By Drew Armstrong, Alex Wayne and Richard Rubin, CQ Staff

July 27 - A major legislative package that would overhaul and expand a children's health insurance program is headed to the House floor next week after an exhausting two days of parliamentary maneuvering in a pair of committees.

The Energy and Commerce and Ways and Means committees worked late into the night Thursday, with Democrats determined to advance the huge health insurance bill in the face of Republican delaying tactics.

Shortly before 2 a.m., Ways and Means finally approved the legislation (HR 3162) on a 24–17 party-line vote after shooting down a long series of Republican amendments.

The Energy and Commerce Committee—which shares jurisdiction over the package—gave up for the night around 10:30 p.m. Thursday. It resumed its markup Friday morning, but again, Republicans stalled progress on the legislation, forcing the committee clerk to read aloud every one of the bill's hundreds of pages.

At about 4:30 p.m. Friday, nearly 30 hours after the committee convened and 160-some pages into the 495-page bill, Chairman John D. Dingell, D-Mich., used his last remaining option to end the deadlock. He said he would discharge the bill to the full House, without any amendments.

Lawmakers and staff stood to applaud Sharon Davis, the clerk who undertook the marathon reading chore.

Dingell adjourned the committee, ending the markup and any chance of altering the bill there. The Rules Committee will write a rule for floor debate that will include a self-executing provision to discharge the bill from the Energy and Commerce panel upon adoption. The Rules panel might meet as early as Monday to do so, in order to get the bill on the floor in the last week before the August recess.

The bill would renew and expand the State Children's Health Insurance Program (SCHIP), which covers about 6 million low-income children whose families aren't poor enough to qualify for Medicaid.

The measure has become a political flash point. House Democrats want to expand spending on the program by about $50 billion over the next five years, while cutting payments to GOP-championed Medicare Advantage private insurance plans and raising tobacco taxes to offset the cost. Their bill also would block a scheduled 2008 cut in Medicare payments to physicians.

Republicans say the House bill as currently drafted would violate "pay-as-you-go" rules that require bills to be fully offset over separate five-year and 10-year periods. GOP members say that the Ways and Means version of the SCHIP bill is offset over its first five years, but not over a 10-year span. The Energy and Commerce version, they say, flunks the pay-go test over both periods.

A Democratic aide said the problem would be addressed over the weekend, but offered no specifics.

The Senate plans to start debate next week on its own $35 billion expansion of SCHIP, a bipartisan measure that the Finance Committee approved June 19 by 17–4. The vehicle for that debate will be a leftover, House-passed tax measure (HR 976) that will be stripped of its contents and used to carry the SCHIP provisions. Majority Leader Harry Reid, D-Nev., late Thursday filed a cloture motion to limit debate on a motion to proceed to that legislation. A vote is scheduled for 5:30 p.m. July 30.

Read-a-Thon
House Democrats had planned for the Energy and Commerce and the Ways and Means committees to approve the bill Thursday in preparation for a House vote next week. But work bogged down quickly when Republicans complained about the way Democrats were writing and advancing the bill, and resorted to delaying tactics in both panels to slow action on the measure.

Addressing complaints that Democrats did not consult Republicans on the measure, Energy and Commerce Chairman Dingell said that was because Bush has threatened to veto a smaller SCHIP expansion approved by the Senate Finance Committee, and House Republican leaders have said they will back him.

In both committees, Republicans forced the committee clerk to read aloud page after page of the giant bill, consuming hour after hour.

As the Energy and Commerce Committee reconvened Friday, so did the seemingly endless recitation of the bill.

Amendments Rejected
Once the Ways and Means Committee finally began considering its first amendments, it became clear that the GOP stalling tactics could not alter the legislation.

Republican efforts to amend the bill piece-by-piece were defeated wholesale by Democrats. Sam Johnson, R-Texas, tried to strike a provision in the bill that would ban physicians from referring patients to hospitals they own—effectively a ban on specialty hospitals. The amendment was attacked by Rep. Pete Stark, D-Calif., and Johnson decided to withdraw it.

An amendment by Jim Ramstad, R-Minn., that would have redefined a program called Medicare Chronic Care Special Needs Plans, used by very sick patients with certain conditions, was defeated by voice vote.

GOP efforts to spare Medicare Advantage plans from payment cuts failed as well. Under the program, which was created as part of the 2003 prescription drug law (PL 108-173), private insurers provide benefits to seniors in place of the government-run traditional Medicare program. An amendment by Phil English, R-Pa., that sought to allow the Department of Health and Human Services to set county-by-county payment levels for Medicare Advantage plans was rejected on a 14–21 party line vote.

