ATLANTA -- A special session of the Louisiana legislature has plugged a potentially calamitous hole in the state' s budget by passing abortion legislation that will ensure continued federal Medicaid funding.

The measure, approved and signed on Tuesday, would allow Medicaid funds to pay for abortions under limited circumstances.

Without the measure, Louisiana would have lost from $170 million to $3 billion a year under a new federal law that withholds Medicaid money from any state that does not allow a portion of the money to cover abortions for destitute victims of rape or incest.

Previously, Louisiana allowed funding only when the mother's life was in danger. A federal judge, in a lawsuit prompted by Congress' new law, ruled that Louisiana must obey the new standard.

"The controversy has been resolved," Gov. Edwin Edwards said on Tuesday. "I want to express my appreciation to the legislature on behalf of 6,600 physicians, 1,100 pharmacies, thousands of hospitals, nursing homes, and other health care providers, and especially on behalf of the 625,000 poor people in Louisiana."

Final approval of the state's new law followed removal of amendments to a House bill passed Saturday, according to David Hood, senior fiscal analyst at the Legislative Fiscal Office. The amendments would have forced physicians to certify that the pregnancy was the result of rape or incest and to file a police report. Another amendment would have abolished the law after July 1, 1996.

In June, the Senate passed a bill similar to the new measure, but the House overwhelmingly rejected the legislation.

In pressing for the new abortion bill, Gov. Edwin Edwards cited a study by Pat Culbertson, an economics professor at Louisiana State University.

Losing $3 billion in federal funding would have resulted in 110,000 lost jobs, swelling the state's unemployment rate to 13% from the current 7.6%, the study said, with the lost earnings eroding state and local revenues by about $275 million a year.

Edwards told legislators in a memo that in fiscal 1994, Louisiana would have had to spend just $1,200 to cover its share of the cost of the 17 abortions that would have had to be performed to meet the federal provisions.

However, the state is not out of the woods on another issue involving Medicaid. According to Greg Albrecht, chief economist for the Legislative Fiscal Office, Louisiana could lose up to $700 million a year under changes that the federal government has proposed in the schedule for reimbursing states for Medicaid payments.

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