Bush, Dems draw battle lines over health care

WASHINGTON (Reuters) - President George W. Bush vowed on Thursday to veto a plan to expand health insurance for children in low-income families, drawing criticism from Democrats and some fellow Republicans and setting the stage for a major battle with Congress.

Democratic leaders in the Senate and House of Representatives are moving toward agreement on a bill that would increase funding for the State Children's Health Insurance Program by $35 billion and raise tobacco taxes to cover the cost. The federal tax on cigarettes would rise by 61 cents a pack to $1.

Congress is likely to vote on the bill next week.

Senate Majority Leader Harry Reid, a Nevada Democrat, accused Bush of "going back on his word" on a campaign promise to enroll millions of kids in the program.

House Speaker Nancy Pelosi, a California Democrat, said the bill enjoyed broad support from Republicans as well as state and local government officials, adding "the president is alone in his opposition to this legislation."

Democrats say more money is needed to help families and ensure that all eligible children get the health care they need. As many as 10 million children could get health coverage under the proposed legislation.

Bush at a news conference called the emerging bill "an incremental step toward the goal of government run health care for every American" and vowed to veto it.

Bush accused Democrats of playing politics with children's health care and said he has enough support to sustain his veto even though many of his own Republicans back the legislation.

"My goal is to pass legislation getting something done for those in need, not getting nothing done so those officials in Washington can claim political victory," Bush said. He maintained the emerging legislation would benefit families earning as much as much as $83,000 a year.

"The proposal would move millions of American children who now have private health insurance into government-run health care," Bush said.

Bush also said he opposed raising tobacco taxes and higher taxes were not needed to fund the program. Bush has asked for an extra $5 billion over five years added to the current $25 billion funding level.

Bush's veto threat angered some of his fellow Republicans. Sen. Charles Grassley of Iowa, who helped broker bipartisan agreement on the legislation, said Bush showed a lack of understanding about the bill and budget realities.

"I think the president thinks there's political hay to be made," Grassley told reporters. "As far as I'm concerned, you need to look at the policy and what he wants to do and the fact that his budget is not intellectually honest because you're going to lose kids at $5 billion."

Sen. Susan Collins, a Maine Republican said "a veto would be a terrible mistake."

Bush asked Congress to temporarily extend the existing program, which is set to expire at the end of September, to give lawmakers time to work out differences.

Access to affordable health care is already becoming a major issue in the November 2008 presidential campaign, with Democrats offering ideas on how to cover millions of uninsured Americans.

The children's program was designed to provide health care for children of low-income families who cannot afford private health insurance, but who make too much money to qualify for the Medicaid health program for the poor. More than 6 million children are currently enrolled in the program.

(Additional reporting by Kevin Drawbaugh and Joanne Kenen)