Prospects dim for popular health bill

A modest attempt to renew a popular program that helps poor children get access to insurance is unexpectedly becoming a proxy for the next big battle over who pays for American healthcare.

In a legislative season distinguished by rancor and gridlock, the bid to renew the State Children's Health Insurance Program, or SCHIP, could have been the exception.

Most lawmakers agreed with the principle: to help states expand health insurance coverage to poor children. And, seven months into the 110th Congress, both the White House and the Democrats now controlling Capitol Hill need a domestic accomplishment.

A new version of the legislation, set to expire on Sept. 30, was voted out of the Senate Finance Committee on Thursday with a 17-to-4 vote, but it faces a veto threat from President Bush.

The $35 billion, bipartisan plan aims to bring an additional 3.3 million children into the SCHIP program over the next five years. To pay for it, senators propose increasing the federal tax on a pack of cigarettes from 39 cents to $1 and a jump in the tax on cigars from 5 cents to up to $10.

The White House proposed $5 billion to fund a reauthorization of the SCHIP program. Mr. Bush calls the proposed Senate bill a massive expansion of government healthcare.

It would cause people to drop their private insurance to join a federal program, he told businessmen in Maryland this week. Instead, Congress should reform the tax code to make private health insurance more affordable for all Americans.

"That's the divide. The debate between these two options is now beginning to play out on Capitol Hill" with the SCHIP debate, Bush said after meeting with healthcare experts in the White House last month.

Sen. Max Baucus (D) of Montana, who chairs the Senate Finance Committee, on Wednesday called on the White House to drop its veto threat.

"The administration appears to be holding children's health insurance hostage to Congress's adoption of the ... larger health-insurance tax and other health-reform proposals," he wrote in a letter to Health and Human Services Secretary Michael Leavitt. "Regardless of the merits of the administration's tax proposal, it has proved far too controversial a matter for the Congress to adopt this year."

The $35 billion price tag is well above the $5 billion the White House budgeted for the program, but below the $50 billion provided in the budget agreement passed by the new Democratic Congress.

But some Republicans, citing estimates by the Congressional Budget Office, say that the costs over 10 years for the SCHIP program will be $112 billion.

"This is unsustainable, and we don't pretend to sustain it in the bill," said Sen. Jon Kyl (R) of Arizona, during the committee markup. "We shouldn't be making a promise we can't keep. People will be relying on us."

"It's staggering to think that to insure an additional 3.3 million children it will cost $35 billion, but that's the scope of the problem we're facing," said Sen. Olympia Snowe (R) of Maine.

One reason costs for maintaining the program are so high is the waivers for states that the Bush administration has approved, including the inclusion of some 700,000 adults in the SCHIP program.

The legislation "tries to straighten out the mess created by all the waivers that have spent program resources on adults and higher-income kids," says Sen. Chuck Grassley, the ranking Republican on the Senate Finance Committee.

Early in the Bush administration, the Department of Health and Human Services (HHS) vastly expanded waivers for states to encourage them to be more innovative in extending health coverage including allowing SCHIP to cover adults.

Since then, the White House has tried to rein in coverage for adults and "refocus on the purpose of the program," HHS spokeswoman Christina Pearson says.

Public-interest groups note that the SCHIP bill is the main vehicle for healthcare legislation in the 110th Congress.

"For the White House, it's all about talking points and doing their tax agenda," says Bruce Lesley, president of First Focus Foundation, a nonprofit group that lobbies for children.

He adds, "They have 16 months left and they've done nothing on healthcare."