Minnesota, U.S. have huge stakes in health debate

WASHINGTON - The teachers who see them every day know what happens to children who fall ill without insurance. "They're sick, they're sick, they're sick and then they go to the emergency room," said Karen Inman, a Minnesota educator for the past 34 years. "Meanwhile, they've contributed to four other kids missing school."

A bipartisan majority in Congress has vowed to put an end to this, sending President Bush landmark legislation last week that would dramatically expand the government-run State Children's Health Insurance Program, known as SCHIP.

Bush, wary of creeping federalization of health care, is threatening to veto the expansion. That veto, which could come as early as this week, will likely set off a major policy standoff. With the looming 2008 elections, Bush faces pressure to back down from many fellow Republicans, as well as Democrats.

Touting the success of the decade-old program, which insures an estimated 36,000 low-income Minnesotans and if expanded could add another 35,000 state residents, two Minnesota Republicans have broken with the White House.

They are Sen. Norm Coleman, who faces a tough reelection battle next year, and Rep. Jim Ramstad, who has announced his retirement at the end of his current term.

Coleman was one of 18 Senate Republicans to join a 67-vote "veto-proof" majority. But in the House, which passed the measure 265-159, backers are still well short of the two-thirds majority needed to override a veto.

"We have a moral obligation to cover all our children," said Ramstad, one of 45 House Republicans who backed the $35 billion expansion, paid for by a 61-cent increase in the federal tobacco tax.

Officially slated to expire today, the program has been extended by Congress until Nov. 16, creating a negotiating window -- or a campaign by Democrats to mount a veto override.

'A blessing'

The showdown leaves Minnesota officials waiting to see whether the program will be expanded or cut off altogether.

A cutoff could cost the state $48 million in annual funding in the coming year. But political analysts say that seems unlikely.

Either way, Minnesota, with one of the lowest rates of uninsured patients in the nation, faces its own special challenges.

Unlike most other states, Minnesota has its own program, MinnesotaCare, to insure children from families that do not qualify for Medicaid but who can't afford private health insurance.

So to make use of the federal program, the Minnesota Department of Human Services has obtained special waivers to use much of its SCHIP money to cover the parents of children enrolled in MinnesotaCare.

Among them is Dahlton Krueger, a 56-year-old drywaller from Corcoran who dropped his private health insurance last year as the housing crunch dried up much of his business.

Now both he and his 15-year-old son get their medical and dental care through MinnesotaCare, which uses matching funds from the SCHIP program.

"It's really been a blessing for us," said Krueger, who needs medication for high blood pressure and cholesterol.

'Reasonable expansion'

Altogether, the proposed SCHIP expansion could mean an additional $50 million a year for Minnesota. But state officials say it remains to be seen whether the state will be able to continue to cover adults, since existing waivers for parents will phase out over time.

The federal government generally limits the age to 18 and the family income to double the federal poverty level, or $41,300 for a family of four.

MinnesotaCare offers eligibility to children from families earning up to 280 percent of the poverty line, or about $57,800 for a family of four. The state also covers pregnant women, including illegal immigrants.

Democratic leaders in Congress say the program's basic eligibility rules won't change. But while the extra money seems to give MinnesotaCare room to grow, new restrictions on the coverage of parents -- the mainstay of the state's SCHIP funding -- could limit the program's reach.

"Minnesota will have to consider how to take advantage of this new 'room' as many of our current health policy commitments will not qualify for SCHIP match," said Christine Bronson, the state's Medicaid director.

Caught in the middle is Minnesota Gov. Tim Pawlenty, who as chairman of the National Governors Association has been a strong backer of the SCHIP program. Amid the misgivings of some state officials, Pawlenty spokesman Brian McClung said, the governor supports a "reasonable expansion" of the program, though he has not specified by how much or at what cost.

'Socialized medicine'

One of the biggest points of contention between Democrats and Bush's allies in the House centers on the use of SCHIP dollars for adults and working-class families with incomes more than two or three times the federal poverty level.

New York, for example, has sought to cover families with incomes as high as $83,000 a year, a number that has been often quoted -- and assailed -- by a number of Republican opponents, including Minnesota Reps. John Kline and Michele Bachmann.

As both sides in the debate strive for the moral high ground, Kline and Bachmann contend that the program has deviated from its original mission of covering what Bachmann calls "needy children."

Backers of the SCHIP extension counter that rising health care costs have made private insurance unaffordable to a growing number of working- class families above the poverty line. There are an estimated 70,000 uninsured children in the state.

The program currently covers about 6.6 million children nationwide. Under the bill now headed for the president's desk, an additional 4 million would be covered.

But as Minnesota and other states increase their coverage to people with higher incomes, a host of conservative critics have come to see the program's expansion as the first step toward universal, government-sponsored health insurance, one that will crowd out private insurance.

"It expands the program so far beyond its original intent that it is no longer social welfare, but instead socialized medicine," Kline said.

Kevin Diaz • 202-408-2753

Kevin Diaz • kdiaz@startribune.com