Katrina Health Care Bill Blocked

With Gulf Coast governors pressing for action, Senate Finance Committee members complained Wednesday that the Bush administration is blocking a bipartisan $9 billion health care package for hundreds of thousands of evacuees from Hurricanes Katrina and Rita.

"We've got people with needs today," Louisiana Gov. Kathleen Blanco said. She was joined by Mississippi Gov. Haley Barbour and Alabama Gov. Bob Riley, who testified via a teleconference hookup, in urging quick action on the legislation.

In her opening statement, Blanco did not mention former FEMA director Michael Brown, who on Tuesday had blamed state and local officials in Louisiana for not responding appropriately to the storm. She declined later to respond to Brown's accusations when given a specific opportunity by Sen. Kent Conrad, D-N.D.

"We are looking forward, not backward, " she said.

Instead, CBS News correspondent Bob Fuss (audio) reports she focused on the needs of her state.

Sen. Charles Grassley, R-Iowa, chairman of the committee, said four or five senators have been blocking action on the bill after the Bush administration raised objections to provisions that would extend Medicaid coverage to thousands upon thousands of adults who otherwise would be uninsured, including those whose applications have been rejected in Louisiana.

"We can work with everybody, including the administration, or against them, and I'm prepared to go either way," said Sen. Trent Lott, R-Miss. "But I'm going to look after our people first."

Administration officials contend the Medicaid extensions are not needed because a newly created fund could be tapped whenever health care providers care for uninsured victims of Katrina between Aug. 24th and Jan. 31, 2006.

But the administration has not revealed how much money will be in the fund, and senators questioned both the funding commitment and whether the administration has the authority to establish such a fund.

Earlier Wednesday, Blanco asked the committee for help in rebuilding her devastated state, saying Hurricanes Katrina and Rita "knocked us down but they did not knock us out."

Blanco said 40 percent of Louisiana's businesses were lost or damaged in the storm and said the state's most pressing need is jobs.

"That's what we need," she said. "That's exactly what we need in the face of this suffering and hardship — jobs."

Across the Capitol, a House panel was hearing pledges from government auditors that they will closely examine millions of dollars in contracts the Bush administration awarded to politically connected companies for Hurricane Katrina relief.

The inspectors general from half a dozen agencies, as well as officials from the Government Accountability Office, on Wednesday were addressing a House subcommittee on the Katrina cleanup and announcing several new audits to combat waste and fraud.

They are pledging strong oversight that includes a review of no-bid contracts and close scrutiny of federal employees who now enjoy a $250,000 — rather than a $2,500 — purchase limit for Katrina-related expenses on their government-issued credit cards.

"When so much money is available, it draws people of less than perfect character," H. Walker Feaster, inspector general of the Federal Communications Commission, said. "It underscores the need for internal controls of the money going out."

The joint appearance of government auditors comes amid a flurry of legislation pending in Congress that would create additional layers of oversight to the Katrina contracting and award process.

It also comes amid growing charges of favoritism that critics say led to government missteps in the wake of the Katrina disaster.

In a House hearing Tuesday, both Republicans and Democrats assailed Brown, who critics say lacked proper experience for the job, for his performance in handling emergency aid. Brown admitted making some mistakes but placed the brunt of the blame on the Louisiana governor, the New Orleans mayor and even the Bush White House that appointed him.

"I'm happy you left," said Rep. Christopher Shays, R-Conn. "Because that kind of, you know, look in the lights like a deer tells me that you weren't capable to do the job."

"You get an F-minus in my book," said Rep. Gene Taylor, D-Miss.

Blanco on Tuesday had vehemently denied that she waited until the eve of the storm to order an evacuation of New Orleans. She said her order came on the morning of Aug. 27 — two days before the storm — resulting in 1.3 million people evacuating the city.

"Such falsehoods and misleading statements, made under oath before Congress, are shocking," Blanco said in a statement Tuesday.

Brown acknowledged making mistakes during the storm and subsequent flooding that devastated the Gulf Coast. But he accused New Orleans Mayor Ray Nagin and Blanco, both Democrats, of fostering chaos and failing to order a mandatory evacuation more than a day before Katrina hit.

"My biggest mistake was not recognizing by Saturday that Louisiana was dysfunctional," Brown told a special panel set up by House Republican leaders to investigate the catastrophe.

"He said that he asked for the money, but he wasn't given the money to deal with it," Shays said Wednesday on CBS News' The Early Show. "He also said that the department was eviscerated in the last three years, and he spoke up privately about it but never publicly made it an issue."

Asked about Brown's claim that his agency's funding had been cut and that state and local officials were to blame for many response failures, White House spokesman Scott McClellan Wednesday said, "Washington tends to get caught up on bickering and finger-pointing. The president is focused on problem-solving."

Lawmakers were turning their attention to the lucrative Katrina contracts.

In the weeks after the Aug. 29 storm, more than 80 percent of the $1.5 billion in contracts awarded by FEMA for Katrina work were handed out with little or no competition or had open-ended or vague terms that previous audits have cited as being highly prone to abuse.