Kentucky Republican Ron Lewis tried to protect his tobacco state constituents with an amendment to strip out the tobacco tax increase that would fund much of the legislation, pleading with Democrats not to hurt his district's industry.

"I don't know how you can find another way to fund this, but I'm sure you can be creative and find another way," Lewis said.

His amendment was defeated 16–23, despite his invocation of the Lord, who, he said in an extended analogy drawing on the Book of Genesis, would not have taxed tobacco.

In the Energy and Commerce Committee, the delays were even longer. Most members delivered an opening statement, which consumed about four hours. Then, the senior Republican on the panel, Joe L. Barton of Texas, offered a motion to postpone debate on the bill until Aug. 1. Republicans engaged in lengthy debate on Barton's motion, and complained when Dingell tried to cut them off and vote after a half-hour of talking.

The arguing was interrupted by votes on the House floor. When the committee returned, Dingell called a vote; Barton's motion failed, 23–29.

Dingell then tried to proceed to debate on the bill by waiving its reading. Barton objected. The clerk, Sharon E. Davis, began to read.

When the clerk skipped the words, "A bill," in the legislation, Barton complained.

"Your clerk has already missed part of the reading," he told Dingell. "It begins, "A bill . . .'"

"The clerk will read the bill," Dingell said. "Correctly."

Lydia Gensheimer contributed to this story.

By Mary Agnes Carey and John Reichard

July 24 -- House Democrats Tuesday evening unveiled a $90 billion legislative package they plan to mark up later this week that would expand a children's health program by cutting Medicare payments to private insurers and raising tobacco taxes, including a 45-cent-a-pack increase in the federal tax on cigarettes.

The proposal also heads off scheduled Medicare payment cuts to doctors totaling 10 percent in 2008 and 5 percent in 2009, replacing them with 0.5 percent increases in each of the two years, and shaves payments compared to current law to home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, and long-term acute care hospitals, in a package of Medicare reductions that includes almost $50 billion in cuts to private plans.

The House Energy and Commerce committee will begin its consideration of the package Wednesday afternoon, with the Ways and Means Committee following at 1 p.m. on Thursday. Republicans said the measure was too large and would not become law. Rep. Joe L. Barton of Texas, the ranking Republican on the Energy and Commerce, was preparing an alternative to the Democrats' bill.

Among its provisions, the House Democrats' measure would increase Medicare benefits for preventive care and mental health care, raise the value of assets low-income seniors can have and still qualify for the relatively generous Medicare drug benefit for poor seniors, and cover more out-of-pocket Medicare costs for poorer elderly Americans. House Ways and Means Health Subcommittee Chairman Pete Stark, D-Calif., described the package as almost complete in an early evening telephone press briefing, issuing the caveat that the sponsors hadn't yet heard final numbers from the Congressional Budget Office confirming his assumption the tax would raise about $27 billion. Stark asserted that the estimate was unlikely to change much when CBO finally weighed in.

To soften the blow of the Medicare reductions, Democrats resorted to phrasing employed by Republicans when they were in control of Congress, instructing reporters not to use the term "cuts," and emphasizing that savings under the package from payments to home health, skilled nursing and rehabilitation providers were consistent with the recommendations of the Medicare Payment Advisory Commission (MedPAC), which advises Congress and the Medicare program on payment levels. Energy and Commerce Committee Chairman John D. Dingell, D-Mich., declared that "these are not cuts to HMOs. These are quite frankly reductions in completely unjustified overpayments" to HMOs. Earlier in the day, Republicans likewise dropped their old phrasing, accusing Democrats of planning to fund the package using "massive cuts" in Medicare.

Among its provisions, the measure aims to equalize payments between Medicare Advantage plans and Medicare's traditional fee-for-service program by 2011, reducing federal reimbursements to those plans by nearly $50 billion over the next five years. While there is no change planned for 2008, beginning in 2009, payment benchmarks will be a blend of two-thirds of the current private plan payment system and one-third of rates paid in traditional Medicare. In 2010, the blend moves to one-third current system payments and two-thirds traditional rates, with payments equalized in 2011. Plans that failed to bid below the phased down benchmarks would not be allowed to enroll new members in that year.

