NJ warns may sue federal gov't over kids health

NEW YORK Wed Sep 12, 2007 6:08pm EDT

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NEW YORK (Reuters) - New Jersey Gov. Jon Corzine on Wednesday warned the state could sue the federal government to stop it from imposing new rules that the Democrat said "will effectively gut" a children's health insurance plan.

Corzine joins a list of other governors, including California Republican Gov. Arnold Schwarzenegger and New York Democratic Gov. Eliot Spitzer, who have assailed the Center for Medicare and Medicaid Services for trying to block their states from enrolling more children from middle-income families.

The plan, called the State Children's Health Insurance Program which relies heavily on federal funding, initially focused on lower-income children.

Spitzer, New York's former attorney general, has also warned he will sue to block the new regulations that would, for example, require states to cover 95 percent of poverty-level families before enrolling more middle-income children. Corzine, like Spitzer, said no state could meet that obligation.

The rules would also make children who have no health coverage wait one year before joining the state plans.

"Although the letter was issued under the guise of preserving employer sponsored insurance, the practical effect of the new policy would be that thousands of innocent children will lose or be denied health insurance coverage and will be forced to join the growing ranks of the uninsured," Corzine warned in a letter to the federal agency.

A spokesman for the agency was not immediately available to comment.

Congress last month approved an extra $50 billion for the program, but U.S. President George W. Bush threatened a veto, calling it a move toward nationalized health care, which he opposes.

Bush wanted only a $5 billion increase in the plan's $25 billion cost over 5 years. Congress would come up with the extra dollars by hiking cigarette taxes 45 cents per pack and cutting Medicare payments to private health insurers.

New Jersey's program has covered 122,000 children, and Corzine said the new rules would deny coverage to 10,000 kids. In the past 18 months, 100,000 more children have been enrolled in both SHIP and Medicaid, which aids the poor, he added.

Corzine vowed to keep covering children in families with incomes of up to 350 percent of the federal poverty limit, citing a series of waivers the federal agency granted.

He added: "the conditions imposed by the letter contravene the fundamental objectives underlying SCHIP, violate the terms of its statutory and regulatory framework, and overstep CMS's authority by altering regulations without utilizing appropriate procedural safeguards."

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