Senate Liberals to Seek Health Insurance for Children : Congress: Pregnant women would be included in plan. Medicare savings and higher cigarette tax would pay for coverage.

Faced with a devastating defeat on health care reform, die-hard Senate liberals are mounting a long-shot effort to provide coverage to America’s 10 million uninsured children in what may be the final battle in the contentious drive to overhaul the nation’s medical insurance system.

As a “down payment” on future reforms, the group is urging Congress to adopt a proposal by Sen. Tom Harkin (D-Iowa) that relies on Medicare savings and a $1-a-pack cigarette tax to finance coverage of uninsured children as well as pregnant women, most of whom are said to be “working poor.”

“Out of the ashes of the attempt to have a universal coverage bill,” Harkin said Wednesday, “we can create universal coverage for the kids of this country.”

But with less than a month remaining before Congress goes home for the off-year elections, even such a seemingly straightforward bill faces daunting if not insurmountable obstacles.

With Republicans expected to make broad gains in November, few if any GOP senators now are willing to vote for any reforms--and hand President Clinton something of a small victory on what was to be the centerpiece of his presidency.

The increasingly partisan nature of the debate was underscored Wednesday by the fact that at least 15 Republican members--including those who have ardently championed children’s causes in the past--declined to join Senate Democrats in a Capitol Hill press conference called by children’s advocacy groups to urge congressional action.

“We are hoping, we are praying that the needs of children will override the political divisions,” said New York physician Irwin Redlener, long a children’s health advocate.

Throughout the 1980s, many Republicans joined Democratic majorities to enact measures that, year after year, broadened Medicaid eligibility for children, according to Peters D. Willson, vice president for government relations of the National Assn. of Children’s Hospitals and Related Institutions.

The move to target coverage for children and pregnant women came as Senate Majority Leader George J. Mitchell (D-Me.) continued his negotiations late Wednesday with a bipartisan group of about 20 senators calling themselves the “mainstream” coalition in hopes of hammering out a more ambitious reform package.

After meeting for more than an hour with four members of the “mainstream” group, Mitchell reported that “a great deal of progress” was being made, saying he plans to meet again with the group Monday afternoon.

But, Harkin said Wednesday, expressing a widely held sentiment on Capitol Hill: “I don’t see much that’s going to come out of that.”

Harkin and Redlener were joined at their press conference by Sens. John D. (Jay) Rockefeller IV (D-W.Va.), Tom Daschle (D-S.D.), Christopher J. Dodd (D-Conn.) and Harris Wofford (D-Pa.) and Rep. Patricia Schroeder (D-Colo.).

At any given time, about 6 million pregnant women and 10 million children are uninsured, and nearly 70% of such children have at least one employed parent.

Studies have shown that each $1 spent on childhood immunization saves as much as $10 in potential spending for hospitalizations and other treatments. Similarly, every $1 spent on prenatal care saves more than $3 in costs associated with premature and low birth-weight infants.

Harkin said that his bill would be fleshed out by early next week. In its current draft, all children starting in 1996 would have access to affordable insurance. While children in destitute families now are covered through Medicaid, the uninsured children of “working poor” families would receive subsidies with which to buy private coverage.

Harkin would provide full subsidies to families with incomes up to 200% of the poverty level. The subsidies would be phased out between 200% and 400% of poverty. The 1994 poverty level for a family of four is $14,800, so a family making up to $59,200 would be eligible for some subsidy.

His bill also would provide 100% deductibility for self-employed Americans, who now may deduct only up to 25% of the cost of health insurance. In addition, the bill would prohibit insurers from rejecting people with existing medical conditions.

Harkin’s bill comes with a price tag of $200 billion to $230 billion over 10 years. In addition to the cigarette tax hike and Medicare savings, Harkin would triple the amount some Medicare beneficiaries would pay for Part B insurance, which pays for doctor’s bills. The increases would affect individuals with more than $80,000 in yearly income and couples with more than $100,000.