More than any other large metropolitan area, L.A. County relies to a great degree on federal dollars to support its health care system a trend that increased in the 1990s as the recession cut into state and local revenues.

"The federal government (is where) we really tapped into for funding because there was no one else to turn to," said Donald C. Petite, controller for the county's Department of Health Services.

Federal health care funds were boosted last year by the County Medicaid Demonstration Project, also known as the 1115 Waiver.

The program, brokered by Gov. Pete Wilson and the Clinton Administration following the county budget shortfall for the 1995-96 fiscal year, offered $364 million for county health care the first year (and lesser amounts in following years), but required the county to make the transition from a system based on inpatient care to one based on outpatient services.

"It's the smarter, most effective way of providing health care," said Burt Margolin, former health czar for the county, adding that public health care systems are starting to imitate private health maintenance organizations in emphasizing preventive care.

For the 1997-98 fiscal year, L.A. County is expecting $1.01 billion in federal funding for its hospitals, medical centers and health care programs.

That accounts for more than 43 percent of the county's $2.3 billion health care budget up from this fiscal year, when Washington contributed 38 percent of total health care funding.

Petite said federal funding started going up significantly in the early '90s because the county having lost a large share of its own revenues when California began seizing a greater share of property taxes from counties took greater advantage of federal health care programs.

The county started facing a series of cuts in federal funding this fiscal year, which runs through the end of June. Some of the cuts came in the form of reduced federal funding for public hospitals serving a large number of poor people, but most came from a massive reduction in county health services. This meant the county was able to collect fewer subsidies from the federal government.

County officials say they are optimistic that the Department of Health Services will regain much of its lost federal funding through a series of proposals, including reinstatement of lost funding for public hospitals serving a high number of Medicaid and uninsured patients, as well as continued funding for the 1115 Waiver program.

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