The House package also would repeal a stabilization fund created by the 2003 Medicare overhaul law (PL 108-173) to entice preferred provider organizations, or PPOs, to offer coverage in underserved regions.

Democrats estimated the cost of heading off payment cuts to doctors in 2008 and 2009 at around $20 billion. They also said the provisions were written in a way that would not drive up the monthly premiums seniors pay Medicare for treatment outside the hospital, which typically are deducted from Social Security checks. The proposal replaces the current system that sets a single spending target for all Medicare outlays for physician care with one that carves up outlays into six separate pools with spending targets for each.

The change is meant to increase incentives for doctors not to overprescribe tests, visits, and procedures, in that outlays surpassing the applicable spending target must be recovered in subsequent years in the form of payment reductions. The pools include outlays for primary and preventive care, which are allowed to grow faster than other types of spending to increase that type of treatment; other evaluation and management services; anesthesia; imaging; major procedures; and minor procedures.

The provisions governing physician payment also create a mechanism to give doctors feedback on how the level of treatment resources they prescribe compares to that of their peers for the same type of patient. And they provide for a pilot program in which doctors get paid to provide a "medical home" to coordinate the often complex care received by the elderly.

Provisions reauthorizing the State Children's Health Insurance Program would cover some $2 million more uninsured children than would the $35 billion SCHIP expansion package approved last week by the Senate Finance Committee, Dingell said. The bill maintains current law regarding eligibility for SCHIP, with the exception that states would have the option of covering pregnant women meeting income eligibility criteria, according to a summary of the proposal.

States would have two years to spend the allotment they receive each year. If they ran out of money enrolling eligible children, they would receive payment adjustments. States would receive higher payments if they adopted certain practices meant to increase enrollment, such as 12-month coverage, presumptive eligibility, elimination of in-person interviews, and a single application form covering both SCHIP and Medicaid. The five million gaining coverage would be children enrolling either in SCHIP or Medicaid. The proposal also would allow for coverage of the children of legal immigrants and of qualifying pregnant women who are legal immigrants.

The proposal also would require dental coverage, and coverage of mental health care benefits on a par with benefits for physical health.

In 2008, the bill also would make a one-time series of changes to scheduled payment updates to fee-for-service providers. Skilled nursing facilities, home health agencies, and long-term care hospitals would see a freeze in their payments, while inpatient rehabilitation facilities (IRF) would see a 1 percent update. To quality as an IRF, 60 percent of a facility's patients would have to meet special criteria for the hospital to quality for the more generous reimbursements given to inpatient rehabilitation facilities.

The provider payment changes, a House aide noted, follow payment recommendations from MedPAC and the panel's recommendations also have influenced the package's provisions aimed at controlling the rising use of imaging services. Stark said the measure also would include a "bundled payment" for dialysis facilities to prevent improper dosing of biotech anemic drugs to dialysis patients.

Concerning specialty hospitals, the legislation would repeal the "whole hospital exception" that allows physicians to refer patients to hospitals in which they have ownership. The package would limit to 13 months the period of time in which beneficiaries pay to rent oxygen equipment, after which time they would assume ownership.

The House Democrats' bill also would eliminate a "trigger" provision in the Medicare drug law (PL 108-173) that requires the president to propose legislation on reducing Medicare spending if the program's trustees find for two years in a row that Medicare is projected to draw more than 45 percent of its funding from general government revenues. For the first time in April, Medicare trustees for the first time triggered the funding warning.

The package also would give Medicare the authority to use recommendations of the U.S. Preventative Health Services Task Force to add new preventative benefits without congressional approval. The bill also would eliminate co-insurance and waive the deductible for current preventative benefits covered by Medicare. Over a six year period, co-payments for mental health services would be reduced from the current 50 percent co-payment to the standard 20 percent co-payment for other medical services.

By Rebecca Adams, CQ Staff

July 23 - On June 27, President Bush summoned six health care experts reflecting conservative and liberal views to the Oval Office to discuss a popular program that provides health coverage to children from poor families and to think out loud about how to cover more uninsured people.

Conservatives have long been uncomfortable with the way the initiative called the State Children's Health Insurance Program, or SCHIP, puts the government on the hook for billions of dollars of health care spending, though they have been careful not to criticize its intent. The discomfort has become especially acute since Democrats took control of Congress and proposed an ambitious expansion calling for as much as $50 billion more spending to cover more kids.

