Gregoire threatens lawsuit over kids' health care

Washington and other states could end up suing the federal government to ensure survival of the state's Democrat-backed plan to give all children a chance by 2010 to receive medical insurance, Gov. Chris Gregoire said Monday.

Gregoire outlined the legal option during her weekly meeting with Capitol reporters. She said the lawsuit is being prepared, if needed, by the state Attorney General's Office if federal authorities insist on new limits that prevent Washington's expansion of the program.

The lawsuit would challenge new rules the federal Department of Health and Human Services adopted "by letter" in August. Gregoire and almost 30 other governors have challenged those rules in a letter to U.S. Health and Human Services Secretary Mike Leavitt, claiming that its requirements "undermine the foundation" of the federal-state partnership on children's health.

"These are simply bad policy decisions," Gregoire said. "I raised the fundamental problem that this was rule-making by letter." She also contends Leavitt exceeded his authority.

The dispute comes at a time Congress is facing a showdown with President Bush over reauthorizing the State Children's Health Insurance Program, or S/CHIP. If the program is not reauthorized by Sunday, 12 states must start pushing children off the program - although Washington is not one of those states, Gregoire said.

Continuing resolution

Washington could survive without new legislation if Congress at least passed a continuing resolution assuring federal payments to states at current levels, said Doug Porter, assistant secretary in charge of Medicaid programs at the state Department of Social and Health Services.

But if Congress was unable even to do that, Porter said he would ask state lawmakers to provide the difference - roughly $38 million a year.

The governor said she favors the U.S. Senate's approach that would increase tobacco taxes and increase spending on S/CHIP by more than $50 billion, a costlier proposal than in the U.S. House. The Senate includes language that removes penalties for Washington having extended coverage to children through Medicaid in the 1990s, before the original S/CHIP program was authorized.

The House proposal also increases spending. But Bush has threatened vetoes of both proposals.

"You know he and I agree on immigration. I am just baffled by his position on this," Gregoire said of Bush.

Gregoire criticized Republican claims that middle-income families would quit private insurance in favor of government coverage, which requires a premium for the higher-income families. She said the experience in New York was that private insurance utilization by less-poor families fell by just 3 percent.

"I think this is a values issue," Gregoire said. "I don't know how Americans can say to the rest of the world that it is OK to turn our backs on children"' in poverty.

Washington now covers children in families of up to 250 percent of the poverty line. But legislation approved this year would expand that to 300 percent - or roughly $61,950 for a family of four in 2009-10.

The new guidelines are part of a Democrat-backed effort to ensur e that all Washington children are covered by 2010. Gregoire said about 8,100 children could be affected by the federal rules.