WASHINGTON -- More than 11,000 children in Maryland - and hundreds of thousands nationwide - are at risk of losing health coverage under a Bush administration plan that would scale back a popular program considered key to state efforts at protecting the uninsured.
As part of his plan to balance the federal budget within five years, President Bush wants to narrow the scope of the State Children's Health Insurance Program, widely regarded as a recent health-care success story.
The decade-old children's program will expire later this year if Congress does not vote to keep it running - an outcome no one envisions. The initiative gives more than 6 million children a year regular access to doctors and medical treatment, and it is particularly attractive to states because it provides them with two dollars in federal funds for each dollar they spend.
But the White House and Congress are sharply divided over how to move forward and how expansive the insurance plan should be.
As health care moves to the top of the domestic policy agenda for lawmakers and several presidential contenders, all sides are girding for heated debate in the coming months - part of a national discussion over the role of the federal government in providing coverage and whether state governments continue as incubators for new ideas.
Continuation of the program is a priority of the nation's governors, who have scheduled a discussion on the subject during their annual meeting in Washington, which begins today.
Bush administration officials say they are worried about the growing costs of the effort, which gives about $5 billion in grants to states yearly.
The president announced this month that the program should be shrunk to cover children in relatively poor families - those earning twice the federal poverty level, or about $40,000 yearly for a family of four.
Administration officials insist that families earning more than that could keep the coverage they now have in some states, but critics say the Bush budget doesn't contain enough money to make that possible and states would likely have no choice but to trim enrollment.
States have been moving in the opposite direction, making their rules more flexible to reach families of moderate means who nonetheless can't afford private insurance.
In Maryland - one of the most generous states - Democratic Gov. Martin O'Malley wants to extend benefits to children in families that earn up four times the federal poverty limit, or more than $80,000 a year for a family of four, as long as they pay a small premium. Legislation that would make the Maryland system the most far-reaching in the nation is advancing in Annapolis.
Bush's position is also at odds with Democrats who control Congress. Several Democrats running for president are pushing to expand federally backed children's insurance and are making the issue part of their campaigns.
"The administration's proposal is moving in the opposite direction of a growing consensus," said Edwin Park, a health care analyst with the left-leaning Center on Budget and Policy Priorities in Washington, which released a study this week concluding that Bush's budget falls $7 billion short of the amount needed for states to maintain their current programs for the next five years.
The State Children's Health Insurance Program was created by the Clinton-era Balanced Budget Act of 1997. It was designed to complement and broaden Medicaid, the joint federal-state entitlement plan that provides health coverage to the poor and disabled.
The law distributed 10 years worth of block grants to states and gave them flexibility in setting rules. That's why some states - Maryland, New Jersey and others - cover children in higher-earning families. In some states, parents and other adults can also get the subsidy.
Analysts say flexibility has led to success. While the number of adults without insurance has grown over the past decade, the number of uninsured children dropped - until last year. In Maryland, 106,0000 are enrolled in the plan, including 11,800 in families that earn between two and three times the poverty level, the group Bush is targeting, said Tricia Roddy, director of planning for Medicaid services in the state Department of Health and Mental Hygiene.
"Until the federal government or the state governments do a comprehensive program, I don't think we can afford to let SCHIP go," said Leigh Cobb, health care director of Advocates for Children and Youth in Baltimore.
Tobi Drabczyk, a stay-at-home mother from Walkersville in Frederick County, enrolled in the program three years ago, when she was pregnant with the third of her four children. Before that, she said, her family went for years without visiting doctors because they could not afford the $500 monthly premium on the health policy offered by her husband's employer, a rental real estate company that pays him $36,000 a year.
"That is literally food off our table," she said.
In Maryland, pregnant women can also receive coverage. So when Drabczyk, 40, was diagnosed with gestational diabetes, she received insulin and blood-sugar testing equipment at no cost. But Drabczyk does not know whether she still has the condition: she hasn't been to the doctor since shortly after daughter Arwen was born 19 months ago.
Still, she said, she is thankful that "my kids are covered and taken care of."
While some states provide coverage to parents and other adults, the Bush administration wants to curtail the practice.
Maryland, New Jersey and a handful of other states have been particularly heavy users of the program, enrolling more kids than the block grant pays for. For years, the Maryland plan has continued to operate through transfers of federal funds from states that had not spent their allotments. But the number of those states is dwindling, while the number of states with deficits is growing - creating tension among states and a federal budget crunch.
The Bush administration and its supporters say the program has grown far beyond its original intent of helping those of limited means.
"The debate is not about whether children should be insured or not. The question here is whether expanding public programs is the best way to do that," said Robert E. Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation and a member of the Maryland Health Care Commission, a regulatory body.
Extending social programs beyond the very poor can cause problems, Moffit argues. Studies show that wider availability of publicly funded health care leads to fewer private insurers, a phenomenon known as "crowding out." And higher-income families are more politically active, meaning legislators will heed their wishes if tough economic times require programs to be scaled back.
"Any time there is a cost crisis, you will end up shredding the social safety net," Moffit said.
But Lisa Dubay, an associate professor at the Johns Hopkins Bloomberg School of Public Health who has studied the children's program extensively, said a one-size-fits-all income limit harms states where health care is more expensive. If New York, California, Maryland and other places can't enroll children at higher income levels, "I feel like we are taking it off the backs of kids in these high-cost states," she said.
Some Bush allies are taking a cue from the president's budget. In Georgia, where health officials announced they are cutting off enrollment in the PeachCare program next month because of a projected shortfall, Republican Gov. Sonny Perdue is backing legislation that would roll back eligibility from 235 percent of poverty to 200 percent. That would take 21,000 kids out of the program.
"The governor said we're willing to look at that and comply with that in a show of good faith,'" said Perdue spokesman Bert Brantley.
But leading Democrats see greater value in a more widely available children's program, not a reduced one.
A few days after Bush unveiled his vision for the plan, a group led by Democratic Rep. Rahm Emanuel of Illinois announced a competing proposal that would double federal spending on children's health care.
"I think we should be insuring more children, not cutting the children of hardworking families off of the Children's Health Insurance Program," Sen. Hillary Rodham Clinton of New York said during a union forum in Nevada this week. Her comments were echoed by another Democratic presidential contender, New Mexico Gov. Bill Richardson.
White House officials say states should do a better job of reaching out to relatively poorer children before looking at enrolling wealthier ones. Only three-quarters of children eligible for Medicaid or the children's program receive the benefits, statistics show.
Said White House spokesman Tony Fratto: "If states were getting more kids enrolled, the federal government would get [them] the money."
david.nitkin@baltsun.com