Dems Cut Health Subsidies to Salvage Jobs Bill

Laid off workers would lose subsidies to help buy health insurance and states would be denied billions in federal aid under a plan by House leaders Thursday to trim a bill extending jobless benefits.

Democrats struggled to extend jobless benefits for people who have been out of work for long stretches as lawmakers worried about the growing budget deficit balked at the price tag of the package.

The cuts would reduce the package by about $31 billion, to about $112 billion. Business tax increases would pay for some of the bill, which would still add more than $50 billion to the deficit.

House leaders hope to vote on the package as early as Thursday evening.

One former holdout, Democrat Henry Cuellar of Texas, said the cuts would probably be enough to win his vote. House leaders hoped to vote on the package as early as Thursday evening.

"The bigness issue and the deficit issue has been addressed," Cuellar said. "I'm leaning toward a 'yes.'"

Congress enacted a 65 percent subsidy last year to help laid off workers pay for health insurance as part of the COBRA program for up to 15 months. The subsidies, which have been extended several times, expire next week.

When the subsidy was first enacted, Congress estimated it would benefit 7 million laid off workers and dependents. It would have cost $6.8 billion to extend it through November.

Democratic leaders have also proposed eliminating $24 billion in aid to cash-strapped states to help cover Medicaid expenses, Cuellar said. Congress increased the federal government's share of the federal-state insurance program for the poor last year.

The increased funding expires at the end of this year. The bill had called for extending it through June 2011, at a cost of $24 billion.

Governors in many states are counting on that money to balance their budgets, Pennsylvania Gov. Edward Rendell said at a Capitol Hill press conference Wednesday.