UPDATE 1-Governors, Bush at odds on health care payments

(Adds estimates of S-CHIP funding shortfall, in 12th paragraph)

By Dean Patterson

WASHINGTON, Feb 26 (Reuters) - Who pays for health care may turn out to be the biggest rift between President George W. Bush and state governors now holding their winter meeting.

Insufficient federal funding of a program to provide health insurance for children was the focus of a press briefing several governors held on Monday after meeting with Bush.

The Bush administration has promised $5 billion a year over five years in supplemental funding for the State Children's Health Insurance Program (S-CHIP), the governors said.

"This is insufficient to keep pace with the rapid increase in health-care costs," said Pennsylvania Gov. Edward Rendell, whose remarks started the press briefing.

Before meeting Bush, Health and Human Services Secretary Mike Leavitt briefed the governors. The National Governors Association began a four-day conference on Saturday.

New Jersey Gov. Jon Corzine told reporters that 9 million children remain uncovered by the existing health insurance program and insufficient federal funding will lead to more rationing of resources.

"It was a chilling conclusion for some of us," he said.

The Washington Post on Monday said New Jersey is one of 14 states expected to run out of money for the program before the next budget year begins in October.

Later on Monday, the governors group released a letter it sent to congressional leaders, urging immediate legislation to provide sufficient funding for S-CHIP.

"Governors are united in support for this important program that serves over 6 million children nationwide," the letter said. "Coverage in the program will be jeopardized without your immediate action to prevent federal funding shortfalls."

The association's letter, which was addressed to Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi, Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner, did not say how much additional funding was needed.

The Bush administration's $5 billion per year funding plan for S-CHIP would lead to a $13.4 billion shortfall for states over five years, the Center on Budget and Policy Priorities said on Monday, citing figures it says were calculated by the Congressional Budget Office.

On Friday, the governors' group urged congressional leaders in a similar letter to pass a law that would block cuts in federal Medicaid funding by the Bush administration.