A Battle Over Expansion of Children's Insurance

Published on
by
the New York Times

A Battle Over Expansion of Children's Insurance

by
Robert Pear

WASHINGTON, July 8 - The fight over a popular health insurance program for children is intensifying, with President Bush now leading efforts to block a major expansion of the program, which is a top priority for Congressional Democrats.
The seemingly uncontroversial goal of insuring more children has become the focus of an ideological battle between the White House and Congress. The fight epitomizes fundamental disagreements over the future of the nation's health care system and the role of government.0709 03

Democrats have proposed a major expansion of the program, the State Children's Health Insurance Program, to cover more youngsters with a substantial increase in federal spending.

Administration officials have denounced the Democratic proposal as a step toward government-run health care for all. They said it would speed the erosion of private insurance coverage. And they oppose two of the main ideas contemplated by Democrats to finance expanded coverage for children: an increase in the federal tobacco tax and cuts in Medicare payments to private insurance companies caring for the elderly.

White House objections to the Democratic plan are "philosophical and ideological," said Allan B. Hubbard, assistant to the president for economic policy. In an interview, he said the Democrats' proposal would move the nation toward "a single-payer health care system with rationing and price controls."

Democrats said the insurance program, created 10 years ago with bipartisan support, had improved access to care for millions of children and sharply reduced the number who were uninsured. Democratic leaders in both houses of Congress - with support from doctors, consumer groups and many state officials - want to increase enrollment in the program, which served 7.4 million people at some time in the last year.

"We expect a showdown on the Senate floor at the end of this month," said James P. Manley, a spokesman for the majority leader, Senator Harry Reid, Democrat of Nevada. "The program, which has enjoyed broad bipartisan support, is under assault by right-wing Republicans."

State officials fear that the conflict in Washington could lead to an impasse.

"I am getting more and more nervous about the future of the program," said Judith Arnold, director of the Children's Health Insurance Program in New York.

In California, Gov. Arnold Schwarzenegger, a Republican, said it was "absolutely essential" that Congress renew and expand the program. Like many Democrats, he said Congress should increase spending by $50 billion over the next five years - the amount decried by Mr. Bush as "a massive expansion."

Several Republican senators said they would work with the White House to prevent a major expansion of the program.

John Hart, a spokesman for Senator Tom Coburn, Republican of Oklahoma, said Mr. Coburn saw the Democratic plan as "part of an effort to bring everyone into a socialized health care system, a clarion call for Hillary Care, part two," referring to the Clinton administration plan for universal coverage. Senator Jim DeMint, Republican of South Carolina, shared that view.

In a June 28 memorandum, House Democratic leaders said they hoped that providing coverage for more children would be "the signature Democratic health achievement" of this Congress. But, they predicted, "The administration will battle us every step of the way." The memorandum was sent by Representatives John D. Dingell of Michigan, Frank Pallone Jr. of New Jersey, Charles B. Rangel of New York and Pete Stark of California.

Bush administration officials recently advised drug company executives not to support a major expansion of the program.

The Pharmaceutical Research and Manufacturers of America, a trade group, has been running television and newspaper advertisements that praise the program and urge Congress to renew it. The television advertisements show children cavorting on a playground and singing a jingle, "If you're healthy and you know it, clap your hands."

The drug industry has joined four organizations in a coalition to whip up support for the program. The coalition, Americans for Children's Health, was incorporated last month and has a budget of several million dollars, mostly for advertising. Directors include lobbyists from the American Health Care Association, which represents nursing homes; the American Medical Association; Families USA, a liberal-leaning nonprofit consumer group; and the Federation of American Hospitals, which represents for-profit hospitals.

Mr. Hubbard said such groups "would be making a huge mistake to support expansion of the Children's Health Insurance Program" along the lines proposed by Democrats.

In an interview, Michael O. Leavitt, the secretary of health and human services, said he had conveyed the administration's concerns to Billy Tauzin, the president of Pharmaceutical Research and Manufacturers of America, and Kevin W. Sharer, the chief executive of Amgen and chairman of the trade association.

The federal government spends $5 billion a year on the children's insurance program. If spending continues at that level, it would total $25 billion over five years. Congress has adopted a budget blueprint providing up to $50 billion more, for a total of $75 billion over five years. That dwarfs the $5 billion increase over five years proposed by Mr. Bush in February.

The Congressional Budget Office estimated that enrollment in the program would "fall to 6.7 million" under the president's proposal.

In recent days, the Bush administration has taken several steps to slow momentum for expansion of the program:

¶The Department of Health and Human Services has tried to redefine the magnitude of the problem by issuing a new study that says one million uninsured children are already eligible for Medicaid or the children's insurance program. Previous estimates by private researchers and government experts put the number at more than 5 million.

¶Regional directors of the department have sent identical letters to newspapers, warning against "a government takeover of the health care marketplace."

¶Administration officials said Congress should include the president's proposal to change the tax treatment of employer-sponsored health benefits as part of any legislation to renew the children's insurance program.

In his 2008 budget request, Mr. Bush proposed replacing virtually all of the current tax breaks for health insurance with a new standard deduction for any taxpayer who buys a qualifying health plan. House Democratic leaders have flatly rejected the proposal. Senate Democratic leaders have said it has no place in a bill to cover children.

To return the children's insurance program to what he calls "its original intent," Mr. Bush has asked Congress to reduce federal payments to the states for coverage of children in families with incomes of more than twice the poverty level. (A family of four is considered poor if its annual income is less than $20,650.) At least 18 states cover children with family incomes more than twice the poverty level.

In Indiana, Gov. Mitch Daniels, a Republican who was Mr. Bush's first budget director, recently signed a bill into law that raised the ceiling to 300 percent of the poverty level, from 200 percent.

The New York State Legislature recently approved a proposal by Gov. Eliot Spitzer, a Democrat, to increase the eligibility limit to 400 percent of the poverty level.

Mr. Leavitt said it was absurd that "families making over $81,000 a year would have children eligible for public assistance."

Mr. Bush and some Republicans in Congress worry that as public coverage becomes available to families with higher incomes, it tends to replace private coverage.

In a recent report, the Congressional Budget Office said that for every 100 children who get public coverage as a result of the children's insurance program, "there is a corresponding reduction in private coverage of between 25 and 50 children."

That increases the cost of efforts to expand coverage, according to the budget office, because the government inevitably picks up some people who recently had private insurance when it tries to sign up the uninsured. Thus, the budget office said, to reduce the number of uninsured children by three million, states may need to add four million to six million children to the rolls.

Peter R. Orszag, director of the budget office, said that other efforts to expand coverage - for example, by offering tax breaks for buying private insurance - faced a similar challenge: some benefits would go to people who already had coverage.

Copyright 2007 The New York Times Company

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