BATON ROUGE, La.-- Louisiana's proposed revamp of the New Orleans public health system will involve providing a type of insurance for the poor that will give them more choices in where they receive care, Gov. Kathleen Blanco said Tuesday.

The universal insurance model has been pushed heavily by U.S. Health and Human Services Secretary Michael Leavitt, whose office is working with the Louisiana Health Care Redesign Collaborative to rebuild the flood-ravaged New Orleans area health care system after Hurricane Katrina. State officials are scheduled to offer a redesign plan to Leavitt by Friday.

Blanco said that the price tag of the insurance plan, however, will be $300 million more than the state currently spends in the four-parish region, and that the proposal will depend on the federal government to help cover those costs.

"Our numbers don't work with our existing dollars, so it does demand that they make some investment," the governor said.

Leavitt has said the state ultimately will save money as its health care costs grow more slowly and it begins to treat more of its poor and uninsured patients with preventive illnesses in doctors' offices and clinics, rather than costly emergency rooms.

But the governor said the federal health secretary also told her he would be willing to give Louisiana "transition" money over as many as five years to help shift the public health care system covering Orleans, Jefferson, St. Bernard and Plaquemines parishes to an insurance plan.

The number of uninsured residents in the region is estimated to top 127,000 people. The plan also would involve letting Medicaid patients in the New Orleans area switch to the insurance program if they choose, said Bob Johannessen, a spokesman for the state Department of Health and Hospitals.

Currently, the state shuffles most of its dollars for uninsured health care to the charity hospitals run by LSU around Louisiana, and those hospitals and its satellite clinics are expected to provide the bulk of care to uninsured patients.

Under the insurance plan, payments for those uninsured patients would follow them to wherever they choose to get care, potentially sending more money to private and community health providers -- rather than going directly to the charity hospitals.

When the state submits its redesign proposal to Leavitt on Friday, new negotiations over the scope of the insurance plan, the nuances and the price tag will begin.

Leavitt said he wants the New Orleans area redesign to be the model for the state and country, but Blanco said such insurance plans for the uninsured statewide could cost as much as $1 billionmore a year than the state spends on health care.

Blanco said the health redesign also will involve the construction of a new charity hospital in New Orleans to replace the flooded facilities, a teaching hospital to train new doctors, nurses and other health professionals.

LSU is seeking to build a 350-bed, $650 million hospital and is expected to present its financial model for covering the costs by Thanksgiving to state officials who will be needed to approve the spending.

Don Smithburg heads the LSU division that runs the charity hospital system in south and central Louisiana and sits on the health redesign collaborative. He said he's optimistic the insurance plan would fit well with LSU's plans for the public hospital in New Orleans.

He said the model involves setting up uninsured patients with "medical homes," doctors' offices, clinics or other medical centers that provide them with central locations for tracking and providing their health care.

"That's who we are. Our system is a tightly woven network of doctors offices and clinics and hospitals," Smithburg said in a phone interview.

Smithburg said he believes uninsured patients given a state-provided type of insurance still would choose to go to the charity hospitals because they provide a high quality of care and will have new, modern facilities in New Orleans that are similar to private clinics and hospitals.

The charity hospital would need to attract patients, who would be able to choose from multiple facilities, to keep the stream of income the charity hospital system has relied on to operate its hospital and clinics.

(Copyright 2006 by The Associated Press. All Rights Reserved.)