States want Bush to ease the rules so that taxpayer-funded care can be available to families with higher incomes than now allowed.

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Should parents who earn nearly $62,000 a year and have two kids qualify for steeply discounted children’s health insurance that’s subsidized by the public?

That’s the crux of a standoff between two dozen states, including Washington, and the Bush administration over how far to stretch tax dollars to cover kids from “middle-income” families.

The battle is partly an ideological one over how large a role government should take in providing health care.

But it’s taken on a practical urgency as more working Americans lose employer-sponsored health insurance and can’t afford the full cost of premiums, which now can rival second-mortgage payments.

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On Monday, Gov. Christine Gregoire and her counterparts in New York, New Jersey and five other states said they are suing or will sue the federal government for having frustrated efforts to raise the income limit for the State Children’s Health Insurance Program (SHIP).

On Tuesday, Gregoire and 28 other governors sent a letter to President Bush urging him to sign a bill authorizing more money for SCHIP and loosening new restrictions.

SCHIP is a joint federal-state program that provides health coverage for children who don’t qualify for Medicaid.

Bush has opposed using federal money to subsidize coverage for children in families earning more than 250 percent of the poverty level, or $51,600 for a family of four, unless 95 percent of Medicaid- or SCHIP-eligible children in lower-income brackets enroll first.

No state apparently now meets that benchmark. And that could stymie plans by Washington and other states to expand SCHIP into higher-income families — in the case of New York up to four times the poverty level, or $82,600 for a family of four.

Washington is planning to raise the SCHIP income limit in 2009 from 250 percent of the poverty level to 300 percent, or almost $62,000 for a family of four. The move is expected to add 8,000 more kids to the program.

The state already provides free coverage under Medicaid to 544,000 children with family incomes up to twice the poverty level. An additional 11,000 children with family incomes between 200 percent and 250 percent of poverty already have SCHIP coverage. The families pay $15 per month per child, with a maximum cost of $45 per family.

The federal government matches Washington’s Medicaid spending dollar for dollar; for SCHIP, the ratio is $2 for every state dollar spent.

Even an income of $60,000 a year doesn’t stretch far for a family with four mouths to feed, said Jon Gould, deputy director of The Children’s Alliance, a Seattle advocacy group.

Expanding SCHIP “is an important ingredient for covering all our children,” Gould said. “Three hundred percent [income level] is where we draw the line now, though that may have to change in the future.”

An estimated 73,000 Washington children lack health coverage. Nationally, the number of uninsured children 18 and younger rose by 710,000 in 2006, the U.S. Census Bureau reported.

Nearly 70 percent of them, or 490,000, came from families earning at least twice the poverty level, according to analysis by the Kaiser Commission on Medicaid and the Uninsured, a national health-research group, and the Urban Institute.

Critics, including the libertarian Cato Institute in Washington, D.C., call SCHIP government assistance for people who don’t need it. Others warned that it may encourage parents to drop their children’s existing health coverage and switch to SCHIP.

However, Jim Stevenson, a spokesman for Washington Medicaid, said that’s unlikely. Families prefer to stay on the same health plan, and finding doctors who accept government health plans can be difficult, he said.

“If they can afford the [company] coverage, I think they will stick with it,” Stevenson said.

Kyung Song: 206-464-2423 or

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