Members of the Pennsylvania House voted 176-19 Tuesday to pass a bill that would raise eligibility limits for the state’s Children’s Health Insurance Program.

The state Senate unanimously approved the bill, H.B. 2699, on Monday, and the House vote should clear the way for Gov. Edward Rendell, a Democrat, to sign the bill.

The original version of H.B. 2699 was introduced by state Rep. George Kenney, R-Philadelphia, but lawmakers replaced the original text of the bill with the text of Rendell’s “Cover All Kids” proposal.

Rendell put out a statement saying he hopes expansion of the Pennsylvania CHIP will provide affordable health coverage for most of the state’s 133,000 uninsured children.

Rendell says he wants to get the program running by January 2007.

The Pennsylvania CHIP now is free for children from families with annual incomes under 200% of the federal poverty level, or about $40,000 for a family of 4. The program offers subsidized coverage for families with annual income up to 235% of the federal poverty level, or about $47,000 for a family of 4, according to Rendell administration officials.

H.B. 2699 will make subsidized CHIP coverage available for families earning up to 300% of the federal poverty level, or $60,000 per year for a family of 4, officials say.

The monthly cost would range from $36 per child for a family with an annual income of $40,001 to $57 per child for a family with an annual income of $60,000.

Families that “cannot find or afford private health insurance for their children who are earning above 300% of the FPL ($60,000 a month for a family of 4)” can pay the full price for CHIP coverage if they can show that coverage was denied due to a pre-existing condition, or the cost of private coverage would cost more than 10% of the family’s annual income, or the cost of private insurance would be 150% more than the cost of CHIP coverage, officials say.

If employer-sponsored coverage is available but the parents cannot afford the premiums, the state may help the family pay for the employer-sponsored coverage, officials say.

To discourage parents from dropping private coverage, the program will require many families to “go bare” for at least 6 months before enrolling in the expanded children’s insurance program, officials say.

Lawmakers have budgeted only $4.5 million for the program, but the state hopes to use that cash to draw down additional federal funds, officials say.

Rendell argues that the program expansion will lead to real improvements in the quality of life for the children of Pennsylvania.

“There is clear evidence that children who aren’t covered are more likely to have chronic illnesses, more likely to be hospitalized and less likely to succeed in school,” Rendell says.

Vince Phillips, the lobbyist for the Pennsylvania Association of Health Underwriters, Pittsburgh, has written an article for the PAHY newsletter suggesting that H.B. 2699 could backfire, by leading employers to ignore the “go bare” waiting period and simply drop dependent coverage.

“National studies show between a 10% to 40% drop-off in CHIP expansion where kids on CHIP were previously covered by private-sector plans,” Phillips writes.

Nathan Benefield, a policy analyst writing for the Commonwealth Foundation, Harrisburg, Pa., a conservative think tank, predicts that competition with an expanded CHIP will force health insurers to reduce the scope of their product menus in Pennsylvania.

“To be sure, Cover All Kids is the first step toward a universal, government monopoly of health coverage for all residents, not just children,” Benefield writes.