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SCHIP Squabble Surrounds Senate Debate on Tax/Health/Trade Package

By Mary Agnes Carey, CQ HealthBeat Associate Editor

December 8, 2006 --Anger over congressional failure to address impending funding shortfalls in the State Children's Health Insurance Program (SCHIP) is complicating Senate action on sweeping legislation that includes tax, health care, and trade provisions.

Democrats and Republicans alike are disappointed that House-Senate conferees on the final bill (HR 6111) dropped language included in a Senate Finance Committee package unveiled earlier this week that would have redirected unspent fiscal 2004 and 2005 SCHIP funds to defer shortfalls through June 2007 and taken other steps to expand SCHIP coverage.

Sen. John D. Rockefeller IV, D-W.Va., said last month that unless Congress intervenes, 17 states will run out of federal dollars to fund their SCHIP programs in fiscal 2007. Shortfalls total $920 million and 630,000 children are at risk of losing their health insurance coverage, Rockefeller said.

Democrats' anger is particularly strong and could derail the chamber's consideration of the comprehensive bill, said Kate Leone, senior health counsel for Senate Minority Leader Harry Reid, D-Nev. The chamber is expected to debate the measure late Friday or Saturday, and senators from some Southern states are expected to object to the legislation's trade provisions.

For some Democrats, "we do SCHIP or we don't do anything else," Leone said at a Friday morning panel discussion sponsored by the Alliance for Health Reform and the Kaiser Family Foundation. "I think it's a significant issue. I think it's going to tie us up a little bit," Leone said. She added that other provisions in the measure—including stopping an impending Medicare physician payment cut—also appeal to Democrats.

Senate Democrats are pushing House-Senate negotiators to include SCHIP money in a package that would combine renewals of federal AIDS programs and a bioterrorism law with a restructuring of the National Institutes of Health (NIH). While the Senate has passed the AIDS and bioterrorism measures, House Energy and Commerce Committee Chairman Joe L. Barton, R-Texas, wants the Senate to pass his NIH reauthorization legislation (HR 6164) before the House votes on AIDS and bioterrorism bills.

"A lot of people on our side think NIH reauthorization can wait until next year, but we need SCHIP now," Leone said.

Another panelist at the Alliance forum said Republicans' willingness to fund an expansion of health savings accounts (HSAs) but not SCHIP shortfalls demonstrates the parties' differences on health care.

"They managed to find $1 billion to improve HSAs, which benefit the healthy and wealthy" but would not spend between $3 billion and $4 million to fund the SCHIP shortfalls, said Wendell Primus, health policy adviser to incoming House speaker Nancy Pelosi, D-Calif.

The legislation package includes several provisions to expand the use of HSAs, such as increasing the amount individuals can contribute to the accounts. Rep. Eric Cantor, R-Va., who has sponsored legislation to make those and other changes to HSAs, said in an interview Friday that such steps would help decrease the number of uninsured.

"HSAs will drive consumerism and transparency in health care," Cantor said. "They will bring down costs and help people get more coverage." But he declined to address the SCHIP equity issue raised by Primus. "I think there are two separate issues here," Cantor said.

Primus also said he was doubtful Congress would take action on the SCHIP shortfalls before adjourning for the year and said he hoped President Bush would submit an SCHIP reauthorization proposal in his fiscal 2008 budget proposal. The program is up for reauthorization next year.

Elizabeth Hall, director of health policy for Senate Majority Leader Bill Frist, R-Tenn., predicted that SCHIP reauthorization would stimulate "significant discussion and debate" next year and could be combined with language to address funding shortfalls. Hall also said some of the shortfalls were due to the level of SCHIP coverage in some states for childless adults.

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