Washington wary of gov.'s health plan

The sheer size of the federal allocation Schwarzenegger's plan would require is raising eyebrows.

"That's a big number on an annual basis," said Sen. Judd Gregg of New Hampshire, the ranking Republican on the Senate Budget Committee. "California hasn't yet passed a law [implementing the governor's plan], but when they do, I would think people are going to take a deep breath."

The cost of helping states fund their health plans has already attracted the attention of budget cutters because it is complicating President Bush's stated goal of balancing the federal budget in five years. In his new budget, scheduled to go to Congress on Monday, Bush is expected to call for a substantial slowdown in federal healthcare spending. Some of the cuts Bush proposes could affect programs Schwarzenegger is counting on to help pay for his plan, such as Medicaid.

Because California is the most populous state, its plan is by far the largest. But four other states are pursuing initiatives to provide health insurance for all their residents. More are expected to follow this year. That could set off a scramble for increasingly scarce federal dollars.

"When they do the math and figure out just exactly how much federal money will be flowing to California

Nichols and other experts say state attempts to reform healthcare are likely to require tens of billions in additional spending in two federal programs that operate as partnerships with the states -- Medicaid and the State Children's Health Insurance Program, or S-CHIP. These programs are different in every state, and operate under a complex series of laws, rules and formulas for federal matching funds.

Medicaid is the nation's main healthcare program for the poor, paying for medical and long-term care for more than 55 million people, according to the Kaiser Family Foundation. S-CHIP covers as many as 6 million children a year, mostly in low-income working families that earn too much to qualify for Medicaid. In California, the programs are known as Medi-Cal and Healthy Families.