Rep. John Dingell (D-Mich.) (WDCpix)

Nine months ago, Democratic leaders on Capitol Hill were all celebration as they hailed the renewal of the popular Children’s Health Insurance Program. Last week, they called for CHIP’s demise.

The $894 billion, 1,990-page health reform bill unveiled by House Democrats last Thursday would repeal CHIP at the end of 2013, shifting millions of kids instead into private plans contained on a proposed health insurance marketplace, dubbed the exchange.

Party leaders have been mostly tight-lipped about their motivations. But a series of factors seem to have driven their decision, according to sources on and off Capitol Hill, including hopes to get family members under the same plan, to centralize control of the state-run CHIP program, and to shift more folks into private coverage to win the support of both the insurance lobby and moderate Democrats.

Image by: Matt Mahurin

“The president has promised to build upon what works and to allow people to keep the coverage they have,” said a representative of one children’s welfare group, speaking only anonymously because of the delicate political nature of the topic. “That promise should apply to kids as well. However, there is growing concern and evidence that the health insurance exchanges will still impose higher out-of-pocket costs for families with fewer benefits for children than CHIP coverage.”

The criticisms over CHIP have raised questions about the importance of the program, with some advocates fighting for its preservation while others maintain that the coverage itself is more important than the program that provides it. The House proposal also sets the stage for a CHIP clash between House Democrats and those in the Senate, where a provision preserving the program was passed by members of the Finance Committee last month.

House lawmakers are planning to vote on their sweeping health reform proposal as early as this week.

Under the House bill, federal funding for CHIP would cease on Oct. 1, 2013, with kids permitted to remain in the program through the end of the year if funds permit. At the start of 2014, however, the program would end, with kids shuffling into private plans on the exchange. An exception would be made in those states that have opted to use their CHIP funds to expand Medicaid rather than create stand-alone CHIP programs. In those cases, children would remain in the Medicaid program.

The shift is indication that House Democratic leaders don’t envision a place for CHIP within the framework of the comprehensive health care reforms they hope to pass this year – reforms that include a broad expansion of Medicaid and subsidized coverage for folks earning below 400 percent of poverty, or $88,200 for a family of four.

The proposal also marks a reversal from the Democrats’ health policy position of the past two years. Created in 1997, CHIP was originally authorized for 10 years, leading to a political showdown between the Democratic Congress and President George W. Bush in 2007, when it came up for renewal. An expansion bill easily passed Congress, but Bush vetoed the measure twice, prompting Democrats to accuse the White House of putting politics above the welfare of kids. Leading the critics was House Speaker Nancy Pelosi (D-Calif.), who called the vetoes “sad” and “cruel.”

The bipartisan program had suddenly become partisan, and the Democrats were its champion.

After a series of short-term extensions, President Obama signed a 5-year, $33 billion CHIP extension into law in February, leaving the program to expire Oct. 1, 2013.

Pelosi’s office did not respond to calls and e-mails for comment. But another one-time CHIP champion, former Energy and Commerce Chairman John Dingell (D-Mich.), said that moving kids from CHIP to exchange plans has at least two distinct advantages: First, CHIP requires renewal every few years, leaving the program’s longevity to the whims of Congress. And second, exchange coverage could wrap kids and their parents into the same insurance plan — a strategy the Michigan Democrat says will increase enrollment of youngsters.

“The most important thing is to cover the children,” Dingell said in an email. “As effective as CHIP has been, families constantly must deal with long wait lists or block grants running out. Families in the Exchange or Medicaid will not have the same problems.”

A recent report from Inside CMS, a trade publication, points to another reason that Democrats might have proposed an end to CHIP: Moving kids to the exchange “would significantly improve the risk pools for private insurers, a boon for insurers,” the paper reported, citing an unnamed Senate Democratic aide.

Several independent analyses have questioned the wisdom of moving kids from CHIP to the exchange, warning that the transition will leave some kids without access to health care. One report, conducted by Watson Wyatt Worldwide, a financial consulting firm, found that most families living at 175 percent of poverty pay nothing to enroll their kids in CHIP, while those living at 225 percent of poverty pay about 2 percent of health care costs. By contrast, those same kids getting coverage through private insurers on the exchange would pay between 5 percent and 35 percent of treatment costs, respectively — a shift “greatly increasing their financial burden and leaving low-income children worse off as a result of health reform,” the researchers noted. The Watson Wyatt study was commissioned by First Focus, a children’s health advocacy group.

