The Senate Finance Committee has put off consideration of a children’s health insurance program reauthorization bill.

The committee has postponed a “markup,” or intense review, of a “chairman’s mark” of S. 1224, a bill that would create the Children’s Health Insurance Program Reauthorization Act of 2007.

Sens. Edward Kennedy, D-Mass., and Olympia Snowe, R-Maine, introduced the original version of S. 1224 in April.

The Senate Finance Committee had scheduled a markup of the chairman’s mark of S. 1224 for 7 p.m. today.

The committee first postponed the markup to 1:30 p.m. today, and then to 9 a.m. Thursday.

The chairman’s mark of S. 1224, released July 13th, would forbid states from starting new efforts to open their CHIP plans to childless adults. But the chairman’s mark, prepared by Sen. Max Baucus, D-Mont., would use an increase in taxes on cigarettes and other tobacco products to increase program funding by an average of $7 billion per year for 5 years.

The program now gets about $5 billion in funding per year, and the Bush administration has proposed increasing CHIP funding by about $1 billion per year.

U.S. Secretary of Health and Human Services Michael Leavitt today wrote to Senate Finance Committee leaders to confirm recent rumors that President Bush would veto the CHIP extension bill as now written.

In the letter, Leavitt praises CHIP’s past success at providing health coverage for children, but he warns about concerns that letting states expand their CHIP plans to include higher-income children could cause those children to “become dependent on government programs for health insurance coverage.”

CHIP should return to its “original focus of covering low-income children,” Leavitt writes.

Baucus immediately responded with a letter asking the Bush administration to join with Congress to extend authorization for CHIP funding.

“I regret that you felt compelled to write your July 17th letter threatening that the president would veto the Finance Committee’s extension of the Children’s Health Insurance Program,” Baucus writes in his letter.

“The administration appears to be holding children’s health insurance hostage to Congress’ adoption of the administration’s larger health insurance tax and other health reform proposals,” Baucus writes. “Regardless of the merits of the administration’s tax proposal, it has proved far too controversial a matter for the Congress to adopt this year.”

Expanding CHIP should not hurt private insurers, because the structure of CHIP is similar to the structure of the new Medicare Part D prescription drug program, “in which federal benchmarks and funds guide a program administered largely through private insurers,” Baucus writes.

Fewer than 10% of children covered by CHIP live in families earning more than the federal poverty level, and most of the states that cover children in families with incomes greater than 3 times the federal poverty level are states where the cost of living is particularly high, Baucus writes.