President Bush and other critics of a $35 billion spending increase for children's health insurance say they'll support expanding coverage to families of four making as much as $62,000 a year, but they want to limit states' ability to go beyond that level.
About three dozen states ignore certain income when determining who can get government-subsidized health coverage. For example, many states exclude child support payments. Others deduct expenses for child care when determining who qualifies for the State Children's Health Insurance Program.
Congress is considering the renewal of SCHIP for an additional five years, but differences remain over who the program should cover and how much money should be spent. The flexibility that states have in defining income is one of the differences that will probably need to be resolved for Democrats to override a promised veto from Bush.
So far, the issue of "income disregards" has received little attention, but that started to change in last week's debate on the House floor.
"You leave it up to the states to say you can't have an income level over 300 percent (of poverty), but you can deduct $20,000 for a housing allowance or you can deduct $15,000 for shelter or whatever," said Rep. Joe Barton, R-Texas. "So, what you've got here is the classic bait and switch."
Rep. John Dingell, D-Mich., said that allowing states to exempt some income helps to ensure that low-income families don't have to resort to welfare to get health care for their children.
Another disagreement over the program's future is over the coverage of adults, even though the Bush administration approved most of the waivers that allowed adults into the SCHIP program. Now, the administration wants to remove those adults from the SCHIP rolls more quickly than called for in the bill that passed the House last week.
Under that bill, states would have to move an estimated 200,000 childless adults off SCHIP within one year. Also, by 2010, waivers covering about 500,000 parents would be paid from a separate fund. States that perform well on covering low-income children could continue covering parents through that fund, which would get a lower federal matching rate than under current policy, Dingell said.
Just last year, administration officials testified during congressional hearings that extending SCHIP coverage to parents increased the likelihood that their children would get health insurance too. But Health and Human Services Secretary Mike Leavitt now calls the coverage of parents an experiment that took resources away from poor kids. About a dozen states received waivers to cover parents through SCHIP.
"All adults should be moved off SCHIP when their state waivers come up for renewal or within one year, whichever comes sooner," said a policy statement issued by the White House last week.
The bill that passed the House on Thursday would allow about 3.9 million more uninsured children into SCHIP by 2012 — on top of the 6 million now enrolled. An additional 2 million children would leave private coverage by then and enroll in SCHIP, according to the Congressional Budget Office.
The president had recommended spending an additional $5 billion for SCHIP over the next five years. The bipartisan bill before Congress calls for a $35 billion increase, bringing total spending to $60 billion.
The administration announced last week that it could support policies that require more money than it previously recommended. Still, Leavitt cited about $10 billion that he believes should be trimmed from the bill before Congress.
The administration remains adamant that it won't support a tobacco tax increase to pay for SCHIP's expansion. Instead, it's calling on lawmakers to pick from $96 billion worth of new fees or spending cuts that were part of the president's budget this fiscal year. However, most of those proposals generated little support in Congress.
Among those recommendations were higher co-payments at the pharmacy for some veterans who are not disabled. Their copays would increase from $8 to $15 under the president's budget, saving about $1.6 billion over five years.
Bush also wants to make higher-income Medicare recipients pay more for their drug coverage as well as for their insurance for doctors' visits. Higher premiums for the drug benefit and doctors' services would generate more than $10 billion over five years, according to his budget.
The bill to expand SCHIP relies on a 156 percent increase in the federal cigarette tax, taking it to $1 per pack from the current 39 cents.
Supporters of the tax increase cite high public support for a tobacco tax. The Kaiser Family Foundation released a poll Friday showing that about 70 percent of those polled supported expanding SCHIP by $35 billion through higher tobacco taxes.
Tobacco tax supporters say higher prices for cigarettes deter smoking and save lives.
"The health benefits of higher cigarette taxes are substantial," says a 1990 report from the surgeon general. "By reducing smoking, particularly among youth and young adults, past tax increases have significantly reduced smoking-related morbidity and mortality."
The Senate is expected to take up next week the bill passed by the House. Democratic leaders are scheduled to meet Monday with a handful of Republicans seen as crucial to deciding whether more changes to the bill will give backers the all-important two-thirds majority necessary to override a veto.