More recently, the Congressional Budget Office examined a Senate proposal to repeal CHIP, reaching the same conclusion that the increased costs to low-income families would leave some kids without any coverage at all.

“Under the mark as it was originally offered, which would have eliminated CHIP, CBO anticipated that some of those children would be eligible for subsidized coverage in the exchanges but would not be enrolled in an exchange plan (owing at least in part to the higher premiums and higher out-of-pocket costs that they would typically face in such a plan),” CBO Director Douglas Elmendorf wrote last month.

That analysis is moot, however, because Sen. Jay Rockefeller (D-W.Va.) successfully preserved CHIP during the markup of the Senate bill in the Finance Committee.

Rockefeller’s office did not respond to requests for comment for this story. But if his words during the Finance debate are any indication, the West Virginia Democrat will likely fight during the House-Senate conference negotiations to keep CHIP alive.

“I don’t believe that we can force vulnerable kids into private coverage,” Rockefeller said in the wee hours of Oct. 2. “That’s what we’d be doing. They’d lose that special kind of defined benefit that comes under Medicaid, which you can argue, I guess, in some cases, but you can’t argue on kids and particularly young kids. You cannot do that. They have requirements that you have to meet and can only be met through Medicaid, not in the exchange, where they’re at the mercy of people that will have them for lunch.”

House Democrats are not blind to those concerns. An amendment to the House bill, sponsored by Rep. Diana DeGette (D-Col.), would have blocked the transition from CHIP to private coverage unless White House health officials could certify that those youngsters would receive comparable care under the exchange plans. But after passing the House Energy and Commerce Committee earlier in the year, DeGette’s provision was diluted to remove the certification requirement. Instead, the final bill requires the Health and Human Services Department to provide Congress with a cost and benefit analysis of CHIP plans versus those on the exchange, including recommendations for a smooth transition. The report is due by the end of 2011 — 12 months before the exchange would launch.

DeGette’s office argued that the final bill retains the initial safeguards because it extends CHIP for the final three months of 2013, providing time for the exchange plans to develop, as well as additional cushion for lawmakers to examine those plans in the context of the White House recommendations. If there are concerns that the exchange plans won’t offer comparable coverage, said DeGette spokesman Kristofer Eisenla, then lawmakers can always extend the CHIP program.

Reauthorizing CHIP, however, would require yet another act of Congress — and a lot more money.

Indeed, critics are questioning the value of the HHS analysis without some guarantee that kids won’t be forced into lesser health plans. “The teeth of that amendment were what made the report matter,” said the child welfare advocate.

House Democrats are also dismissing the CBO’s analysis of the CHIP repeal, arguing that different enforcement and funding mechanisms in the House bill make Elmendorf’s statement irrelevant. “They’re like apples and oranges,” Eisenla said of the two chambers’ bills.

Dawn Horner, senior project director at Georgetown University’s Center for Children and Families, an advocacy group, applauded some of the CHIP proposals contained in the House bill. The provision to keep CHIP-funded Medicaid patients in the Medicaid program, for example, is a step above the Senate proposal, she said. Also, the House bill has better affordability protections for kids on the exchange, Horner added. The combination makes it difficult to determine whether CBO’s analysis of the Senate bill holds for the House proposal, she said.

CBO did not respond to requests for comment on the CHIP provisions of the House bill.

Still, Horner was quick to add that the House bill should go further to ensure that kids aren’t forced to move into exchange plans if those plans are deemed to be of lesser quality than CHIP. The original DeGette amendment provided that protection, she said, “but there’s nothing in there right now… The hope is to get something stronger [as the bill proceeds].”

The amendment, which would provide financial incentives for people to trade in their old vehicles for more fuel-efficient ones, arose from a compromise between two competing cash-for-clunkers bills, one of which was authored by Sutton and both of which contained much stronger environmental standards than the final product.

Sutton’s bill would have required the new vehicle to get at least 27 miles per gallon, while the bill favored by environmentalists would have mandated 25 percent higher fuel efficiency than the average vehicle in its class. The Sutton amendment — co-sponsored by John Dingell (D-Mich.), Jay Inslee (D-Wash.), Bart Stupak (D-Mich.) and Bruce Braley (D-Iowa) — requires just a 4-mpg improvement over the old vehicle for passenger cars, as long as the “clunker” got no more than 18 mpg. And for large light-duty trucks, a driver is eligible for a $3,500 voucher if he or she upgrades to a vehicle that’s only 1 mpg more efficient.