For more than an hour, four think tank analysts who were among the visitors said, the president—flanked by his top political adviser, Karl Rove, Chief of Staff Joshua B. Bolten, Health and Human Services Secretary Michael O. Leavitt, and other aides—quizzed them about how the program could be paired with efforts to provide tax breaks for Americans who buy private medical insurance coverage. The line of questioning reflected Bush's belief that the market is better equipped than the government to address the needs of uninsured families. The experts and the president engaged in civil back-and-forth, gently parsing the merits of deductions, tax credits, and mandates to buy coverage. One visitor, lobbyist and former Democratic Sen. John B. Breaux of Louisiana, offered tips on how to frame political arguments on health care.

The gathering might have been the last high-level consultation on health care between the White House and Democrats for some time.

Immediately afterward, Bush gave a previously scheduled health care speech during which he depicted the future of children's health coverage in starkly partisan terms: as a choice between government-run health care and a market-driven system that empowers consumers. Abandoning the genial tone of the just-concluded discussion, he then accused Democrats of using the program to advance their goals of creating a government-run health system.

The brittle address—reminiscent of past rhetoric in debates about Medicare, Medicaid, and the Clinton administration's effort in the 1990s to establish a government-run system—surprised some of the meeting attendees. It also crystallized how SCHIP has become an unlikely crucible for a huge political fight that poses major implications for the 2008 election.

Democrats triggered the battle soon after they took control of Congress six months ago. Eager to address the growing population of the uninsured and egged on by liberal-leaning interest groups, party leaders chose to try to more than double the size of SCHIP in the hope of enrolling millions more children.

It came as little surprise that Democrats would put doing more for uninsured children high on their domestic agenda. What has been surprising is the way the White House and many of its conservative allies in Congress haven't given in, despite the urging of some within the GOP. Although SCHIP is a relatively small anti-poverty program with annual spending that is capped, many right-leaning politicians are eager to demonstrate fiscal discipline and derail any Democratic efforts to expand government health spending. Conservatives reason that a well-choreographed display of toughness will energize a political base that Bush needs to support his policy on the war in Iraq. The party loyalists have been increasingly disenchanted with Bush's stands on immigration and with his spending decisions.

"It really has become the vehicle for a referendum on the future of health care," Matthew Salo, health policy director for the National Governors Association, said of the SCHIP fight. "Everyone's playing political football with this program."

The risk for the Republican Party is that its members of Congress who support Bush in this battle could be portrayed as putting politics ahead of efforts to improve the lives of some of society's most vulnerable. Should Democrats manage to expand the program, Bush would probably veto the legislation, forcing Republicans either to back an unpopular decision or to break ranks with their party leader. The fallout would carry over to the 2008 campaign, complicating GOP efforts to hold on to the White House and gain back seats in both the House and Senate.

"You can't construct a question on children and health without getting an overwhelming majority in favor of giving health insurance to children," said Republican pollster Whit Ayres, who added that voting against an SCHIP expansion is "politically stupid" and could make politicians who do so appear shortsighted or stingy.

But the showdown also poses some risks for Democrats. Because SCHIP is only one of a variety of programs capable of addressing children's medical needs, a large-scale expansion could be depicted as a wasteful example of big government run amok. And the way Democrats are proposing to pay for an enlarged SCHIP risks alienating seniors and key voting blocks in some swing states. Plans under discussion include raising tobacco taxes or cutting some Medicare payments to insurers.

"Seniors in particular, while supportive of SCHIP, do not think Medicare ought to be cut for this or any other purpose," said Democratic pollster Mark Mellman. "There is a potential political price for cutting Medicare."

Legislative Battles
The confrontation could evolve into one of the final big domestic policy debates of the Bush era. Because the law authorizing the children's health program is set to expire at the end of September, interest groups are spending millions of dollars to influence the shape of the program and, in some cases, weigh in on other health care issues at the same time. To the annoyance of the administration, the Pharmaceutical Research and Manufacturers of America is calling for a renewal of the program in a widely aired series of television and print ads.

The seniors' advocacy group AARP, the Federation of American Hospitals, health insurers, and the American Medical Association are also voicing support, joining liberal-leaning advocacy groups such as Families USA, which first encouraged Democrats to pursue a major expansion of the program.

Until now, Democrats and Republicans confined most of their discussions about children's medical coverage to keeping SCHIP adequately funded in the face of rising health costs and growing numbers of uninsured Americans. That is partly because the program is a small component of government-sponsored health care, serving just over 6.6 million children from low-income families at an annual cost of about $5 billion. In contrast, Medicaid, the federal-state health program for the poor, serves about 52 million people at a cost of more than $200 billion annually.

