The bill would use an additional $32.8 billion in funds from a cigarette tax increase to expand the State Children's Health Insurance Program to cover 4.1 million more children by 2013. The program currently covers about 7 million kids.
Supporters laud the bill's passage as an important victory in a tough week for health care, having come just a day after Tom Daschle withdrew his candidacy for secretary of health and human services amid controversy over his tax payment record.
"This is really a major step forward in terms of kid's coverage," said Cindy Mann, executive director of the Center for Children and Families at Georgetown University's Health Policy Institute. The bill, she said, includes a more efficient funding formula and gives states' incentives to do a better job at both retaining and enrolling children.
Families with incomes of up to three times the federal poverty level would qualify. It also reauthorizes the 12-year-old program, which was scheduled to expire on March 30.
Additionally, it eliminates an earlier provision that barred newly arrived legal immigrants and pregnant women from enrolling for five years.
Critics oppose the bill mostly on ideological levels, arguing that it shifts too many children from private to public insurance. John Goodman, president and CEO of the National Center for Policy Analysis, said that the cigarette tax disproportionately hurts poor people, who are more likely to smoke. He also argues that expanding the number of children in public programs results in lower reimbursement rates for doctors and a higher burden on taxpayers.
"We think this a very bad thing to do," Goodman said. "It will encourage people to drop private insurance and enroll in a public program that in most places pays little better than Medicaid rates to providers ... The more people you put into a public program, the more difficult it becomes."
Mann counters that both private and public insurance are important to health care, and SCHIP has helped fill a gap for those who make too much to qualify for Medicaid but not enough to afford private health insurance.
"And that gap has been widening as everybody knows," Mann said. "The cost of family-based coverage has more than doubled. CHIP is designed to help fill that gap between Medicaid eligibility and private coverage."
Some say the legislation still doesn't do enough. Even with the expansion, it will only cover about 40 to 50 percent of uninsured children.
Irwin Redlener, a Columbia University professor and president of the Children's Health Fund, said the bill an important first step. But, he cautions, it's too soon to start pouring the champagne, particularly in a climate of rising unemployment and financial uncertainty.
"There's a persistent gaping hole in the health insurance safety net for children," he said. "I'm concerned that we're still treading water. Many children are still left out."
Improving SCHIP is largely a question of increasing enrollment. The overwhelming majority of uninsured children - 83 percent -- are already eligible for SCHIP or Medicaid, but have not signed on, Mann said, citing Congressional Budget Office statistics.
"This does quite a bit with new tools and incentives to reach those children," Mann said, adding that more can be done. "There's still a lot of opportunity to do online applications. Not a lot of states are doing that."
Improving retention rates is important, too. In some states, as many as 20 to 30 percent of children get dropped from SCHIP for simply failing to renew coverage.
Redlener hopes that SCHIP will represent, as Mr. Obama said Wednesday "a down payment" in the road toward covering all American children. Even with insurance, other barriers to children's health still exists, such as quality of care, transportation difficulties, a lack community health clinics in underserved areas plus language and cultural barriers, he points out.
"My biggest fear is that the federal government will now think they've taken care of children's health by the passage and signing of the bill by the president," he said. "What I would like to say as vociferously as possible is we can't stop thinking about solving children's' health access challenges with health insurance. This work is just beginning, not ending."