The result is that people can receive $3,500 to buy a car that gets just 22 mpg — this on the same day that President Obama announced new regulations that will mandate that cars get 42 miles to the gallon by 2016.

And so in introducing her amendment, Sutton framed it in terms favoring the auto industry, rather than the environment.

“Over the last few months, auto sales have greatly suffered,” Sutton said. ” … This program has the potential to help change that.”

Another sign that the amendment lacks real environmental teeth: it’s getting broad support from the Republican side of the aisle.

Update 4:45 PM: The amendment just passed, with 50 votes in favor, 4 against and 1 present.

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While the numbers are noteworthy, the real significance here lies in the sponsors of the agreement. Energy and Commerce Chairman Henry Waxman (D-Calif.) and Energy and Environment Subcommittee Chairman Ed Markey (D-Mass.) are, not surprisingly, at the top of the press release. But so are Rep. John D. Dingell (D-Mich.), Rep. Rick Boucher (D-Va.), Rep. Bart Gordon (D-Tenn.), and Rep. Mike Doyle (D-Pa.) — all moderate Congressmen from coal- or industry-reliant states who were considered swing votes on the bill.

Boucher said he was “pleased with the product we are able to put forward on this issue,” while Dingell, the former Energy and Commerce chairman who has expressed strong reservations about the bill, said the compromise “moves the ball forward significantly in terms of renewable energy, but does so in a framework within which all states can operate.”

The renewable electricity standard is merely one of several controversial components of the legislation. Still, Waxman appears open to compromise, and the moderate Democrats on the committee, who previously expressed concern over the renewable energy provisions, have agreed to what is really only a modest change. Democrats may indeed be able to vote this bill out of committee by Waxman’s Memorial Day target.

Update: Just a few minutes later, the Energy and Commerce leadership sent out another press release, announcing a compromise on the allocation of carbon allowances to the auto industry. The Obama administration has pushed for all allowances to be auctioned off to polluters, not given away for free. The Alliance of Automobile Manufacturers, representing eleven major vehicle manufacturers, has asked Congress to give the auto industry 5 percent of all allowances for free. The compromise: the industry gets 3 percent of allowances until 2017, and then 1 percent until 2025. Again, Dingell’s name is on the press release. One step closer to a bill that House Democrats can pass.

Update 2: And now they’ve released a compromise on allowances for “energy-intensive, trade-exposed industries,” which will receive 15 percent of allowances, as expected. In 2025, the president (whoever that may be) will determine whether the continued allocation of allowances is needed. What remains: the allocation to electric utilities, which are expected to receive 35 percent of allowances.

As Mike flagged yesterday, Waxman, the chairman of the House Committee on Oversight and Government Reform, will challenge Rep. John Dingell (D-MI) for the post of House Energy and Commerce Committee chair. Waxman called Dingell this morning. A Dingell spokesman has called the challenge “unhealthy.”

Dingell is the most senior member of the Democratic caucus,  having been in Congress since 1955.

But Waxman may be well-positioned to challenge Dingell for the chairmanship of the committee that has jurisdiction over energy, the environment and health care policy.

In his two years as House oversight chair, he’s been– perhaps along with Sen. Barbara Boxer (D-CA) — the most outspoken critic of George W. Bush’s environmental policies. While Waxman spent much of 2007 investigating the Iraq war, his focus this year has largely been on the EPA’s failure to draw up global- warming regulations.

Dingell has been criticized by Waxman and House Speaker Nancy Pelosi (D-CA) for putting the needs of the auto industry ahead of environmental concerns. Pelosi even campaigned for Dingell’s primary opponent in 2002.

A 50-member Democrat steering committee and then the full Democratic caucus will vote on whether Waxman or Dingell gets the powerful post. If Waxman loses, it’s not known whether he would return to the oversight committee. The No. 2 Democrat on the committee in terms of seniority is Rep. Edolphus Towns, (D-NY), chairman of the committee’s government management subcommittee.

The last hearings that Towns held were on the presidential transition and “Management of the Digital TV Transition: Is New York Prepared?”

Waxman’s possible departure would not be the only big change in the world of House oversight. Top committee Republican Tom Davis of Virginia retired. And No. 3 Republican Chris Shays was not reelected. Shays was the lone remaining New England Republican in the House.

Sen. John McCain (WDCpix)

BIRMINGHAM, Mich.– Battleground no more.

For the past several months, the Republican and Democratic nominees for president have targeted this fading center of the Rust Belt, with its 17 electoral votes, as a winnable state — part of each party’s electoral strategy to take the White House.