Enacted as part of the 1997 law that put the federal government on course to a balanced budget, SCHIP is aimed at children in families that aren't poor enough to qualify for Medicaid. It provides grants to states to expand their Medicaid programs, or to create new child health insurance programs. Congress has made three rounds of legislative changes since the program's inception, mostly to liberalize rules for the use of unspent funds and tweak grant formulas based on populations of low-income children.

The changes currently under consideration would go much further. A plan approved by the Senate Finance Committee last week would more than double the cost of the program—to $60 billion during the next five years, up from the current $25 billion that's allowed. The expansion would be funded by an increase of 61 cents a pack in the federal tax on cigarettes, as well as increased taxes on other tobacco products. The increase would bring the federal cigarette tax to $1 per pack.

Supporters contend that the expansion would help cover children in families who have lost medical coverage because of economic downturns and the gradual decline in employer-sponsored health insurance. Their arguments persuaded six Republicans—including the most senior on the panel, Charles E. Grassley of Iowa and Orrin G. Hatch of Utah—to join with Democrats to produce a 17–4 committee vote.

The House could follow suit as soon as this week, when the Energy and Commerce and Ways and Means committees are expected to mark up plans that call for an even more generous, $50 billion expansion. The bill is expected on the House floor before the summer recess. Democrats in the chamber say one way to pay for an expansion would be to cut Medicare payments to private health plans.

However, the administration contends that a major expansion is unnecessary and that SCHIP can be sustained with a $5 billion increase over five years, to $30 billion. Bush has threatened to veto the Senate bill, while Cabinet officials depict Democratic efforts as a prelude to a broader government takeover of the health care system.

Democrats' plans are "very clearly a major step toward having all Americans insured by the federal government," Leavitt, the HHS secretary, told reporters. "We know that what happens when that occurs is you get long waiting lines, you get unhappy consumers, and you get government price-setting, and that's not good for the system."

Sound Bites for 2008
Such remarks are likely to serve as a template for conservative talking points during next year's campaign—and reflect the viewpoint of a brain trust culled from such right-leaning think tanks as the Heritage Foundation and the Galen Institute. Conservative health policy analysts are convinced that Democrats want to assemble a government-financed health system one step at a time, beginning with SCHIP because it's viewed as less controversial than Medicaid. In a not-too-subtle nod to one of the Democrats' 2008 presidential front-runners, many conservatives are calling the proposed SCHIP expansion step one in "Hillarycare on the installment plan," referring to New York Sen. Hillary Rodham Clinton's failed 1993 attempt as first lady to add federal regulation to American health care.

To conservatives, the Democrats' plans epitomize big government interference with the private market. They theorize that an offer of government-subsidized care to the working poor could inspire millions of families who now have private insurance to drop that coverage and instead rely on taxpayer-funded care.

'The tone of the debate has changed because the motivations of Democrats in Congress are becoming very clear," said Robert Moffitt, a health policy expert at the Heritage Foundation. "It brings back the bad memories of Hillary trying to put everyone on a government health care program, because that's what this is really about."

Particularly galling to many conservatives is the notion that the Senate Finance plan could make SCHIP coverage available to some middle-class families, by making it easier for states to enroll children from families that earn 300 percent of the federal poverty line. (This year, the poverty line is $20,650 for a family of four.)

Analysts at Heritage have observed that if the program were expanded a bit more, some families might simultaneously qualify for SCHIP and also be subject to the alternative minimum tax, which was created to limit deductions taken by the richest taxpayers.

Bush and like-minded politicians believe the program should be reserved for families with earnings below 200 percent of the poverty line, or $41,300 for a family of four.

"People really are taking two very different philosophies of what the future of health care in this country should be," said Grace-Marie Turner, founder and president of the Galen Institute in Alexandria, Va.

Ignoring Reality?
But the hard-nosed fiscal arguments could collide with political realities. Democrats and even Republicans such as Grassley have publicly criticized the administration for downplaying the needs of some of the most vulnerable Americans. The Congressional Budget Office notes that many children eligible for the program have not been enrolled, and that covering them would require an expansion of at least $14 billion over five years.

Administration foes also note that almost all states contract with private insurers to offer SCHIP benefits, meaning the program embraces most Republicans' vision of a market-driven medical system. Moreover, states have the ability to limit coverage and stop enrolling more children.

