Congress nears deal on children’s healthcare

House and Senate Democratic leaders are on the verge of a deal to expand the popular state-federal health insurance program for the children of working parents, setting up a major confrontation with President Bush, senior congressional aides said Friday.

At issue is the State Children’s Health Insurance Program, a federal-state partnership that covers about 6 million children and will expire Sept. 30 unless Congress and the president agree to extend it. In California, the program is known as Healthy Families.

Democratic aides said leaders in both chambers of Congress were nearing an agreement to spend about $35 billion more over five years, a level significantly below that approved by the House but close to the amount that cleared the Senate this summer by a vetoproof 68-31 vote. The new funding would expand the program to serve more children whose parents’ incomes are well above the poverty line -- an enlargement that has drawn a veto threat from Bush, who wants the program’s emphasis to remain on the poor.

The fate of the program is widely viewed as the most important healthcare decision facing Congress this year.

“There are still details being worked out, but there has been a realization in the House that the final bill needs to be closer to our bill,” a Senate aide, who asked not to be identified because of the sensitivity of the negotiations, said Friday. “There is a new spirit of ‘We’ve got to get this done,’ -- $35 billion is the number everybody is zeroing in on.”

House aides said that lawmakers in that chamber were moving closer to the Senate position but that some issues remained unresolved.

Washington contributes about $5 billion a year to the program, most of its cost. The House has passed an expansion of $50 billion over five years, and the Senate approved a lower figure of $35 billion. Bush has offered $5 billion more over five years, a figure that analysts say would not sustain the current caseload.

A central issue in the dispute between Congress and the administration is whether middle-class families with uninsured children should get help.

As the cost of coverage has risen, employers have trimmed healthcare benefits, leaving more middle-class families in a quandary. A study released Thursday found that nearly half the estimated 700,000 children added to the ranks of the uninsured last year were from families earning $40,000 to $80,000. About 9 million children in the United States are uninsured.

Many lawmakers and governors of both major parties want states participating in the program to be able to cover some uninsured middle-class children. In California, Gov. Arnold Schwarzenegger and Democratic leaders in the Legislature want to include uninsured children in families making as much as $60,000 for a family of four.

But the Bush administration says that approach would pave the way for government-run healthcare.

“Basically, we’re saying take the poorest kids and put them at the front of the line,” Kerry Weems, administrator of the Centers for Medicare and Medicaid Services, said this week.

To help middle-class families, Bush has proposed new tax breaks for private health insurance. However, his proposal would also change the tax treatment of health insurance for all employees, and that is considered too controversial to pass Congress.

Part of what’s driving congressional Democrats to make a deal on children’s health insurance is the fear that they -- and not Bush -- could be blamed for the collapse of the program if it succumbs to political gridlock.

“They don’t want to be in a situation where any delay [in renewing the program] was occasioned by Congress,” said Ron Pollack, executive director of Families USA, a liberal group that advocates for the uninsured. “They want to get this done and let the onus be on the president for vetoing it.”

Democratic congressional aides said staffers would work through the weekend to iron out differences and present a proposal to lawmakers early next week.

Some House Democrats are reluctant to back away from their bill because it would also make changes to Medicare that their party has long sought. It would trim overpayments to private managed care plans participating in Medicare, improve the new prescription drug benefit and roll back a scheduled cut in fees to doctors. Senators say those issues should be dealt with in separate legislation.

Both the Senate and the House plans would help pay for expanded children’s coverage through a hefty increase in tobacco taxes. The Senate’s calls for an increase of 61 cents on a pack of cigarettes, and the House’s for a 45-cent increase. House staffers are concerned that Democrats from tobacco-producing states may not vote for the final bill if it includes the Senate increase. The tax is now at 39 cents a pack.

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ricardo.alonso-zaldivar@latimes.com