Bush Threatens Veto of Children's Health Insurance Program

The Bush administration said Saturday that senior advisers would recommend the president veto Senate legislation that would substantially increase funds for children's health insurance.
The legislation calls for a 61-cent increase in the federal excise tax on a pack of cigarettes. The revenue would be used to subsidize health insurance for children and some adults with incomes too high to qualify for Medicaid but not enough to afford insurance on their own. Members of the Senate Finance Committee brokered a bipartisan agreement Friday that would add $35 billion to the program over the next five years. The Bush administration had instead recommend $5 billion.
The Senate legislation expands the State Children's Health Insurance Program beyond the original intent of the program, said White House Spokesman Tony Fratto.
"It's clear that it will have the effect of encouraging many to drop private coverage -- purchased either through their employer or with their own resources -- to go on the government-subsidized program," Fratto said. "Tax increases are neither necessary nor advisable to appropriately fund SCHIP."
Congress is considering renewing the program before it expires Sept. 30. When Congress approved the program in 1997, it provided $40 billion over 10 years. States use the money, along with their own dollars, to subsidize the cost of health insurance. The federal government covers about 70 percent of the cost.
"Congress needs to deliver a bill the president can sign or they need to send him an extension so that people don't worry about losing their current coverage," Fratto said. "It's important that Congress understands the serious consequences of delaying this or sending the president legislation that he clearly cannot sign."
Fratto also called on the Senate Finance Committee to consider the president's recommendation to tax employees on the health insurance premiums paid by their employers. The president would offset the increased taxes by giving taxpayers a deduction or credit. The result would be a tax cut for most families, but not for those with the highest-priced insurance plans.
"We believe that these proposals would mean that as many as 20 million others who have no health insurance would purchase basic coverage," Fratto said.
Sens. Charles Grassley, R-Iowa, and Orrin Hatch, R-Utah, had called on the president Thursday to step back from veto threats of legislation that had not been finalized yet.
Grassley and Hatch said they would like to consider the president's proposals to change how tax law treats health insurance. Such changes could make insurance more affordable for many families, but now is not the time, they said.
"Not taking that (tax proposal) on is a missed opportunity, but it's not realistic given the lack of bipartisan support," the senators said.
Grassley and Hatch were among the lawmakers that backed the agreement reached late Friday with key Democrats on the Senate Finance Committee. Sen. Max Baucus, D-Mont., the committee's chairman, said the proposal would lead to more than 3 million uninsured children obtaining health coverage. But others said that estimate is high because they believe some families that would sign up for the program would have already been getting their coverage through the private sector.