To cut spending on the state's $31 billion health insurance program for the poor, the Schwarzenegger administration Monday floated the idea of enrolling more recipients in managed health care and requiring everyone to pay a share of costs, even people below the poverty level.

In his proposed budget for next year, Gov. Arnold Schwarzenegger has suggested a sweeping overhaul of the state's Medi-Cal program, which uses state and federal dollars to provide health coverage for about a fifth of Californians. Monday's comments from administration officials at legislative budget hearings marked their first specific description of possible changes.

Officials said they want public feedback on an approach that would divide Medi-Cal recipients into two main groups: One would comprise pregnant women, children and other adults below the poverty level. The other would include adults, mainly parents, with incomes above the poverty level, which is about $15,000 for a family of three. Those below the poverty level would make small co-payments of about $1 for services, while those above it would pay more.

Sandra Shewry, director of the Department of Health Services, said the proposals were merely "concepts that we are looking at." She said the administration would return to the Legislature with a detailed plan in May. The administration then plans to submit the plan to the federal government for approval, she said.

The concepts immediately provoked opposition from advocates for Medi-Cal recipients, who warned that some poor families would drop out of the health insurance program if they were required to pay a share of costs.

"Even though it hasn't been fully vetted, it is still a proposal with cuts," said Angela Gilliard, an attorney at the Western Center on Law and Poverty, a nonprofit organization representing needy Californians. "The Legislature should look at this proposal very, very carefully."

Officials also sought feedback on getting rid of acupuncture and chiropractic care for Medi-Cal recipients while keeping other services that go beyond basic medical care, such as dentistry and medical equipment.

And they talked about expanding managed care.

Slightly less than half of the state's 6.8 million Medi-Cal recipients, in 22 counties, are enrolled in managed-care programs that limit costs by requiring participants to see certain doctors and get preapproval for specialized services.

Officials estimated the state could save 5 percent to 10 percent in Medi-Cal costs if it expanded managed care to more counties and started requiring the elderly and disabled to use those programs instead of choosing their own health care providers.

Members of Assembly and Senate budget panels that held hearings Monday said they were skeptical about the state's ability to cut costs, given that other efforts in recent years have stalled.

According to some estimates, the state has forgone more than $1 billion in rebates from drug companies that supply medicine to state programs because state employees have not collected the money or negotiated contracts with the companies to require the refunds.

Officials blamed staff reductions - another state cost-cutting effort - for delaying their attempts to collect the rebates.