House lawmakers have proposed to do away with the program at the end of 2013, transitioning millions of kids instead to private plans on the exchange. Senate lawmakers have taken a different tack, arguing that CHIP offers both coverage and cost advantages that private companies can’t (or simply won’t) replicate. The Senate bill would  reauthorize CHIP through 2019.

Today, Sen. Tom Harkin (D-Iowa) became the latest lawmaker to weigh in on the distinction. The chairman of the Senate health committee was quick to point out that he isn’t familiar with the CHIP repeal proposed by the House. Still, he told local Iowa reporters that he wouldn’t oppose such a repeal if the shift to the exchange plans wouldn’t harm kids’ coverage.

“My bottom line is just to make sure that all the kids get good coverage,” Harkin said in response to a question from my colleague Lynda Waddington at The Iowa Independent. “If this [the House repeal] is better for kids, and they can show it’s more effective — and cost effective — fine. I’ll go with that. If not, then I’ll stick with the CHIP program.”

Under the House bill, White House health officials would be required to study the shift from CHIP to the exchange, weighing the advantages of each program in terms of cost and benefits. The idea is to ensure that children won’t be moved into lower-quality health plans.

As many children’s health care advocates have warned, though, there’s nothing in the House proposal that would block the transition, even if the White House analysis found that private plans would offer inferior benefits. Such a safeguard was included in the legislation that passed the Energy and Commerce Committee in July, but budget restraints caused Democratic leaders to scrap that trigger in the final bill.

“It’s probably going to be a conference item,” Harkin said Tuesday of the CHIP repeal. And he’s probably right about that.

“As health reform moves forward, we need to make sure children can keep their CHIP coverage and not be forced into untested private coverage,” Rockefeller said.

The Congressional Budget Office has been very clear that replacing CHIP with private health coverage will lead some children to lose their health coverage altogether, which is harmful and intolerable. Health care reform should improve the coverage children have – not take their coverage away.

I have spent my entire career working to protect children and other vulnerable populations, and will keep fighting to protect CHIP as health care reform goes to the Senate floor, and then moves to conference with the House of Representatives. We must do all we can to shield children from harm. Always.

It’s tough to envision a scenario in which Rockefeller, who chairs the Senate Finance Committee’s health subpanel, won’t play a part in the discussions forging the final bill. This statement, therefore, is hardly good news for the House Democratic leaders who’ve proposed to shift CHIP kids into private plans on the exchange.

Get out the popcorn. This saga is just getting started.

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].”

Under the $894 billion health reform legislation that House leaders unveiled last week, CHIP would cease to exist at the end of 2013, with kids enrolled in the program transitioning to plans on a proposed insurance exchange.

The move is raising concerns in the children’s advocacy realm, with some groups worried that higher costs on the exchange will prevent some kids from receiving health care.

In the Senate, Democratic leaders had also proposed to kill the CHIP program, but the program was salvaged by Sen. Jay Rockefeller (D-W.Va.), whose amendment preserving CHIP was passed by the Senate Finance Committee last month.

The House is expected to take up its health reform bill this week, with the Senate to follow later in the month. If those bills pass, the gaping disparity in approaches to the CHIP program will leave the fate of the program in the hands of the conference negotiators representing each chamber. Expect fireworks.

Under the finance panel’s bill, Medicaid would be expanded, but the CHIP program would phase out as those kids transitioned into insurance plans on newly proposed state insurance exchanges. Rockefeller argued the need to keep those youngsters in CHIP, rather than pushing them to the exchange, “where they’re at the mercy of people who will have them for lunch.” He was talking about private insurance companies.

The West Virginia Democrat, who chairs the Finance Committee’s health subpanel, sponsored an amendment to keep CHIP as it is. “I don’t think there’s any reason to dismantle a program that works,” he said.

Republicans were unmoved. Sen. Charles Grassley (Iowa), the panel’s senior Republican, said that keeping kids in a public program rather than moving them to private coverage “is contrary to everything we’ve been working for.”

Yet a report released yesterday seems to bolster Rockefeller’s argument. According to researchers at Watson Wyatt Worldwide, a financial consulting firm, shifting kids from CHIP to the exchange would put increased cost burdens on those families. Specifically, the study found that children currently enrolled in median CHIP plans living at 175 percent of poverty pay nothing for their care, while those living at 225 percent of poverty pay about 2 percent of treatment costs. By contrast, those same kids getting coverage through private insurers on the exchange would pay between 5 percent and 35 percent of health costs, respectively, “greatly increasing their financial burden and leaving low-income children worse off as a result of health reform,” the researchers noted.

Children’s health care advocates quickly jumped on the findings as reason to preserve CHIP. Bruce Lesley, president of First Focus, a children’s advocacy group that commissioned the study, said the findings confirm that CHIP provides kids “the best, most affordable care.”

“Congress should be fixing what is broken and building on what works,” Lesley said in a statement. “CHIP works for kids and we should be expanding this program, not phasing it out.”

The vote approving Rockefeller’s amendment was 13 to 9, with Sen. Olympia Snowe (R-Maine) the only member crossing party lines. Sen. Ron Wyden (D-Ore.) remained neutral, voting “present.”

