Gov. Don Carcieri has proposed cutting millions of dollars meant to reimburse hospitals for providing health care to the poor during a recession that has cost thousands of Rhode Island residents their jobs and employer-provided health insurance.

The latest budget proposal from the Republican governor would eliminate $3.7 million in funding to four hospitals _ South County, Miriam, Westerly and Kent Hospital _ that have seen an increasing number of patients who have health insurance but cannot afford to make co-payments or pay deductibles of $1,000 or more required under their insurance plans.

"These are people who are choosing whether they can pay their mortgage or pay us," said Sandra Coletta, president and chief executive of Kent Hospital, which stands to lose $800,000 in state funding.

Her hospital tries to put patients who cannot afford their bills on payment plans, sometimes as little as $25 per month. Others it attempts to enroll in publicly funded insurance plans for the poor. Still, the charity care provided by Kent Hospital has leaped from $15 million in 2005 to $30 million last year.

If Carcieri's proposal becomes law, Kent may be forced to lay off staff, Coletta said.

Carcieri included the cut as part of a package intended to close a $220 million budget deficit for the fiscal year ending in June, a shortfall equivalent to about 7 percent of what the state expected to take in. With unemployment hovering around 13 percent, that budget shortfall could grow larger as people lose jobs and cut back on spending, which drives down state tax collections.

"Frankly, the pressure on the hospitals is likely to grow in the coming years," Carcieri said, referring to the possibility of more state cuts and the impact of a health care overhaul now being debated in Congress.

Democrats hold a veto-proof majority in the General Assembly and say they want the cuts overturned.

"It can't happen," said Rep. Donna Walsh, a Democrat who represents Westerly. "There's going to be more and more uncompensated care, and you're going to cut the payments for it?"

Several of Rhode Island's hospitals have been in precarious financial shape for years. In 2007, they pushed for legislation making health insurance companies responsible for collecting co-payments and deductibles from patients.

The legislation would also have required businesses that offer health insurance plans with high deductibles to start special savings accounts for their employees to cover costs and instituted a tax to fund more affordable health insurance plans.