Associated Press Writer

AUSTIN (AP) - The state budget is hurting and House Speaker Tom Craddick believes he's got an idea to make it better.

The new leader plans to create a special committee to study skyrocketing health care costs in state government. It will examine every Texas program -- from Medicaid to teachers' retirement benefits -- to try to get a handle on the rising cost of medicine.

The result will determine "what are they going to cost us today? What are they going to cost us in the future, and how can we get the budget under control?" Craddick said Tuesday.

The current $114 billion, two-year budget is expected to be $1.8 billion short when the fiscal year ends Aug. 31, partly because of higher-than-expected costs in areas such as Medicaid and the Children's Health Insurance Program.

"I do think it's a good idea," said Rep. Dianne White Delisi, a Republican from Temple who has been pushing for such a move.

She said Texas and other states' budgets are being strangled by expensive emergency room visits, high prescription bills and other health care costs.

Ideas to rein in spending could include requiring co-payments by Medicaid recipients and focusing on management of chronic diseases such as diabetes instead of allowing patients to get so sick they turn to emergency rooms, Delisi said.

"The beauty of that is it's less costly, they're staying out of a crisis acute care situation and it improves their quality of life," she said.

Some of the ideas, including Medicaid co-pays, are opposed by advocates who say it will overburden the state's poorest and sickest citizens.

The Senate Finance Committee was scheduled to begin tackling the budget Wednesday, but Craddick isn't expected to appoint House committees until Thursday, at the earliest.

Even so, he believes the new Republican-majority House is ready to write a 2004-05 spending plan despite a projected $9.9 billion shortfall. He promised an Appropriations Committee of new faces, including some younger lawmakers.

"I think we're going to have some people over there on appropriations that are going to be willing to make those hard decisions," said Craddick, R-Midland.

"The state's going to have to set its priorities. The average household in this state, their incomes have come down and they've had to cut back and the state's just going to have to do the same. That's just the bottom line," he said.

Rep. Talmadge Heflin, R-Houston, the likely appropriations chairman, said he'd welcome new faces on the committee.

"There is a freshness when people come in, you're not supposed to know anything, so you're free to ask questions," Heflin said. "You been here a while, you've been in the process so you're supposed to be smart enough you don't have to ask questions."