Lending a glimpse at what’s looming, The Washington Post today gives a few leaked details of what Sen. Edward Kennedy (D-Mass.) is eyeing for his health reform proposal — and they are sure to cause an outcry from many of his upper-chamber colleagues.

The proposal, for example, goes the controversial Massachusetts-plan route by mandating that everyone obtain health coverage, The Post reports; it promotes the even more controversial concept of a government-sponsored plan to compete with private insurers; and it proposes to extend Medicaid eligibility to include those earning up to 500 percent of poverty wages — $54,150 for a single earner, or $110,250 for a family of four.

If you recall the ferocity with which Republicans fought the idea of expanding the State Children’s Health Insurance Program to include kids from families living at even 300 percent of the poverty line, you’ll have a taste of the coming debate.

Not that Kennedy is alone here. Sen. Max Baucus (D-Mont.), a moderate who chairs the Senate Finance Committee, is also working on comprehensive health care reform. Baucus is collaborating closely with his counterpart on the committee, Sen. Charles Grassley (R-Iowa), a long-time opponent of public health plans and the expansion of programs like SCHIP and Medicaid to include moderate-income homes.

If the Democrats hope to pass anything this year, someone’s got to give. As President Obama told supporters yesterday, “If we don’t get it done this year, we’re not going to get it done.”

With the 100-day anniversary just one week away, it’s notable that almost all of Obama’s accomplishments so far have been rhetorical, rather than policy-based.

Let’s see … there was the passage of the stimulus bill, the passage of the SCHIP bill, the Afghan surge, the various abortion and stem cell executive orders, etc. and etc.

Now, there have been high-profile setbacks, like the Employee Free Choice Act stalemate and the slow-walking of health care as (in part) a function of President Obama’s troubled nominees, and a case can be made that President George W. Bush had a better first 100 days (the Jim Jeffords switch did not happen until May), but any attempt to equate Obama’s huge rhetorical PR blitzes with a lack of accomplishments is sort of foolish. Republicans are getting rolled on most of the president’s priorities.

Grassley, the highest ranking Republican on the Senate Finance Committee, said this week that his counterpart, Chairman Max Baucus (D-Mont.), was “pushed” by Democratic leaders to accept both the stimulus proposal and the enormous expansion of the State Children’s Health Care Program that passed the upper chamber last night. In a conference call with reporters Wednesday, Grassley said Baucus was not allowed the time to negotiate those bills in a more bipartisan way.

From the call:

In the case of SCHIP, I don’t blame Baucus. In the case of stimulus, I don’t blame Baucus. But it’s still not a very good environment compared to the good environment we had before where almost every mark that was laid on the table was a bipartisan mark.

So let me make it very clear that — that it was pushed — a partisan approach was pushed on Baucus by — I don’t know whether by the president-elect at that time or whether it was by the leadership of the Democratic Party in the Senate.

But we were going to sit down and negotiate until they were kind — the other side was kind of dictated to. In the case of the stimulus, even though I don’t like how it was handled, I don’t blame Baucus because he was under fire to get something done very quickly because the president wants something on his desk by February the 15th.

The debate over the renewal of SCHIP — the popular state/federal program that covers kids from families too wealthy to qualify for Medicaid, but too poor to afford their own health insurance — goes back more than a year, when congressional Democrats passed legislation expanding the program by $35 billion over five years, only to see that bill vetoed twice by former President George W. Bush. Many Republicans at the time argued that the expansion went too far to cover families that could afford their own coverage, thereby “crowding out” the private insurance market.

The bill that passed the Senate yesterday goes even further than the 2007 proposal, including dental coverage and allowing legal immigrants to get SCHIP benefits immediately, rather than suffering the five-year waiting period that’s currently in place. (Grassley had been particularly critical of the latter provision.)

The cost — projected to be $32.3 billion over four-and-a-half years — will be offset by raising the federal cigarette tax by 3 cents per stick.

For children’s healthcare advocates, the Senate vote marks the end of a long push to expand the SCHIP program. Bruce Lesley, president of First Focus, issued a statement last night calling the bill a “critical” step toward getting all of America’s 11 million uninsured kids covered — of particular importance in the middle of a recession.

No government program has been more successful in expanding children’s healthcare coverage than SCHIP. In these dire economic times, this program serves as a critical lifeline for millions of American families. While it is clear that there is more work to do to ensure coverage for all children, indeed all Americans, we are grateful for this important step in that direction.

Such statements are also indication that the SCHIP debate is just the start of much larger health care reform proposals likely to emerge in the coming months. And if you thought SCHIP was partisan, just you wait. (Yesterday’s SCHIP vote attracted nine Republicans.) As Robert Pear points out in The New York Times today:

The Senate debate showed the outlines of what promises to be a much larger political fight over universal coverage. While Democrats championed expansion of the child health program, many Republicans, including Senator John McCain of Arizona, said they worried that it was part of a long-term effort to replace private health insurance with government programs.

As an indication that Democrats plan a much larger role for the federal government in the healthcare arena, consider this: As part of the SCHIP expansion, the program has been officially renamed to CHIP. That is, the “state” has been dropped.

