A panel studying ways to provide basic health care to the District's 80,000 uninsured residents is considering a plan to give $50 million in annual tax credits to businesses that offer health insurance to employees who live in the city.

That idea was among several proposals presented during the first public meeting of the D.C. Health Care Systems Development Commission, which in January is scheduled to make recommendations to help Mayor Anthony A. Williams (D) and the D.C. Council set budget priorities for 2001. The panel also began examining a, $4 million tax-credit plan that would affect only small D.C. businesses offering health coverage for the first time to D.C. residents who are their employees.

The tax credit to employers under the smaller plan would equal about $100 a month per eligible worker and could be an incentive for firms to locate in the District, officials said.

The $50 million plan was mentioned as a deluxe option that would be fairer to employers that already provide health insurance, but the cost was viewed warily by D.C. Council Chairman Linda W. Cropp (D), one of the health panel's 11 members.

Commission member Henry J. Werronen said the tax credits could give D.C. residents an edge in competing with suburbanites for jobs in the city, while cutting the number of residents who have no coverage or who rely on Medicaid, the insurance program for the poor.

Werronen said the commission could fashion a plan to bring 26,000 uninsured residents under the financial umbrella of the Medicaid program for $20 million in city funds by shifting resources away from hospitals in favor of primary care services.

With millions of dollars and the future of hospitals, clinics and health maintenance organizations riding on these efforts, it was clear yesterday that the debate over expanding health coverage will be a politically contentious issue in next year's budget negotiations.

Minutes after the meeting began, top officials of the Public Benefit Corp., the quasi-public agency that runs D.C. General Hospital, complained that city leaders don't understand their mission to care for the indigent through the hospital, eight clinics and school health nurses. The agency relies on $50 million in annual city subsidies to survive, a payment that could be reduced as insurance coverage to the poor is expanded.

D.C. General is the city's largest provider of care to the uninsured and Medicaid patients, and some officials believe the time has come to decide whether to invest millions of dollars and replace or upgrade the deteriorating hospital or simply shut it down. Patients then would be sent to private D.C. hospitals, which have seen patient admissions decline.

In a memo last summer that is being examined by the commission, D.C. financial control board official Doneg McDonough suggested that the city health system would save millions by farming out patients to private hospitals. McDonough, who wrote the memo with the help of Paul Offner, then the D.C. Medicaid director, calculated that the District spends $101 million a year in direct and indirect support on the Public Benefit Corp. to provide services that could be purchased from the private sector for $55.4 million.

"Preliminary estimates are that the District may save between $22 million and $26 million per year if a competitive procurement process were used," McDonough wrote.

Public Benefit Corp. Chief Executive John Fairman blasted that view.

"It is the most credibility-minus report I've ever seen," Fairman said in an interview.

But there were other questions at the meeting about the hospital corporation's finances. A report from Mark W. Legnini, of the Economic and Social Research Institute, asked how the corporation was able to operate with zero cash on hand, according to its Sept. 30 balance sheet.

A Public Benefit auditor disagreed with the premise of Legnini's questions--that the corporation was in serious financial distress.

D.C. Health Director Ivan C.A. Walks said the disagreement illustrates a recurring problem for those trying to solve the city's health-care problems. "We need a set of [financial] numbers we agree on," Walks told the commission. "This keeps coming up all the time, and it tends to distract us."