Congressional Democrats acknowledge that expanding children's health insurance would push some families to abandon private coverage, but they say that any health care proposal would have that effect, including Bush's proposals to revise the tax code.

Robert Greenstein, executive director of the liberal-leaning Center on Budget Policy and Priorities, predicts that the Senate plan would only modestly replace private insurance with public coverage, by expanding coverage for about 4.1 million children. About 3.5 million either are eligible for aid but are not enrolled or are currently enrolled but in danger of losing coverage if states don't get more SCHIP funds, he said.

"Most health care experts would concur that it's actually good to keep it that low," said Greenstein. "It's virtually impossible to provide resources to shrink the number of uninsured people without resources going to people who otherwise would be covered . . . and expanding SCHIP is the most cost-effective way" to increase coverage.

Such arguments are unlikely to sway Bush, who is not running for re-election and no longer needs to appeal to the electorate. Sympathetic members of Congress and others familiar with the president's thinking say one of his top priorities for the rest of his tenure is firming up support among fiscal conservatives, many of whom opposed Bush's efforts to change immigration policy and have been dismayed by costly administration initiatives, including the Medicare prescription drug benefit. A high-profile campaign stressing fiscal conservatism, his allies say, could help convince the party faithful that the lame-duck president still wields clout and is capable of accomplishing things in health care.

"A lot of analysts are well aware of the degree of disaffection by conservatives with Washington and the Republican leadership over spending and the inability to get things done," said Heritage's Moffitt. "It's time to make a decision about ultimately whose side are you on in this fight. If you believe in the private market, in individual freedom, if you really are serious about these things, well, the bill is coming due, and you have to stand up and be counted."

If Bush were able to restrain Democratic attempts to broaden the children's health program spending, Moffitt said, "the political effect is it would resolidify the conservative base, which is the foundation of the Republican establishment," in time to help the GOP in the 2008 campaign.

Leavitt at the Center
Leavitt played an important role in persuading Bush to take a more aggressive stance in the children's coverage debate, according to administration allies. As governor of Utah, he was one of a handful of top state officials who came to Washington in 1997 to express concerns about the design of the program at SCHIP's creation. In the Cabinet, he is now talking with conservative senators including Judd Gregg of New Hampshire, Robert F. Bennett of Utah, Tom Coburn of Oklahoma and Jim DeMint of South Carolina about developing alternatives to the Finance Committee proposal.

The HHS secretary turned up the rhetoric in a letter last week to Finance Chairman Max Baucus of Montana, chiding him for dramatically shifting health care costs to the government. Leavitt also complained about a budget "gimmick" he said downplays the costs of adding coverage and insisted that the package include tax incentives for buying private insurance.

Baucus' response was uncharacteristically tart: "I regret that you seem to object to more children getting help from a government-sponsored" program, he said, and noted that the administration has regularly granted states waivers to expand SCHIP coverage, in some cases to low-income parents of even adults without children. "You should be happy that our bill would prevent you from promulgating further waivers to expand coverage to adults," Baucus wrote.

Baucus also warned that administration efforts to attach tax breaks for health insurance would be rejected.

Some Democrats in Congress blame Leavitt for poisoning the atmosphere. The secretary "has been lethal in his efforts to kill this" in recent months, said senior Senate Finance member John D. Rockefeller IV of West Virginia, who acknowledges that the administration still retains considerable leverage. "As long as he can veto, as long as he can keep people on the 60-vote discipline, he's got power," Rockefeller said, alluding to the majority's need to muster 60 votes to stave off filibusters. "Unfortunately, it's all negative power."

Delivering on Promises
The Democrats are especially motivated to please advocacy groups such as Families USA, which began rallying political support behind an SCHIP expansion before the midterm election by enlisting the help of unlikely allies such as the U.S. Chamber of Commerce, which was concerned about employers paying a bigger share of uninsured Americans' care. Eventually, a coalition of 16 groups, also including hospital chains and health insurers, agreed on a plan to expand the program by $60 billion over five years. The plan was quickly endorsed by the Congressional Black Caucus.

Families USA Director Ron Pollack and other coalition executives met with Democratic leaders and sympathetic Republicans in December and won assurances that the issue would be placed near the top of the new majority's agenda. While House and Senate leaders did not immediately commit to a specific dollar figure, their resolve became apparent when budget writers in both chambers reserved $50 billion for an expansion of the program in the fiscal 2008 budget resolution.

