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Senate Finance Nears Deal on Expansion of Children's Health Care Program

By Alex Wayne, CQ Staff

July 10, 2007 – Members of the Senate Finance Committee said Tuesday they have reached agreement on the framework for an expansion of the State Children's Health Insurance Program.

Under the bipartisan agreement, the expansion would cost $35 billion over five years—significantly short of the $50 billion increase sought by Democratic congressional leaders and included in the congressional budget resolution (S Con Res 21), several senators said. The expansion would be paid for with a 61-cent increase in the 39-cent federal cigarette tax, to an even $1 per pack.

"There is general bipartisan support on the committee" for the SCHIP agreement, said Sen. Gordon H. Smith, R-Ore., who has pressed for a tobacco tax increase to pay for the program's expansion. Finance Chairman Max Baucus, D-Mont., who has been negotiating a compromise on the bill for months, said his committee would likely vote on the bill July 17.

But while the compromise might have the support of most of the Finance Committee, it is likely to be politically difficult for other members on both sides of the aisle to support.

SCHIP is a state-federal insurance program, similar to Medicaid, that covers about 6 million children, along with about 600,000 adults. It is intended to provide health insurance for children whose families are low-income, but not poor enough to qualify for the larger Medicaid program.

The government has spent about $4 billion per year on SCHIP since it was created 10 years ago.

An estimated 9 million children in the nation do not have health insurance, and many health experts say about two-thirds of them are eligible for SCHIP but are not enrolled.

SCHIP will expire Sept. 30 without congressional action. Children's advocates and many health groups, including insurers and hospitals, have been pressing Congress to reauthorize and expand the program.

Since the start of the year, Baucus and other Democratic leaders have said that their goal is to boost spending on SCHIP enough to cover every child eligible for the program, an expansion that has been estimated to cost $50 billion over five years. But conservative Republicans, including President Bush, have pushed back, arguing that such a large expansion is unaffordable and is a step toward socialized medicine.

"Their goal is to take incremental steps down the path toward government-run health care for every American," Bush said June 27. He has proposed a far smaller increase of SCHIP that would limit eligibility for the program to children from families earning twice the poverty level or less, combined with tax deductions or credits for middle-income families to help them buy health insurance.

The agreement between Finance Committee members could be too small an expansion for some Democrats and too expensive for some Republicans. Sen. John Kerry, D-Mass., a member of the committee, said Tuesday that he was disappointed that the expansion would be smaller than many Democrats had hoped.

"It may be that's what has to happen to get the votes," he said.

But a large increase in the tobacco tax might be difficult for conservatives on either side of the aisle to support, especially those from Southern, tobacco-growing states. "That, in and of itself, will be a challenge on our side," said Finance member Olympia J. Snowe, R-Maine.

And other conservatives, such as Finance Republican Michael D. Crapo of Idaho, say they prefer Bush's proposal. "I'd prefer a solution more focused on a market-oriented approach," Crapo said.

There are still details to be resolved before the committee votes on the bill, members said, including an all-important analysis of the legislation's cost by the Congressional Budget Office. But Baucus said he is "very optimistic" that his months-long effort to reach agreement on the bill is nearly complete.

John Reichard contributed to this story.

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