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House votes to add $50 billion for children's health

Bush threatens veto, proposes a $5b increase

WASHINGTON -- The House of Representatives passed legislation to triple the funding for a health insurance program for low-income children, defying a threatened veto by President Bush.

The Democratic-controlled House voted 225 to 204 yesterday to add $50 billion over five years to the $25 billion program, allowing enrollment to almost double to about 11 million children. The money would come from increasing tobacco taxes and cutting government payments to insurance companies that provide health coverage through the Medicare system for the elderly and disabled.

The 10-year-old State Children's Health Insurance Program, known as SCHIP, is aimed at children in families that earn too much for the Medicaid insurance system for the poor and too little to buy private coverage. The coverage will expire unless it's reauthorized by the end of September, cutting off healthcare for children already enrolled.

"If you are against this bill, you are in favor of depriving 6 million children of their health care," said Representative John Dingell, a Michigan Democrat and chairman of the Energy and Commerce Committee.

The House bill must be reconciled with legislation awaiting action this week by the Senate. That measure would add $35 billion, with funding coming solely from increasing tobacco taxes. Bush has said he would veto either version, warning that Democrats are trying to replace private insurance with government-run healthcare.

"There's a lot of common ground between the two bills," Genevieve Kenney, a researcher with the health policy center of the Urban Institute, a nonpartisan economic and social policy organization in Washington, said in an interview. "But that's not to underestimate the difficulties they will have reconciling scaling of support and how they will pay for it."

Bush has proposed an extra $5 billion for the program, saying that's enough to help low-income uninsured children. The funding proposed by Democrats would allow the benefit to be tapped by middle-income families earning $83,000 a year or more, the administration said in a statement today by the Office of Management and Budget. "This bill essentially extends a welfare benefit to middle-class households," the statement said.

Bush, who has proposed tax incentives to encourage private-sector health insurance, said in his budget that the children's program should "refocus" attention on its original target: Low-income children whose families earn up to 200 percent of the federal poverty level, or $41,300 a year for a family of four.

Seventeen states allow children to enroll if their families earn more than that. New Jersey, the most generous, accepts children whose families earn up to 350 percent of the poverty level, on the rationale that the state has high living expenses. New York has applied for a waiver, not yet granted, to increase eligibility to $83,000, or 400 percent of the poverty level.

"People can always be generous with other people's money," Representative Mike Pence, a Republican from Indiana, said before the vote. "This bill is a massive increase of the government's role in healthcare."

The number of uninsured children in the United States has dropped from 22.5 percent before SCHIP was enacted to 16.9 percent in 2005, according to a May report by the Congressional Budget Office, an independent government agency. There still are about 9 million children without coverage, of whom 6 million currently would qualify for SCHIP.

The House measure would cost about $90 billion over five years altogether. That includes the added funds for children's health, plus money to block a scheduled cut in Medicare fees to doctors and provide subsidies to help low-income seniors pay for certain Medicare benefits.

Most of the money would come from reducing payments to insurers contracted by the government to provide benefits to Medicare beneficiaries.

The privately run plans, known as Medicare Advantage and sold by companies such as Humana Inc. of Louisville, Ky., and UnitedHealth Group Inc. of Minnetonka, Minn., are paid on average 12 percent more than the government spends to provide Medicare services directly.

The companies say they provide extra benefits for enrollees, such as eye care and exercise programs.

Democrats say that private insurers should not be paid extra. About 18 percent of Medicare enrollees get benefits through private companies, and the added costs are borne by all Medicare beneficiaries, the House Ways and Means Committee said in a statement.

The legislation also would increase the federal tax on cigarettes to 84 cents a pack, producing $26 billion in tax revenue over five years, according to the US Joint Committee on Taxation.

The move is backed by the American Medical Association.