Rockefeller said Senate Democrats have already made some concessions to reach a bipartisan deal—for example, shrinking their proposed increase from $50 billion to $35 billion—in the hope of reaching a compromise with Republicans.

"It killed me to do it, but you had to," Rockefeller said. He noted that Democrats would also continue to give states flexibility on how to design SCHIP coverage, rather than mandating benefits such as dental care, as some more liberal politicians have suggested.

Senate Finance Democrats offered more sweeteners at last week's markup, including making it easier for families who qualify for both SCHIP and employer-sponsored health insurance to use federal aid to buy coverage through their employers.

GOP in a Tight Spot
Grassley, Hatch and some other Republicans are urging the White House to back down from the veto threat and take the high road on a politically loaded issue. Some in the GOP, fearing political fallout in their re-election bids, have urged the administration to avoid making them take tough votes on children's health proposals or on overriding a veto.

"To veto a bill that does so much, that implements provisions that have bipartisan support in the Senate, that has the support of many Republican governors, at this time in his presidential career is going to be a pretty big challenge," said Lloyd Doggett of Texas, a House Ways and Means Democrat.

But fiscal conservatives are pressing Bush to stand firm. The Heritage Foundation and Galen Institute have formed a coalition with other free-market groups such as the American Enterprise Institute to point out the problems that they believe would result from an SCHIP expansion, including a greater reliance of the middle class on the government. And some lawmakers predict that Democrats might lack the votes to override a veto—unless they entertained some GOP counterproposals.

A Ways and Means Republican, Phil English of Pennsylvania, said part of the calculus required in determining if Congress could overturn Bush's veto depends on how hard Democrats push. If House Democratic leaders do not reach out to Republicans or limit the party's ability to offer alternatives, English said, "politically that could hand the administration an opportunity to sustain a veto."

English, a top official at the National Republican Campaign Committee, says time could be on the administration's side if the White House and GOP operatives make the case that those of middle income might benefit from an anti-poverty initiative.

"In my district, there is wide support for children's health insurance," English said. "But I'm not sure middle-class taxpayers want their hard-earned taxpayers' dollars going to pay for health insurance for families that are more affluent than they are."

But pollsters and analysts warn that voters won't parse the details of an SCHIP proposal if they generally agree with its goals. GOP pollster Bill McInturff estimated this spring that three out of five voters "strongly favor" reauthorizing children's health insurance, and one-quarter "somewhat favor" doing so. Republicans favored renewing the program almost as much as Democrats did, with 79 percent favoring reauthorization, compared with 88 percent of Democrats.

A New York Times poll of 1,281 adults in late February found 84 percent of those surveyed in support of expanding the current program to cover all uninsured children. A similar majority said they thought the lack of health insurance for many children was a "very serious" problem for the country.

"One party wanting to look more Scrooge on children's health doesn't make a lot of sense going into a general election," said Robert Blendon, professor of health policy and management at the Harvard School of Public Health. "If you were a political adviser, you'd be scratching your head about why this debate is going the way it is."

Mary Agnes Carey contributed to this story.

By CQ Staff

July 27 - Premier Inc., a hospital consortium, on Thursday announced a three-year program aimed at improving hospital quality and reducing costs.

The project, dubbed QUEST, will require participating hospitals to report data in five areas—mortality ratio, appropriate care, efficiency, prevention of items such as infections and adverse drug events, and patient satisfaction. Premier will analyze the data, share best practices and provide incentives for top-performing hospitals.

"QUEST high performing hospitals will move us closer to the day when we can say that America has the most effective, efficient, and caring health care system in the world," Premier president and CEO Richard A. Norling said in a statement.

Premier officials said QUEST is based on many of the principles used in another pay-for-performance demonstration project initiative overseen by Premier and the Centers for Medicare and Medicaid Services (CMS). In February, CMS announced a three-year extension of that demonstration project, which includes more than 250 hospitals nationwide and provides incentive payments to participating hospitals if they perform well on 30 measures assessing treatments for heart attacks, heart failure, bypass surgery, pneumonia and hip and knee replacements.

Hospitals have until Sept. 30 to sign up for the QUEST program, and the American Hospital Association is urging its members to consider participating.

By Mary Agnes Carey, CQ HealthBeat Associate Editor

July 24, 2007 – New Medicaid citizenship documentation requirements have caused a drop in Medicaid coverage nationwide for eligible individuals—including U.S. citizens—and have increased the program's administrative costs rather than saving money, according to two reports released Tuesday.