Now, that plan for one ticket, that of Sen. John McCain and Gov. Sarah Palin, lies in smoldering ruins. As early as yesterday afternoon, reports began to filter out that the McCain campaign had suspended its efforts here and would be cutting staff as well as advertising.

McCain was essentially giving the state that George W. Bush narrowly lost, by five percentage points or less in 2000 and 2004, to Sen. Barack Obama.

Illustration by: Matt Mahurin

Before I traveled here, Debbie Dingell, the wife of the venerable Rep. John Dingell, talked with me about Michigan. A Democratic National Committee member, General Motors executive and political power in her own right, she explained why the state is so complicated and considered such a political prize:

“Michigan is the definition of a battleground state. It’s got a divided legislature. It’s gone back and forth on who its governors are. You’ve got two Democratic senators. But in a 15-member congressional delegation, six are Democrats and nine are Republicans. It’s a split state, and that’s what people forget. You have distinct urban agendas next to distinct rural agendas. You’ve got unions but also a strong religious community.”

To be certain, McCain’s move–or move-out–took all sides by surprise. As the darkened Detroit afternoon turned into a chilly night, political operatives and reporters alike were left a little like the characters in “Heroes” — disoriented and confused after the Haitian guy wipes away their memories.

For months now, Obama and McCain have been in a statistical dead heat — with the Democratic nominee only pulling ahead a little bit in the past few weeks. As a result, Michiganders have grown accustomed to frequent visits by the two candidates, who both promise to reroute the internal wiring of Michigan’s economic engine to make it a state that will thrive from the new, clean-energy-based economy. One half-expected McCain to ride out of Detroit in a Chevy Volt. As late as July, McCain told an audience here, “The state of Michigan, as it has in many elections in the past, will determine who the next president of the United States is.”

Now the Michigan GOP must travel alone — fighting in their leader’s name but without their actual leader. While polls over the past week have showed as much as a 10-point swing in favor of Obama, it’s precisely that volatility that made Michigan a state to stay in and fight for.

In a state where the Reagan Democrats were virtually born, there remains strong support for McCain despite recent events. But in the wake of the economic implosion, McCain has fallen behind Obama by an average of 7 percentage points in most polls.

McCain’s lack of authority on the economy and his fumbling response to the Wall Street meltdown have hurt him as the financial crisis seized the national psyche. He first said he would put his campaign on “hold” to help solve the problem in Washington, and then he returned to the hustings, which has led some voters to regard him as erratic. One report even cited that a fear among McCain campaign officials in Florida of a recent Obama surge in the Sunshine State contributed to the Arizona senator’s decision to quit Michigan.

But still, McCain defeated Bush in Michigan during their testy primary battle in 2000, and it is the home of a substantial number of white, working-class voters who Obama struggled to win over in the Democratic primary campaign. In short, this was a race McCain might have won.

“I certainly would have waited till after the debate tonight,” said Republican pollster Steve Mitchell before Sen. Joe Biden and Alaska Gov. Sarah Palin faced off in Thursday night’s vice presidential debate. “If Palin did well, that would have moved up [McCain's] numbers drastically. It’s a mystifying decision.

“It’s my understanding that it costs $1 million a week to run a campaign in Michigan,” Mitchell continued, “so it’s a multimillion-dollar decision. But it just seems like a really premature decision based on a couple of bad polls.”

McCain, by one account, had spent $8 million in television ads before pulling out.

According to many political experts, what McCain did by saying “no mas” to Michigan was to abandon a winnable race. It’s true that, to date, he hasn’t run the most efficient campaign here. More so than in some other states, the Obama campaign has been successful in linking McCain’s record to President Bush’s here.

In addition, going back to the Republican primary here earlier this year, McCain, to many Michigan business and union leaders, never really decided how to engage the auto industry. One day, he was the castigator; the next, he was ready to feel their warm embrace.

But these were supremely fixable things.

As much as McCain had going for him, several factors were also in play against Obama. Chief among them — and perhaps the one thing that many people seem most uncomfortable addressing — is race.

Late Tuesday morning, I sat down with William Black, the Teamsters’ political director in Michigan, in his office on Trumbull Avenue in Detroit. It was a cluttered space decorated with a “Hoffa” movie poster signed by Jack Nicholson and a photo of the union leader with Sen. Hillary Rodham Clinton and Michigan Gov. Jennifer Granholm. Black was blunt about his biggest concern going into the November election.

“It’s the race issue,” Black said, leaning back in his chair, his arms folded over his chest. “It’s a concern for all of us. I don’t think it is for our age group — but it shows up in the older age groups.”

