Stage being set for showdown on healthcare

WASHINGTON -- The move to offer government-funded health insurance to more poor and low-income children is headed for an apparent showdown this fall between Congress and President Bush, after the Senate passed legislation late Thursday with 68 votes -- just one vote more than lawmakers need to override a threatened veto from the president.

While the final outcome remained uncertain for the State Children's Health Insurance Program, or SCHIP, supporters of the House and Senate bills passed this week said the two pieces of legislation represented great hope for millions of children without health insurance.

"This is the biggest step forward in health insurance for kids of low-wage workers that's happened since this program started 10 years ago," said Lew Finfer, director of Massachusetts Communities Action Network, a federation of faith-based groups. "It puts you on the edge of your seat because we're really close. If President Bush vetoes it, that's a real setback, but there's a chance now to override his veto."

But the House and Senate bills are markedly different in many respects. Lawmakers from both chambers will meet early this fall to find compromises, under a tight deadline: SCHIP is set to expire Sept. 30.

The Senate bill would expand the program from covering 6.6 million mainly low-income children to 9.8 million -- a change that would add $7 billion a year to the program's price tag over the next five years. The cost increase would be covered by a 61-cent rise in the cigarette tax, which would go from 39 cents to $1 a pack.

The House measure is more sweeping, expanding the rolls of insured children to 11 million at a cost of $15 billion over five years. And it would be funded by a combination of tobacco tax increases -- a cigarette pack would cost 45 cents more -- and reductions in federal subsidies to insurance companies that offer private health plans for Medicare beneficiaries.

The House bill also would cover immigrants, while the Senate bill would not.

Bush has repeatedly said that he opposed both bills, predicting that expanding the program would lead more families to abandon their own health insurance plans to take advantage of the government-funded insurance. The White House said the Senate bill "goes too far in federalizing healthcare."

Senator Edward M. Kennedy, the Massachusetts Democrat who was one of the sponsors of the original SCHIP bill, which became law in 1997, said yesterday that the program isn't run by the government, but rather by states using private insurance companies.

"This is a battle that I can't understand why he wants to fight," Kennedy said of Bush.

Compared with the bills before Congress, Bush favors a more modest SCHIP increase of $5 billion annually over the next five years, capping eligibility to 200 percent of the poverty level, which is $41,300 for a family of four. Opponents say it would mean that many states, including Massachusetts, would have to drop thousands of low-income children from their programs.

In July 2006, Massachusetts raised eligibility to children in families earning 300 percent of the poverty level, or $61,950 for a family of four. Now, 90,500 children in Massachusetts are covered under the program.

"You have the president talking about limiting this to a family of four earning $41,000 a year," Kennedy said. "Do you expect that family to be able to afford $10,000 in health insurance?"

But the arguments against the plans, especially the House proposal, are expected to be fierce. Representative Ron Lewis, a Kentucky Republican, yesterday denounced the House bill for including immigrants.

"That bill, if it becomes law, would take $197 billion out of the Medicare trust fund, from our seniors, to give to illegal aliens," Lewis said.

"It also takes money from legitimate kids here in the United States and gives it to people who are not citizens," he said.

AARP, which represents roughly 39 million older Americans, supports the House bill in part because it shifts the costs from private insurance plans for Medicare beneficiaries and gives modest increases to Medicare payments to doctors over the next two years.

Leaders of both parties said yesterday that the legislation's future remained murky.

"We look forward to reconciling those bills and sending them to the president's desk," said House Speaker Nancy Pelosi, a California Democrat.

Senator Mitch McConnell, the Senate minority leader and a Republican from Kentucky, said "nobody's against health insurance for truly low-income children. . . . We got a long way to go in children's healthcare before we get to the end of the trail, but hopefully at the end we'll have a program for low-income children, which is what was designed to do 10 years ago."

John Donnelly can be reached at donnelly@globe.com.