A report from the Government Accountability Office (GAO) found that 22 of 44 states surveyed reported a decline in Medicaid enrollment because of the requirements, and that a majority of those states attributed the lowered enrollment to delays in, or losses of, Medicaid coverage for individuals who appeared to be eligible citizens. Two major burdens of the new requirements are that the documents required must be originals and the list of acceptable documents is complex and does not allow for exceptions, states reported to GAO.

While the Centers for Medicare and Medicaid Services (CMS) has estimated the documentation requirements would result in savings of $50 million for the federal government and $40 million for states in fiscal year 2008 as a result of ineligible noncitizens being removed from the program, state responses to GAO indicated that those estimates may be overstated because they did not account for increases in administrative expenditures that states incurred. "The intended effect of the requirement—to prevent ineligible noncitizens from receiving Medicaid benefits—may be less prevalent than CMS expected," GAO said. Only one state reported potential savings as a result of individuals being denied, or their coverage terminated, who were determined ineligible because of their citizenship status, GAO found.

Provisions of a budget savings bill (PL 109-171) President Bush signed into law last year require Medicaid beneficiaries to produce documents such as a birth certificate or passport to prove they are U.S. citizens. Some lawmakers, consumer and patient groups have said the new requirements could cause millions of Medicaid beneficiaries to lose their eligibility because they will not be able to produce such documents.

In its response to the GAO report, CMS expressed concern that it overstated the significance of states' reports of the decline in enrollment because of the requirement and the challenges that states and individuals faced in complying with the new documentation requirements. CMS also expressed concern that states did not submit data to back up their survey responses.

A separate analysis released Tuesday by the majority staff of the House Committee on Oversight and Government Reform found that for six states, for every $100 spent by federal taxpayers to administer the documentation requirements, the federal government saved just 14 cents. For those six states, the federal government spent an additional $8.3 million to identify eight undocumented immigrants among approximately 3.6 million Medicaid enrollees, for a total federal savings of $11,048.

While the analysis may not be representative of all states' experience, "the lopsided ratio of high administrative costs to minimal savings reported by the states indicates that the documentation requirements are likely to cost federal taxpayers significantly more than they generate in savings," the staff report concluded.

Mary Kahn, a spokeswoman for CMS, said the agency had not yet reviewed the committee's findings but added that the agency is "absolutely committed to assuring access to Medicaid for all American citizens who are otherwise entitled" and will assist states with any technical difficulties they have in administering the new law.

By Susannah Crepet, CQ Staff

July 26 - Massachusetts' attempt to establish nearly universal health coverage may be limited by the costliness of health care, which threatens to discourage individuals and small business from participating, according to a study by the Center for Studying Health System Change (HSC).

The study was based on interviews with about 25 market observers in January 2007 that included representatives of employer groups, state agencies, health plans, providers, advocates, and other health care leaders knowledgeable about the state's health care overhaul, according to a press release.

Massachusetts' universal coverage law requires most uninsured adult residents to have health insurance coverage by July 1, 2007. To help residents obtain insurance, the law requires employers to take steps to increase coverage. Employers with 11 or more workers are required to set up Section 125 plans to allow employees to purchase health insurance with pre-tax dollars, which can reduce employee premiums by an average of 41 percent, according to the HSC brief. If employers do not make a "fair and reasonable" contribution to the cost of workers' coverage, they will have to pay a relatively modest $295 annual fee per worker, researchers said.

The study found that the requirement that individuals must have health coverage could have "spillover consequences" for employers if more employees respond to offers of health coverage, look for greater coverage or pressure their employers to offer health insurance.

Employers with less than 11 workers who are supposedly exempt from the mandates, and who formerly did not offer coverage to their workers, will be pressured to change their ways under the new law. Since all workers face tax penalties for going without health insurance, workers will demand coverage, according to the brief.

"Workers who now decline coverage offered by their employers may choose to participate because of the individual mandate, raising costs for employers," said HSC Researcher Laurie Felland in a press release.

Some state residents, however, would be willing to forgo coverage and pay the tax penalty if the costs of coverage are too high, according to the brief, because frequently, lower-income individuals must prioritize basic needs such as housing and food over obtaining health insurance.

Penalties for individuals who remain uninsured are relatively small this year, according to the brief. By 2008, financial penalties for individuals who forgo coverage will be more substantial, but most small employers have already renewed coverage for that year. As a result, it is unlikely that the first years of the overhaul will have decisive results, researchers said.