SCHIP plan to forgo Medicare cuts

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Congressional negotiators tentatively have agreed to avoid cutting funds to a Medicare program to pay for the expansion of a federally funded health care plan for low-income children, senior Capitol Hill aides say.

"It seems pretty clear that the Senate is not going to take up the Medicare issue in this [bill], but it will be addressed at another time," said a Democratic aide.

Without the Medicare cuts, a proposed cigarette-tax increase would be the main funding source for expanding the State Children's Health Insurance Program — riling many members of Congress from tobacco-producing states.

Sen. Jim Bunning, Kentucky Republican, said his state would pay $602 million more in tobacco taxes over five years than it would receive in SCHIP money if the Senate version were enacted.

California, conversely, would receive $2.5 billion in SCHIP assistance over what it would pay in tobacco taxes for the same period, he said.

The Senate bill calls for a 61-cent cigarette-tax increase, while the House is proposing a 45-cent increase.

House and Senate negotiators have been meeting this month to hammer out differences in bills passed in each chamber last month to reauthorize the 10-year-old SCHIP.

The biggest sticking point has been whether to include a House proposal that calls for cuts to the Medicare Advantage program, which provides health care services for rural seniors and minority communities. The cuts would save billions of dollars, with the money used to pay for covering up to 5 million more children.

The Senate version calls for no Medicare cuts. Senators who support the plan have shown no interest in a compromise on the issue.

House Majority Leader Steny H. Hoyer conceded yesterday that the Medicare issue may be dropped from the bill's final version, which he expects to be ready before funding for the program expires Sept. 30.

"We may well agree to do in two separate bills what we did in one bill in the House," the Maryland Democrat said yesterday.

The House bill calls for a $50 billion spending increase for the program over five years, for a total of about $75 billion. The Senate version would spend an additional $35 billion, covering about 2 million fewer children than the 5 million protected by the House version.

The White House has threatened to veto either measure because of their hefty costs. Republicans say both versions are a step toward socialized medicine because families well above the poverty level would be getting federally funded health care.

Democrats say the wealth of the United States should be used to ensure all children have access to health care.

The tobacco industry is fighting the tax proposals and is soliciting its customers' help. Tobacco giants Philip Morris U.S.A. and R.J. Reynolds have Web sites intended to mobilize smokers to complain to their representatives.