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From The CQ Newsroom: Bipartisan Children's Health Plan Unveiled

By Alex Wayne, CQ Staff

February 16, 2007 -- Democratic and Republican House members, backed by a broad industry and consumer coalition, announced a $60 billion plan Friday that is intended to provide health insurance to most American children without it.

The effort is being led by Rahm Emanuel of Illinois, the fourth-ranking member of the House Democratic leadership, and two senior Republicans, Ray LaHood of Illinois and Jim Ramstad of Minnesota. Allyson Y. Schwartz of Pennsylvania and Carol Shea-Porter of New Hampshire are other Democratic cosponsors.

The Emanual plan is also supported by an array of health care–related trade associations and consumer groups, including America's Health Insurance Plans, the main industry trade group, and Families USA, a large consumer group—two organizations that do not often agree on policy.

It has not been introduced as legislation yet. Emanuel said he hopes to see elements of the proposal included in a bill that Energy and Commerce Chairman John D. Dingell, D-Mich., will produce this spring to renew the State Children's Health Insurance Program (SCHIP).

"Every time John Dingell and I see each other, he looks at me and I look at him and we say, 'kids,'" Emanuel said.

Sen. Richard J. Durbin, D-Ill., has agreed to introduce the plan in the Senate, Emanuel said.

Extending health insurance to people without it—especially children—has emerged this year as a high-profile issue nationally and a priority for congressional Democrats. Many Republicans are supportive, though they acknowledge that Congress did not give the issue priority when their party was in control.

"I doubt if we were the majority party, we'd be standing here today talking about this bill, or this issue," LaHood said.

The House plan is based in part on elements of a proposal that the health care groups put forward late last year to cover the uninsured. It would combine an expansion of SCHIP and Medicaid, to cover more low-income children, with a new tax credit to help middle-income families purchase health insurance policies.

The plan also would encourage states to streamline their SCHIP and Medicaid programs by offering them more matching federal funds. The intent is to make it easier for families to enroll in the programs and to stay covered. Currently, families in many states drop in and out of public health insurance programs because of difficulties applying and short enrollment periods.

The current SCHIP authorization expires Sept. 30, the end of this fiscal year. Although there is near-universal support for a renewal and expansion of the program, there is no agreement on how much money to pour into it.

President Bush has proposed a relatively small expansion: His fiscal 2008 budget includes about $5 billion for the program, a $600 million increase over fiscal 2006. He has proposed limiting eligibility to children from families that earn up to 200 percent of the federal poverty level; currently some states offer SCHIP to families earning up to 350 percent of the poverty level.

Emanuel's plan would provide SCHIP and Medicaid $50 billion extra over five years—enough, he and his allies say, to cover budget shortfalls some states are experiencing this year and to cover the estimated 6 million children who are eligible for at least one of the programs but not enrolled. SCHIP currently covers about 6 million children at any given moment.

In addition, the Emanuel plan would provide $10 billion for a tax credit to defray the costs of purchasing health insurance that covers children. It would be available to families earning up to 350 percent of poverty, if they are not eligible for SCHIP in their states. The credit would be refundable and could be advanced, similar to the popular Earned Income Tax Credit for low-income families.

Emanuel said Congress could offset costs of the proposal with legislation (HR 878, S 601) to improve collection of capital gains taxes. That proposal would require stock brokers and mutual fund companies to report cost basis information to the IRS, in addition to the sales information currently reported. Advocates of the proposal say many investors now overstate how much they paid for securities in order to minimize the capital gains on which they are taxed. Supporters say cost-basis reporting could help the government collect about $17 billion in added capital gains tax revenue each year.

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