Black asked: “Will people put race over their pocketbook, over their financial well being? I think that’s the real issue here.”

Black had reason to worry. Two years ago, polls taken before the vote on a ballot measure that would have effectively eliminated affirmative-action programs in Michigan’s universities predicted a tight contest. The measure ended up winning 58 percent to 42 percent.

Moreover, Black said, the Obama campaign seemed at odds with itself. As the candidate of change who raged against the establishment, Obama had stormed into Michigan after not being present for the farce that was the Michigan primary, in which Clinton and Dennis Kucinich were the only candidates on the ballot. And his campaign hadn’t effectively used the machinery offered by the political establishment that has run Michigan for decades.

“[The Obama campaign] needs to do better outreach at the district level–I’ll tell you that right now,” Black said. “[It] needs to engage the John Dingells of the world and say, ‘John, what do you need?’ I’d like to see that. It’s not happening much, particularly down river or in Macomb County with the Reagan Democrats who need to be [targeted]. That would be the area I would be focusing on.

“John McCain is a guy you can never count out. Look at the Republican Party, look at what he did with Palin. I think he’s an amazing guy. I just can’t see him being president.”

But McCain is someone who many in Black’s own union ranks — a third of which he says are solidly Republican — could. That’s because they had seen the great promise of a young and energetic leader with limited executive experience who fizzled out as governor of Michigan.

Granholm stormed into office on the force of her personality and smarts and one term as state attorney general. In 2002, she ran for governor as the candidate of change, won and maintained a high approval rating as a new kind of Democrat.

Her approval rating remained strong until her first budget crisis. It’s been sliding with each subsequent crisis. With Michigan’s unemployment rate currently the highest in the country, Granholm’s approval rating hovers around 30 percent, equal to that of the Texan in the White House.

“[The McCain campaign] barely tied Granholm to Obama,” said Detroit News editorial page editor Nolan Finley when we sat down in his office late in the day Tuesday. “It ought to be doing that constantly. The Democrats have done a very good job of tying Bush to McCain,” added the influential conservative. “In this state, [the Republicans] could very well tie Obama and Granholm together — and do very well.”

As I’ve written before, one key reason that the presidential race remains close is that McCain is not Bush. His story–that of courage in combat, of standing against his own party when called for–has been effective when executed properly.

Indeed, given McCain’s image as a maverick, he could emphasize the idea of execution. Yes, he could say, the Bush tax cuts were a good idea, but they should have been followed by spending cuts. Yes, he could say, you hate the war in Iraq, but if I had been running things, we’d have been in and out.

“People aren’t looking for 10-point white-paper sheets,” Finley said. “They’re looking for a leader who can be confident. If he can come here and tell a story — his story — and show the confidence that he’s the guy who can lead them to a better place. He doesn’t have to come in here and say, ‘I’m going to do these six things, these eight things.’

Finley laid out how he would advise McCain to run here. “He shouldn’t give up on his foreign-policy issues just because of the financial crisis,” Finley cautioned. “He should remind people of that growing threat from Iran. Iran, Russia and other dangerous places are not going to go away.

“But he’s got to find himself domestically. One thing he could do today is say, ‘I’m going to appoint Mitt Romney as my Treasury secretary,’ and the people of Michigan would perk up and pay attention. He would have won Michigan if he’d put Romney on the ticket and said, ‘You take care of Michigan, Colorado and Nevada, and I’ll see you on Election Day.’ He needs Romney here. Whether Romney will do it or not is another question.”

Even without Romney on his ticket, McCain could still have advanced his position in Michigan with the GOP’s new political star, Sarah Palin. As Dingell has said, Michigan remains a divided state, a place where the Republican base still cares deeply about the issues that McCain holds dear–his stance against abortion, his opposition to gun control.

Palin would have drawn huge crowds from now until Election Day in the western part of the state, would have become a regular attraction on local newscasts and would have generated the kind of free publicity that a campaign relying on public financing needs. Gosh, golly, gee whiz, couldn’t you just see it? Wowzers!

But now that will not happen. The McCain campaign has all but shuttered its shop in Michigan, brushing off the state and conceding the ground that, only a few days ago, seemed one for the taking.

In coming days, McCain’s campaign advisers will explain their actions, provide a rationale that the climb was too steep, that resources were needed elsewhere. But should he lose on Nov. 4, the old soldier might look back at today as the beginning of the end, an opportunity lost. For once, McCain counted himself out.