Despite veto threat, Senate panel OKs youth health plan

Times Staff Writer

Defying a veto threat from President Bush, a Senate panel on Thursday overwhelmingly approved a compromise to expand health insurance for children of low-income working families by sharply hiking tobacco taxes.

The 17-4 Finance Committee vote underscored the popularity of the State Children’s Health Insurance Program, which insures about 6 million children across the country. In California, where the program covers about 800,000 children, it is known as Healthy Families.

Six of the 10 Republicans on the panel joined all 11 Democrats in supporting the plan.

Until now, the program has been a federal-state collaboration with broad support from both parties. Backers fear it will become a lightning rod for partisan politics, jeopardizing its future. Legal authority for the program expires Sept. 30, and its renewal is generally considered the most important healthcare decision Congress will make this year.


The program costs the federal government about $5 billion a year, with states contributing additional amounts. The Senate plan would add about $35 billion in federal money over five years, enough to cover an additional 3.3 million out of as many as 9 million uninsured children.

To pay for that, the plan would boost taxes on tobacco products. The cigarette tax would rise to $1 a pack from 39 cents now. And taxes on cigars would more than double to as much as $10 for the most expensive ones.

“It doesn’t make me comfortable to advocate for such a large increase in spending,” said Sen. Orrin G. Hatch (R-Utah), a panel member. “But it’s important to note that [the program] has been tremendously successful. And one of the lessons we’ve learned is that it’s going to cost more to cover additional kids.”

Hatch, one of the authors of the program in the late 1990s, helped negotiate the committee compromise.

But Bush wants to hold the line on spending, adding about $5 billion to the program over five years. Critics say that is too little, and with the rising cost of healthcare, it will not be enough to cover all the children currently in the program.

Democrats in the House -- and many in the Senate -- want to spend an additional $50 billion or more to cover the majority of uninsured children. But the Republican backers of the Senate plan have said they would not support such a funding increase.

During an appearance in Nashville on Thursday, Bush denounced the Senate plan as “the beginning salvo of the encroachment of the federal government on the healthcare system.”

The day before, in Landover, Md., he said: “If Congress continues to insist upon expanding healthcare through the S-CHIP program -- which, by the way, would entail a huge tax increase for the American people -- I’ll veto the bill.”


Such polarization of the issue would undermine the consensus on covering children, one of the few areas of agreement in the contentious debate over how to expand healthcare coverage and rein in costs.

“This program was developed as a compromise and does not reflect any one party’s ideological views,” said Alan Weil, director of the National Academy for State Health Policy, a nonpartisan group that advises states. “It would be a really tragic development ... to drag it into the 50-year-old debate about the role of government in healthcare.”

In a letter to the Senate panel, Health and Human Services Secretary Mike Leavitt warned that the legislation would “dramatically shift costs to the federal government and increase the number of individuals who become dependent on government programs for health insurance.”

Leavitt called the tobacco levy a “massive, regressive tax increase.”


But Senate Finance Committee Chairman Max Baucus (D-Mont.) accused the administration of “blocking the way” for children, adding that he sees the tobacco tax increase as a public health measure that will save lives.

“When given the choice between standing with big tobacco companies and standing with kids, I stand with America’s children,” Baucus fired back in a letter to Leavitt.

Hatch called the Senate plan “a true compromise, a conservative-liberal compromise.”

Supporters of a major expansion of the children’s program include the American Cancer Society, the American Medical Assn. and AARP, the seniors lobby. It is also backed by America’s Health Insurance Plans, the main health insurance industry trade group. Most of the children covered under the program are enrolled in private managed-care insurance plans.


Bush wants Congress to also consider a plan he unveiled in his State of the Union message to provide tax deductions for individuals and families to buy private health insurance.

But Baucus said that proposal was too complex and too controversial to attach to the children’s legislation and accused the administration of attempting to hold the children’s program “hostage” unless it gets its way.