ATLANTA --- Deep state budget cuts won't slice into Medicaid and PeachCare benefits for Georgia's neediest residents, according to a spending recommendation that state health officials adopted Thursday.

But hospitals and health care providers will feel the pinch as the state balances the books by delaying a planned Medicaid rate increase, the first in five years. The boost would have funneled tens of millions more dollars their way for caring for those on government health rolls.

State health officials are also recommending that the state take advantage of a federal rule change and require commercial insurance providers with managed care plans to pay an additional fee in the next fiscal year. That's expected to face stiff opposition from the powerful insurance lobby in the coming legislative session. Currently, the fee is paid only by Medicaid managed care plans and generates about $90 million a year in revenue.

State health commissioner Rhonda Medows said officials would have to slash PeachCare benefits and freeze enrollment without that fee.

Cuts are rippling throughout Georgia government as officials look to fill a projected $1.6 billion budget gap for the fiscal year that began July 1. Medicaid, the state and federal program for the poor and disabled, is targeted for a 5 percent reduction.

The state was spared even deeper cuts to health programs because of a surplus in revenue. PeachCare, the state health insurance program for children of the working poor, has also seen its enrollment dip 22 percent in the past year as it toughened its screening process, Ms. Medows said.

The board of the state Department of Community Health sent the budget blueprint to Gov. Sonny Perdue. The department is slashing about $120 million from its $3.5 billion budget, which comes from state and federal funds.