By Alex Wayne, CQ Staff
August 2 -- The Senate passed a $35 billion expansion of a children's health insurance program Thursday, setting up a difficult negotiation with the House and a probable veto by President Bush.
The House passed a broad bill Aug. 1 that included a larger expansion of the State Children's Health Insurance Program (SCHIP), plus changes to Medicare—notably a cut in spending for managed care plans that participate in the entitlement, plus a reversal of a scheduled cut to physicians' Medicare reimbursements.
The narrower Senate bill passed, 68–31, after a day of defeating mostly Republican attempts to alter the bill.
Both bills would reauthorize SCHIP, which covers about 6 million children whose families are low-income but not poor enough to qualify for Medicaid. The two chambers must now hash out their differences, which are extensive.
Lawmakers from both the House and Senate acknowledge that the House's Medicare provisions, intended to piggyback their way into law on the popularity of children's health insurance, will complicate negotiations.
"I'd be less than direct if I didn't say that we got a lot of help from children,"said Pete Stark, D-Calif., the chairman of the House Ways and Means Health Subcommittee and principal author of the Medicare provisions.
Further, the conferees will negotiate in the shadow of a threatened veto: Bush says he would not sign either bill into law.
Some lawmakers are skeptical that Republicans would sustain a veto. In 2004, at the Republican National Convention, Bush vowed to "lead an aggressive effort to enroll millions of poor children who are eligible but not signed up for the government's health insurance programs."
"He's always supported SCHIP," Rep. Diana DeGette, D-Colo., said of Bush. "For congressional Republicans to be forced to think about sustaining a veto of legislation they've always supported in the past would put them in a very untenable position going into the elections, I think."
The senior Republican on the Senate Finance Committee, Charles E. Grassley of Iowa, said he planned to ask for a meeting with Bush to try to convince him not to veto the bill. "I'm going to convince him we've done the best we can," Grassley said.
Bush has proposed a $5 billion expansion of SCHIP over five years.
Grassley, in a July 31 speech, criticized Bush for not living up to the promise he made at the 2004 convention. But he also issued a warning to House Democrats.
"I'm not going to be able to support a bill that changes significantly from what we have here [in the Senate] with this proposal," he said.
Sen. Trent Lott, R-Miss., acknowledged a veto override was possible, but only if negotiators accept the lower spending total in the Senate bill. "If it goes one iota above what's in [the Senate] bill, we will be able to sustain the veto," Lott said.
Lott also said Senate Republicans would block a formal conference from convening until there was an agreement on spending. "Grassley is going to hold the line pretty strong on this," Lott said.
Coverage Concerns
House Democratic leaders complain that the Senate bill would not allow coverage of as many children as the House bill.
The Senate bill would add 6.1 million children to SCHIP and Medicaid, the Congressional Budget Office (CBO) estimates. The House bill would add 7.5 million.
"We have to cover all of the kids who are eligible for SCHIP in this country and not enrolled, and we have to pay for it," DeGette said. "Any creative suggestions would be welcomed."
Paying for the expansion will prove difficult. Ten Democrats voted against the House bill, in many cases because of its tobacco tax increase of 45 cents per pack of cigarettes, to 84 cents.
The Senate bill includes a 61-cent increase, which would likely drive many more House Democrats to vote against the bill.
Instead of a larger tobacco tax, House Democrats included in their bill a cut in spending for Medicare Advantage, a program in which private managed-care plans provide benefits to seniors in place of the government. The plans are paid about 12 percent more per beneficiary than traditional Medicare costs, according to CBO and the Medicare Payment Advisory Commission, which has recommended reducing the imbalance. The cuts in the House bill would raise $157 billion over 10 years— enough, with the tobacco tax increase, to pay for both the SCHIP expansion and the reversal of the scheduled cut in Medicare reimbursements for doctors.
But Medicare Advantage is championed by Republicans, and the insurance industry is lobbying to preserve it. Several Republicans who voted for the Senate SCHIP bill, notably Gordon H. Smith of Oregon, say they will not vote for a compromise bill that includes Medicare Advantage cuts.
Negotiators also must decide whether to keep the Medicare provisions and SCHIP expansion linked. The American Medical Association is lobbying for the physician payment change. Nearly everyone in Congress seems to agree that the cut must be averted.
"The idea of linking these does make sense, and I haven't heard that the Senate would be unwilling to link them," said Frank Pallone Jr., D-N.J., the chairman of the Energy and Commerce subcommittee on Health.
But that drags Medicare Advantage into the debate, because reversing the physicians' payment cuts is expensive, costing $101 billion over 10 years, according to CBO. Lawmakers have had trouble identifying other programs to cut that would yield that kind of money, and further tax increases are probably not an option.
Drew Armstrong and John Reichard contributed to this story.
