UPDATE 1-US House passes kids health bill Bush opposes

(Updates throughout)

By Donna Smith

WASHINGTON, Aug 1 (Reuters) - The U.S. House of Representatives voted on Wednesday to expand a popular children's health insurance program, ignoring a veto threat from the White House, which called the legislation a move toward nationalized health care.

The House voted 225-204, mostly along party lines, for the bill that would renew the so-called SCHIP program that gives federal grants to states to help provide health coverage to working families unable to afford insurance but who earn too much to qualify for the Medicaid program for the poor.

The Democratic-written bill would provide an extra $50 billion for children's health care, raise cigarette taxes by 45 cents a pack and cut Medicare payments to private health insurers. Backers said it would ensure continued health insurance for 6 million children and provide enough money to cover an additional 5 million eligible children.

"Contrary to the claims of the president and other opponents of this bill, it does not constitute a 'government takeover of health care,'" said House Majority Leader Steny Hoyer, a Maryland Democrat. "In fact, three-fourths of the children in the SCHIP program receive care today through private insurance plans that contract with the states."

The White House said Bush would veto the bill. Bush wants to add just $5 billion to the current $25 billion over five years funding level. He advocates using tax breaks to help more Americans afford health insurance and Republicans argued the House bill was a major step toward socialized medicine.

"Democrats want to raise taxes by at least $54 billion to fund a massive expansion of government-controlled health care," said Rep. Jim McCrery, a Louisiana Republican. "This is not just about helping low-income children. They are spending government funds to lure middle-class families to opt out of private health coverage."

The administration has also threatened to veto a more modest Senate bill that expands the children's health program by $35 billion, financed by a 61 cent-per-pack increase in the federal cigarette tax, which now stands at 39 cents a pack.

The Senate is expected to complete work on its bill, which enjoys broad bipartisan support, sometime this week and the two chambers would have to work out differences before sending a final bill to Bush.