D.C. Council member David Catania, seen in March 2011, is chairman of the council’s Health Committee. (Bill O'Leary/WASHINGTON POST)

D.C. Council member David A. Catania has found an additional $20 million in the budget to continue offering free health insurance to 19,000 undocumented immigrants, reversing a proposal by Mayor Vincent C. Gray (D) that could have restricted them from receiving emergency care.

Catania (I-At Large), chairman of the council’s Health Committee, has made full funding of the Alliance Insurance program a chief priority as the council prepares for final budget deliberations.

But the council would be restoring the health insurance program at the same time it is scaling back other government services, including millions in services for the poor, potentially sparking fresh debate about whether city benefits for undocumented immigrants are too generous.

When the Health Committee convened on the budget Thursday, Catania announced that he and his staff had found $20.5 million in savings by eliminating some vacant positions, recalculating Medicaid enrollment and transferring some funds between Health Department units.

The five-member Health Committee unanimously approved Catania’s plan to transfer the money to immigrant health care. The full council is expected to accept the agreement when it votes on the budget later this month.

“The mayor’s proposal would have treated immigrants differently,” Catania said in an interview. “I believe, for us in this city, it was critically important we reject that.”

Gray had proposed scaling back the Alliance program to balance his 2013 spending plan by shifting some of the burden for immigrant care onto hospitals and federal programs for uncompensated care.

Created in 2001 after D.C. General Hospital closed, the Alliance Insurance program provides coverage to residents who earn too much to qualify for Medicaid but not enough to be able to afford private insurance.

But following the 2010 passage of President Obama’s health-care legislation, which boosted Medicaid eligibility, the city was able to transfer thousands of residents into the federal program.

Now, about 99 percent of residents covered by locally funded insurance are undocumented immigrants who are not eligible for federal benefits.

Catania said preserving the program this year was a crucial and symbolic step in the nationwide battle over immigration and health care.

“It’s big America versus small America,” Catania said. “I gravitate toward the notion of big America. Big America is one who welcomes people who want to work.”

If the program is cut, Catania said, undocumented immigrants would not be covered for specialty or emergency care at many area hospitals. But Gray had argued the patients would still receive care through funds hospitals establish to provide services to the uninsured.

A Gray spokesman said the administration is reviewing Catania’s proposal.

Catania’s decision comes as the council has been struggling over whether the city can afford to repay its employees a combined $22 million for furlough days they were forced to take last year. By fully funding the Alliance program, public employee unions are likely to put renewed pressure on the council to come up with the money.

For Catania, however, cutting Alliance would be a setback to his long-held goal of offering universal health insurance in the District.

In 2010, the city estimated that only 6.2 percent of District residents were uninsured, less than half the national average and lagging behind only Massachusetts in total percentage of uninsured residents.

The District was only able to achieve those rates by extending coverage to undocumented immigrants, Catania said.

“This is a rich city, and we have the resources,” said Catania. “We ought to be a leader, and not a follower, and showing the rest of the country this is America.”