President Bush’s budget will include $140 billion to expand health coverage for the uninsured but also will seek about $45 billion in savings from the Medicaid program for the poor, a top government official said on Thursday.

Bush’s new Secretary of Health and Human Services, Mike Leavitt, said the budget blueprint for the coming 2006 fiscal year to be released on Monday would also seek to give states more flexibility in how they cover Medicaid patients.

Leavitt said overall Medicaid spending would continue to rise by more than 7 percent annually - totaling $5 trillion of spending by states and the federal government for the next decade - but proposed changes in state accounting, regulations on assets and drug payments could produce savings.

Bush in the past has proposed capping or limiting the federal portion of the Medicaid program in exchange for greater state flexibility.

The $140 billion over 10 years would be new spending that would aim to cover 12 to 14 million uninsured Americans. The number of uninsured Americans rose by five million, to 45 million, during Bush’s first term.

The plan would build on proposals Bush has made in previous budgets, much of which was never enacted into law by Congress. Those included tax credits for low-income people to buy insurance and small business insurance purchasing pools.

Leavitt noted that some of the uninsured are getting taken care of through expansion of community health centers in poor areas.

MEDICAID SAVINGS

On Medicaid, Leavitt outlined three sources of savings: $15 billion to eliminate Medicaid overpayment for drugs; $40 billion from ending “creative accounting” by states; and $5 billion by tightening rules on how the elderly transfer assets so Medicaid will pay for nursing home care.

Leavitt has repeatedly said he believes that the system can be made more innovative and efficient to cover more people with fewer resources.

Of the savings, $15 billion would be reinvested, used to cover more poor and uninsured children and to making it easier for the elderly and disabled to receive home-based care instead of in institutions, he said.

Under Medicaid, states must cover certain “mandatory” groups of poor and disabled people, but then they can also expand coverage to certain “optional” groups. Leavitt said the mandatory system would remain intact but states would have more freedom in how to cover optional people and what services to include.

Democrats - and some Republicans - have resisted attempts to turn the optional portion of Medicaid into a block grant system.