Debate is heating up on Capitol Hill over the renewal of the State Children's Health Insurance Program, or SCHIP, a 10-year-old federal and state initiative that provides health insurance to children in families with incomes over the cutoff for Medicaid that cannot afford private insurance.

The program, established by Congress in 1997, insures 6 million children each year. It expires in 2007. Analysts say that the program's success has ensured that virtually all lawmakers -- Republicans and Democrats alike -- want it to continue. The question, however, is how much funding it will receive.

"The overwhelming story of CHIP [another name for SCHIP], which I think is uncontested, is that it's been very successful," said Cindy Mann, executive director of the Center for Children and Families at Georgetown University. "So nobody on either side of the aisle is interested in stopping the program."

However, the nonpartisan Congressional Budget Office recently estimated that to continue covering the same number of children under SCHIP for the next five years will cost $12 billion to $15 billion more than current funding levels.

To expand coverage to the more than 8 million children in the United States who remain uninsured, meanwhile, would cost billions of dollars more.

The Bush administration has proposed raising federal funding by less than $5 billion over five years, and some Republicans argue that this lower price tag is sufficient to cover the low-income children SCHIP is intended to help.

But some congressional Democrats, looking to cover all uninsured children, propose increasing federal funding by as much as $50 billion, according to a March Washington Post article.

"A lot of states, including my own, have more kids that are eligible for the program but are not enrolled that we'd like to reach out to," Rep. Frank Pallone Jr., D-N.J., told the paper. "I don't understand what the president is doing."

Right now, SCHIP is funded at $5 billion per year. The federal government provides that money to states, which match the funds -- at 30 percent to the federal government's 70 percent -- then establish their own programs and set their own guidelines about who is eligible to participate.

Part of the funding controversy stems from the fact that some states use SCHIP funds to cover children from relatively higher-income families, as well as parents of children, pregnant women, and in a few cases even some childless adults, under the rationale that providing health care for pregnant women and parents helps produce healthier children.

States also vary widely in their income eligibility requirements. North Dakota, for example, covers children from families with income up to 140 percent of the federal poverty level ($28,000 for a family of four in 2006). New Jersey, on the other hand, covers children from families making up to 350 percent of the federal poverty level ($70,000 for a family of four). The majority of states cover children from families making up to about 200 percent of the federal poverty level.

Some legislators argue that states should not use SCHIP to fund anyone except relatively low-income children.

"I fear that using these limited federal dollars for adults has undermined coverage for low-income children," Rep. Charles Grassley, R-Iowa, told the Washington Post in March.

But state governments -- Republican- and Democratic-led alike -- don't see it that way. At the February meeting of the National Governors Association, for example, governors of both parties took the opportunity to criticize President Bush's SCHIP proposal and request more funding.

"The states that are covering parents and pregnant women are to a large extent the ones that were covering children before [SCHIP] was enacted," said Catherine Hess, senior program director at the National Academy for State Health Policy. "These states were in the early years encouraged to cover [pregnant women and other adults]. So they don't want to see the rug pulled out from under their feet."

As Congress debates the reauthorization, it also will have to grapple with issues of funding distribution -- the formula the federal government will use to decide how money will be divided among states.

"Formula issues are always difficult to deal with, and this one has some formula issues for sure," Hess said. "States that have been successful don't want to be penalized for their success."

In other words, legislators will have to decide how much money to give states that have been successful at signing up children for SCHIP, and so have reduced their numbers of uninsured children -- but still need money to cover the children they've enrolled. And at the same time, they will have to figure out how much to give states that still have a large number of uninsured children.

-- By Lea Winerman, Online NewsHour