The tobacco industry is fighting a lonely battle against health insurance for poor kids.

A coalition of tobacco industry groups ran a full-page ad in the influential Capitol Hill newspaper, Roll Call, on Monday warning President-elect Barack Obama that a proposed tobacco tax hike to cover the expansion of the popular State Child Health Insurance Program (SCHIP) would be an “economic disaster.”

The ad is sponsored by the National Association of Tobacco Outlets (NATO), the American Wholesalers and Manufacturers Association (AWMA), and the Southern Association of Wholesale Distributors (SAWD), which claim, jointly, to represent the employees of tobacco sellers, wholesalers, and manufacturers. [To view full-sized ad, click on thumbnail, above.]

Congressional Democrats hope to score an early victory by passing an SCHIP expansion. The bill is expected to face vote in the House and a markup in the Senate Finance Committee this week. The legislation will reauthorize the program before it expires on March 31.

The expansion of the SCHIP rolls would be funded with a tobacco tax hike. The size of the proposed increase hasn’t been officially announced, but an earlier version of the bill vetoed by president Bush in 2007 would have added 61 cents to the price of a package of cigarettes–an extra $222.65 per year for a pack-a-day smoker.

The ad in Roll Call asserts, without supporting evidence, that the tobacco tax would cause “economic and employment devastation” by putting more than 117,000 tobacco industry workers, such as convenience store clerks, warehouse workers, and tobacco farmers out of work.

However, a $35 billion expansion program to cover an additional 4 million people could create at least that many new jobs, if the money were spent on expanding public programs like Medicaid, according, at least, to one advocate for expanding SCHIP.

“If the bulk of that spending were going into Medicaid, I can imagine that something on that order jobs could result.” said Michael Lighty, Director of Public Policy for the California Nurses Association.

The greatest job growth from an SCHIP expansion would be expected in those states that put the money directly into private programs like Medicaid, as opposed to private health insurance programs, Lighty explained.

Opponents of the tax increase, like Big Tobacco, argue that increasing cigarette taxes burdens the poor disproportionately because lower income people are more likely to smoke. However, by the same token, lower income Americans will disproportionately benefit from both reduced tobacco consumption and expanded health insurance coverage for poor children. Plans vary, but private health insurance for one child typically costs more than $223 per year. So, even families with smoking parents could easily come out ahead if they get healthcare for their kids, despite paying more per pack of cigarettes, explains Ron Pollack, Executive Director of Families USA, a national consumer health organization that supports the plan to expand SCHIP with tobacco taxes.

SCHIP serves the children of America’s working poor–kids whose parents make too much to qualify for Medicaid, but not enough to afford private health insurance. Currently, about 6 million children are covered by SCHIP. The proposed expansion would relax eligibility standards to cover an additional 4 million children, according to Pollack.

The proposed expansion is popular with Democratic legislators, unions, pharmaceutical and insurance trade groups, physicians, and the general public. Even some moderate Republicans support the plan. An earlier version of the legislation passed Congress in 2007 only to be vetoed by President Bush.

The rhetoric in the Roll Call ad suggests that the prospect of a Democratic president is making the tobacco industry very nervous. This time, when the SCHIP bill reaches the oval office, George Bush won’t be there to veto it.

Democrats, as they push to renew and expand the State Children’s Health Insurance Program, or SCHIP, hope to include coverage for legal immigrants, who currently must wait five years to receive health care under Medicaid and SCHIP. Indeed, House Democrats announced yesterday that the legal immigrant provision is included in the lower chamber’s SCHIP proposal.

But it’s not in the Senate version released today by Senate Finance Committee Chairman Max Baucus (D-Mont.). Instead, Senate Democrats will attempt to add the language as an amendment in the Finance Committee — an amendment that’s likely to pass.

Why go through the extra trouble?

It’s not because Senate Democrats oppose the policy. Indeed, Baucus has supported the concept of covering legal immigrants under SCHIP in the past. Rather, the issue here is political. As Robert Pear of The New York Times explains this morning:

This part of the bill deals only with legal immigrants. But it could revive the emotional debate over immigration, as many Republicans want to establish stricter verification procedures to prevent illegal immigrants from getting health benefits.

Most Finance Committee Republicans — including Iowa Sen. Charles Grassley, the panel’s ranking member — oppose the legal-immigrant provision. Grassley’s office sent out a statement this week explaining that opposition thusly:

In order to get legal immigrant status, a sponsor has to sign an agreement that the immigrant will be financially supported for five years so the taxpayers won’t have to bear the immigrant’s health care costs. Senator Grassley and many other Republicans support that policy and would be concerned about now allowing sponsors to go back on that commitment by asking the taxpayers to shoulder the health care costs for individuals who came to this country under those terms.

If the provision is in the final bill, the statement adds, “it’ll be difficult for many Republicans to support final passage.”

Republicans likely won’t have the votes to prevent the Democrats’ SCHIP bill from passing. Still, the current ruckus over the legal-immigrant provision is some indication of just how volatile an issue immigration remains.