county. The state kicked in $300 million as part of the last federal bailout, in 2000.

Johnson, Davis’ health and human resources secretary, dismissed accusations of inattentiveness.

“The fact that some people are very frustrated and have high anxiety, I can understand it,” he said.

“I think it’s simply without a basis for suggesting that this administration has not been exercising leadership and working on L.A. County’s behalf,” he said. “One has to attribute those comments to being uninformed and certainly inaccurate, to say the least.”