WASHINGTON (AP) -- The White House will support increased Medicare funds for rural hospitals when Congress considers overhauling the federal health care program for older people.

President Bush made the pledge Thursday in a letter to Sen. Charles Grassley, R-Iowa, who had proposed the Medicare increase as Congress worked out a deal on a tax cut and spending bill.

Senators voted 86-12 last week to approve Grassley's $25 billion proposal, but the measure was stripped when House and Senate leaders settled on a final, $350 billion plan.

In his letter, Bush told Grassley they agree on the need to help rural hospitals and doctors, and "you demonstrated your commitment by passing your amendment last week with tremendous bipartisan support, and by pushing hard for it in the conference negotiations."

"I will support the increased Medicare funding for rural providers contained in your amendment as part of a bill that implements our shared goal for Medicare reform," Bush wrote.

At issue are the formulas the government uses to determine the size of checks sent to hospitals for Medicare patients.

The rates, which date to the early 1980s, were written with the belief it is cheaper to treat people in rural towns and small cities.

Many lawmakers and hospital administrators say that is no longer the case, as hospitals everywhere compete for the same staff and pay the same for high-tech equipment.

"Those base payments are anachronistic now," said Chip Kahn, president of the Federation of American Hospitals.

Congress equalized hospital Medicare payments for this year. The Senate amendment would have made that fix permanent and increased payments to other sorts of health care providers.

Copyright 2003 The Associated Press. All rights reserved.