President Bush has threatened to veto proposed expansion of a program for families who earn too much for Medicaid but cannot afford insurance for their children, to be financed by an increase in the federal tax on tobacco.

Created by the Balanced Budget Act of 1997, the State Children’s Health Insurance Program, also known as SCHIP or CHIP, currently provides health coverage for 6.6 million low-income children.

About 3.3 million more would be covered under a bipartisan compromise measure being hammered out in the Senate, paid for in large part by a 61-cent increase in the federal excise tax on cigarettes, to $1 a pack.

Supporters say the genius of the proposition is it will also reduce smoking, a further health benefit.

Some opponents say it puts an unfair tax burden on smokers, but most of the opposition comes from Republican leaders in the House and Senate and the White House, who view it as a Trojan horse setting the stage for a future government-run healthcare system.

SCHIP allows each state to design its own insurance program targeted toward low-income children, with the federal government paying about 70 percent of the cost and the state 30 percent. The program has proven popular. SCHIP plans have been approved in all 50 states, the District of Columbia and five territories. Unless Congress acts, the program expires in two months.

Health and Human Services Secretary Michael Leavitt said over the weekend in a chat on the White House Web site the administration supports reauthorization of the program, which expires Sept. 30.

“We do not want to see the coverage of children in any way jeopardized,” he said. But, he added, “It should not become the tool by which we extend insurance through the federal government to all Americans.”

The White House says huge increases in the program, which currently costs the federal government $5 billion a year, will encourage Americans that are already insured to drop private coverage to go with the government-subsidized program.

“I’m worried that there will be a strong incentive for people to switch from the private sector to the government,” President Bush said in an interview with the Washington Post. Bush said he instead supports improvements to the healthcare system through the tax code.

The House and Senate are considering separate bills to continue and expand the program. The House version would increase current spending of $25 million over five years to $75 million. The more-modest Senate version, approved 17-4 by the Senate finance committee, would cost $60 billion over five years. The president is offering an increase of $5 billion, to $30 billion over five years.

Two high-ranking Senate Republicans asked the president to back off of a veto threat at least at least until the legislation is finalized.

“What the administration needs to understand is that if a bipartisan plan isn’t achieved, then the Democratic-controlled Congress will, at the very least, extend the current program with all the terrible policy provisions that have evolved, such as waivers for childless adults and coverage for higher-income kids,” Sens. Chuck Grassley (R-Iowa) and Orrin Hatch (R-Utah) and said in a joint statement.

Grassley, the ranking Republican on the finance committee, and Hatch said they are working with to keep focus on the program’s original intent, low-income children. They are concerned that the Department of Health and Human Services has approved and extended state waivers to cover adults. “Simply put, adults should not have been added to a program for low-income children,” they said.

Separate from those issues, the two senators said, the cost of an extension sponsored by Democrats alone is certain to cost more than a bipartisan measure. Their appeal didn’t move the president.

“I disagree,” Bush told the Post in response to a question about Grassley and Hatch. “I’m not going to surrender a good and important idea before the debate really gets started. And I think it’s going to be very important for our allies on Capitol Hill to hear a strong, clear message from me that expansion of government in lieu of making the necessary changes to encourage a consumer-based system is not acceptable.”

Proponents say a byproduct of the proposed legislation would be saved lives. Cigarette smoking is the leading cause of preventable death in the United States. According to the Centers for Disease Control, smoking causes about 440,000 premature deaths in the U.S. each year and costs about $157 billion in annual health-related economic loss.

The American Cancer Society says raising the price of cigarettes by 10 percent a pack would cut overall use by 4 percent, saving thousands of lives each year.

Grassley, the Iowa senator who urged Bush to give Congress a chance to work out bipartisan legislation, is a Baptist and a scheduled speaker at the New Baptist Covenant Celebration in Atlanta in January 2008.

Bob Allen is managing editor of EthicsDaily.com.

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