Bipartisan legislation expanding the State Children’s Health Insurance Plan was scheduled to be reported out by the Senate Finance Committee at press time last July 19th, setting the stage for a spirited floor debate in the face of a veto threat from the Bush administration.

“It’s important that we reauthorize the State Children’s Health Insurance Program,” Sen. Charles Grassley, R-Iowa, ranking minority member of the panel said in opening the debate on the bill.

“Too many children in America don’t have health care coverage,” Grassley said. “This bill will reduce those numbers by 2.7 million. It does so in a way that’s cost-effective and uses appropriate targeted policies.”

The legislation, S. 1224, “the Children’s Health Insurance Program Reauthorization Act of 2007,” was originally introduced by Sens. Edward Kennedy, D-Mass., and Olympia Snowe, R-Maine.

But it was redrafted by Grassley and Sen. Max Baucus, D-Mont., chairman of the committee, and reintroduced July 13th to represent a compromise; bipartisan proposal aimed to head off threats of a presidential veto.

It 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.

But, a recent analysis by the Congressional Budget Office concluded that the program would require about $14 billion in new money over five years — on top of the current $5 billion in annual funding — merely to keep covering the same number of children, in part because of rising health-care costs.

Baucus and Grassley also noted in releasing the draft legislation that House Democrats are working feverishly to draft and win the votes for passage before Congress leaves in early August for a month’s vacation of legislation expanding the program to $50 billion over 5 years.

Grassley also highlighted, as he opened debate on the bill, a provision that would forbid states from starting new efforts to open their SCHIP plans to childless adults, one of the concerns the administration has voiced by conservative Republicans and the administration about plans to expand the program.

But, the administration has persisted, and HHS Secretary Michael Leavitt sent a letter to the committee several days before the bill was scheduled to be marked up outlining the administration’s concern and reiterating the administration’s plan to veto the bill.

But, in responding to Leavitt’s letter, Baucus rejected the administration position, noting that expanding CHIP should not hurt private insurers.

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.