HARRISBURG, Pa. (AP) - October 25, 2006 -- Thousands of Pennsylvania children whose parents cannot afford private insurance, but make too much money to qualify for government-sponsored insurance, will become eligible for coverage in January under legislation awaiting Gov. Ed Rendell's signature.

State lawmakers approved an expansion Tuesday of the Children's Health Insurance Program, which was created in 1992 to provide free or low-cost health care for children who are ineligible for welfare health benefits.

When Rendell signs the measure he calls "Cover All Kids," Pennsylvania will become the second state in the nation to offer health-insurance benefits to all uninsured children. Illinois became the first state to do so under its "All Kids" program, which took effect July 1.

After the bill is signed, the state will have to ask the federal government for more than $10 million to supplement $4.5 million set aside in the state budget for the expansion.

"It's a pretty big financial commitment on the part of the federal government," Deputy Insurance Commissioner George Hoover said Wednesday.

The Children's Health Insurance Program, known as CHIP, currently insures more than 147,000 children under age 19. About 15,000 children are expected to enroll in the expanded program between January and June, the end of the current fiscal year, and that number is expected to increase to nearly 70,000 within five years.

The legislation calls for the expansion to take effect either on Jan. 1 or 30 days after the state publishes a notice that the federal government has approved the expansion, whichever is later. Hoover said the state has been working with the federal Centers for Medicare and Medicaid Services to ensure that the CHIP expansion will occur in January.

"We'll be working with the families in January and try to get them enrolled as expeditiously as possible," Hoover said.

An Insurance Department survey in 2004 found that 133,589 Pennsylvania children lacked health insurance. That included 25,500 who were not eligible for any subsidized health coverage; the rest were eligible for such programs but were not enrolled.

The newly passed measure would expand eligibility to children whose families earn up to 300 percent of the federal poverty level - about $60,000 annually for a family of four - provided they pay a part of the premium.

Families with incomes above that threshold would be allowed to participate, paying the full premium, if they meet certain criteria, such as having children whose health problems disqualify them from private insurance coverage.

Rendell had originally proposed allowing families with incomes of up to 350 percent of the poverty level (about $70,000 for a family of four) to receive benefits partially subsidized by the state. Republican legislative leaders argued his proposal would harm the insurance industry by encouraging families who can afford private insurance to abandon it for state benefits and motivating businesses to cut private health insurance for employees' children.

The compromise bill ensures that more affluent families enroll in the program only as a last resort, said Sam Marshall, president of the Insurance Federation of Pennsylvania.

"For those who have traditionally gotten private coverage and have dependents, what they did was make this program available, but as a fallback, not a first choice," Marshall said.

One point that seemed to get lost in the debate is that Cover All Kids was not intended to mandate government-subsidized health coverage for all children, said Joan Benso, president and chief executive officer of the nonprofit Pennsylvania Partnerships for Children.

"There's a big difference between making (insurance) available and providing it," Benso said. "No one ever set out to provide health insurance for every child."

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