House approves boost for children’s healthcare plan

A divided House on Wednesday approved sweeping healthcare legislation that would expand government benefits for children and seniors while boosting tobacco taxes and cutting Medicare payments to private insurance companies.

The largely party-line 225-204 vote came after hours of rancorous debate and parliamentary stalling tactics by Republicans. Cheers rang out in the House chamber when Speaker Nancy Pelosi (D-San Francisco) announced that the legislation had passed.

The bill -- a wish list that expresses the pent-up desires of Democrats after more than a decade in the minority -- would expand a popular health insurance program mainly for the children of the working poor. It would also improve preventive benefits for Medicare recipients, provide low-income seniors more help -- particularly with prescription costs -- and roll back a scheduled 10% cut in Medicare fees for doctors.

The legislation faces a veto threat from President Bush and stiff opposition from GOP leaders, who have denounced it as a step toward government-run medicine. The Senate is expected to finish work on a compromise bill this week that deals only with the children’s program, not with Medicare. Republican and Democratic senators are trying to line up a veto-proof majority because Bush also opposes that measure.

“If they fail to reach a compromise on covering kids, it would be pathetic,” said Drew Altman, president of the nonpartisan Kaiser Family Foundation, an information clearinghouse on healthcare issues. “If they can’t agree on kids, what will they be able to reach a deal on when it comes to health reform? Failure to reauthorize [the children’s program] would damage many of the most important state health reform efforts around the country.”

Indeed, the outcome of the battle is crucial to Gov. Arnold Schwarzenegger’s plan to expand coverage in California -- and to competing proposals from Democrats. Both would rely on federal cash from the State Children’s Health Insurance Program to cover all California children. The federal-state program, known in California as Healthy Families, expires Sept. 30. Its renewal is viewed as the most important health coverage decision in Washington this year.

The California delegation split along party lines, with all Democrats in favor and all Republicans opposed.

Created by a Republican Congress in 1997 and signed into law by President Clinton, the program insures about 6 million children whose parents make too much to qualify for Medicaid but too little to afford private insurance. Still, between 8 million and 9 million children remain uninsured, and most qualify for help through government programs.

Washington contributes about $5 billion a year to the children’s program, which covers most of the cost. States design their own coverage plans, and most have opted to rely on private managed-care plans to insure children. But with the rising cost of health insurance, current funding levels can’t sustain the program. Some states have already seen funding shortfalls, and California may face that predicament as early as next year.

The House bill would add an additional $50 billion to the program over five years, for a total of $75 billion for the legislation. That would allow it to cover about 5 million more children. The Senate bill would add $35 billion over five years and cover about 3 million more children.

Many Republicans say that’s too much money. They complain that program spending has increased rapidly because some states have been allowed to cover children in middle-class families, and even adults.

“We want to reauthorize [the program] -- that fact cannot be emphasized enough,” said Rep. Jim McCrery (R-La.). “But we cannot support this proposal. Democrats want to raise taxes ... to fund a massive expansion of government-controlled healthcare.”

In the debate, some Republicans accused Democrats of wanting to expand the program to cover illegal immigrants, and of trying to foist a “hidden tax” on private insurance.

Democrats called those charges distortions.

The bill would give states the option to cover children of legal immigrants. It would also allow states to establish methods for verifying citizenship. That would reverse recent federally mandated documentation requirements that critics say are too burdensome and have had the unintended consequence of denying coverage to some citizens.

“The [bill] does not allow one single dime to be spent on illegal immigrants,” said Rep. John D. Dingell (D-Mich.).

The tax on insurance is a $2-per-person fee that would be used to fund research into cost-effective treatments that could save money for individuals, employers and government programs, said a Democratic aide.

Both bills would more than double tobacco taxes -- the House bill would raise the 39-cent tax on a pack of cigarettes by 45 cents and the Senate measure by 61 cents. But because the House legislation attempts to do much more than its Senate counterpart, its sponsors had to come up with additional funding.

To cover more children, improve benefits for seniors in Medicare, and roll back fee reductions for doctors, Democrats want to cut payments to private managed-care plans that participate in Medicare. Congressional analysts have found that those fees are inflated by about 12% per beneficiary when compared with the cost of caring for seniors in traditional Medicare.

Doing that, according to the health insurance industry, would force about 3 million seniors -- about one-third of those now enrolled -- out of Medicare managed-care plans.

If Democrats insist on trimming the managed-care program, it would unravel the Senate deal, warned a key backer of that compromise. “If they do that, I’d be off the bill,” Sen. Orrin G. Hatch (R-Utah), an original author of the children’s program, told reporters Wednesday.

ricardo.alonso-zaldivar@latimes.com