Senate panel OKs SCHIP funding bill; Bush threatens to veto it

Washington -- Add the State Children's Health Insurance Program to the list of issues on which Congress and President Bush fundamentally disagree.

On July 17, Bush promised to veto a bipartisan Senate SCHIP reauthorization bill to increase the program's five-year funding by $35 billion, from $25 billion to $60 billion. The measure, approved 17-4 by the Senate Finance Committee on July 19, with six Republicans voting in favor, would allow another 3.3 million uninsured children to gain coverage. SCHIP now covers 6 million children.

The veto threat cast a shadow over the Senate bill, a compromise carefully negotiated over several weeks. The measure backed away from the $50 billion boost, for total five-year funding of $75 billion, approved by House and Senate lawmakers May 7 in their budget resolution.

House leaders were expected to stick with the $50 billion funding increase in their SCHIP reauthorization legislation, said a House Energy and Commerce Committee aide. At press time, that measure was scheduled for a committee vote on July 25.

Bush said he views the Senate bill as an attempt to federalize health care. He also objected to lawmakers' plan to raise the extra $35 billion by increasing the national cigarette tax by 61 cents to $1. "If Congress continues to insist upon expanding health care through the SCHIP program -- which, by the way, would entail a huge tax increase for the American people -- I'll veto the bill," Bush said.

In his 2008 budget plan, Bush proposed adding $5 billion to SCHIP over five years and allowing enhanced federal matching funds only for enrollees at or below 200% of the federal poverty level. But supporters of SCHIP expansion said Bush's proposal doesn't have enough funding to maintain existing enrollment.

The Senate SCHIP bill addressed a number of concerns raised by state Medicaid agencies, consumer advocates, think tanks and organized medicine over the years. For example, it would allow states to use information from other federal means-tested programs to enroll people in SCHIP.

The measure also would allow states to cover pregnant women's prenatal care. It would limit new enhanced federal matching funds to SCHIP enrollees at or below 300% of the poverty level. Currently, SCHIP has no specific eligibility ceiling, and states have been granted federal waivers to cover enrollees earning up to 350% of poverty.

The American Medical Association supports the Senate SCHIP bill, wrote Executive Vice President and CEO Michael D. Maves, MD, in a July 17 letter to Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee and one of the architects of the bill.

"We believe that this bipartisan proposal is a responsible, measured approach to reauthorizing and improving SCHIP," Dr. Maves wrote. He also called on the Senate panel to support funding to avert Medicare physician payment cuts in 2008 and 2009. House leaders included a provision in their SCHIP bill to stop those cuts. Dr. Maves also praised the Senate bill provision to pay for the SCHIP increase by boosting the cigarette tax.

The Bush administration's objections to the Senate bill are fundamental and numerous, wrote Health and Human Service Secretary Mike Leavitt in a July 17 letter to the Finance Committee. Although the administration is committed to reauthorizing SCHIP, the 61-cent cigarette tax boost is a "massive, regressive" increase that would likely draw revenue away from state budgets by depressing cigarette sales, he said.

"Ironically, the proposed legislation would increase taxes on low-income taxpayers as a way to fund health coverage for low-income individuals. At the same time, the [bill] would allow children who live in higher-income families to become eligible for government-run health care," Leavitt wrote.

He also said the bill's insufficient funding beginning in 2013 would make SCHIP unsustainable. The Senate measure would provide $8.6 billion in additional funding in 2012 but only $600 million in 2013, the Congressional Budget Office estimates.

Baucus said in a same-day letter to Leavitt that the bill is intended to be a five-year reauthorization and that he hopes "by then, Congress and the next president will have entered into discussions about how to fundamentally reform our health care system."

Baucus said the cigarette tax is a health measure because it would prevent nearly 2 million children from smoking. He noted that fewer than 10% of SCHIP children are in families earning more than 200% of poverty.

Three Republicans on the Senate panel, in a July 11 letter to Bush, questioned why the administration has approved waivers allowing states to cover adults in SCHIP while criticizing a Senate bill provision grandfathering in such coverage. SCHIP covers approximately 600,000 adults. Leavitt said the administration will have helped a majority of them to make the transition into Medicaid by October.

Some medical associations support a larger funding increase than the $35 billion in the Senate SCHIP reauthorization measure. The AMA backs the bill, but also would support a bigger boost. At their June Annual Meeting, Association delegates passed a resolution calling for $60 billion in additional funding.

The American Academy of Pediatrics would like $50 billion in extra SCHIP funding, said its president, Jay E. Berkelhamer, MD. "While the $35 billion included in this bill is a good start, it's not enough to cover all the eligible but unenrolled children in either SCHIP or Medicaid," he said.

A $50 billion boost would better cover unenrolled but eligible children, wrote Joel S. Levine, chair of the American College of Physicians' board of regents, in a July 17 letter to the Senate panel. The ACP, like the AMA, said the Senate should prevent cuts to Medicare physician fees scheduled to begin on Jan. 1, 2008.

The American Academy of Family Physicians supports both the Senate bill and the 61-cent cigarette tax but would like $50 billion in new funding, said spokeswoman Janelle Davis.