Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT) are planning to introduce a health care package to assist victims of Hurricane Katrina. The package will expand Medicaid eligibility and provide 100 percent federal reimbursement for Medicaid coverage to states who have seen an influx of displaced persons.

Baucus said new Medicaid provisions were needed to provide health care to victims who have lost homes and jobs. The devastation from Hurricane Katrina has plunged thousands of people into unemployment and poverty, resulting in a huge increase in the number of people who are now eligible for Medicaid. At the same time, hospitals and clinics -- especially in the south -- are being flooded with people in need of medical care, which is putting a growing burden on the already-fragile public health infrastructure of many major cities.

Well before this natural disaster took place, hospitals and clinics across the country struggled to take care of local patients who didn't have insurance to cover all medical costs. Congress, in fact, included instructions in the budget resolution for $10 billion to be cut from mandatory programs under the jurisdiction of the Senate Finance Committee (like Medicaid).

While the date for reconciliation has been pushed back, Majority Leaders Bill Frist (R-TN) and other Congressional GOP leaders are saying they want to go ahead with cuts to these entitlement programs. Those cuts would put cost strains on states not directly impacted by the disaster, ultimately leaving taxpayers to foot the bill. So, while this Finance Committee health care package will help alleviate some of the burdens for now, keep in mind that many in Congress still want to move forward with severe cuts to Medicaid, perhaps in the very near future.

The Senate Finance committee released a set of proposals for tax cuts designed to aid the victims of Hurricane Katrina, and encourage other Americans to donate to the relief effort. Among the items included that will directly benefit hurricane survivors include cancelation of early withdrawl penalties from retirement plans, extension of the Work Opportunity Tax Credit and other provisions that would encourage hiring those displaced by the hurricane around the country and aid in the retention of employees within the disaster zone, and a relaxation of restrictions of financing to first-time homebuyers in the areas impacted for three years.

In addition, the package would provide incentives for all Americans to contribute to the relief effort by increasing tax right-offs for businesses for food and books, granting an additional tax credit for those who open their homes to shelter hurricane victims, and by allowing tax-free cash donations from IRA accounts. The proposals by the Finance committee would also increase taxpayer assistance efforts by the IRS to meet the needs of those seeking to receive the benefits of these proposals.