WASHINGTON--In the wake of Hurricane Katrina, Congress is postponing legislation that would cut Medicaid and is instead considering expanding federal funding of the program.

The fiscal year 2006 budget resolution had a deadline this Friday for the House Energy and Commerce Committee and the Senate Finance Committee to produce legislation that would reduce $35 billion in federal entitlement spending--including $10 billion from Medicaid--over the next five years.

"At a time when millions are displaced and seeking federal and state assistance, we believe it is inappropriate to move forward on ... a legislative package that would cut funding for Medicaid, food stamps ... housing and education," Sens. Gordon Smith, R-Ore.; Olympia Snow, R-Maine; Jeff Bingaman, D-N.M.; and Blanche Lincoln, D-Ark., wrote in a letter last week to Senate Finance Committee Chair Charles Grassley.

Although the original cuts may now be delayed by a few weeks, some legislators point out they are still necessary, citing a need to balance the budget--especially with the costs of Katrina adding up. Congress has already approved $62.3 billion in hurricane aid, and many experts are estimating that federal costs for the disaster could pass $100 billion.

Meanwhile, proposed legislation in the House and Senate aims to expand federal Medicaid funding to states that suffered damage from Katrina, as well as to states hosting evacuees. With tens of thousands of victims fleeing the Gulf Coast region, some states have warned that they will have trouble providing health care to hurricane survivors if the federal government does not foot the bill.

"The states directly affected by Katrina, and those hosting the survivors, will not be able to put up their match payments due to the fiscal crisis that Katrina has created," said Lincoln, who introduced a Senate bill that would have the federal government pay the full costs of Medicaid in Louisiana, Mississippi and Alabama and the full costs of victims from those states who enroll as Medicaid recipients in other states.

Reps. John Dingell, D-Mich., and Sherrod Brown, D-Ohio, introduced the House version of the bill.

Other priorities also are shifting on Capitol Hill as fallout from Katrina's devastation mounts. Health care legislation including information technology bills and a Medicare payment increase for doctors are expected to be put on hold for now.