(CBS/AP) President Bush challenged Democrats on Thursday to quickly renew a popular children's health insurance program and accused them of “putting poor children at risk so they can score political points in Washington.”

Democrats say the president is freezing out struggling Americans ineligible for Medicaid, but who can't afford to buy insurance, reports CBS News chief White House correspondent Jim Axelrod.

So far the Senate has passed a version by a veto-proof majority, but the House has not, and House Speaker Nancy Pelosi, D-Calif, knows the president's veto threat could easily become reality, reports Axelrod.

“The president is saying, 'I forbid 10 million children in America to have healthcare,’” said Pelosi.

The State Children's Health Insurance Program is set to expire Sept. 30. Democrats are pushing for a $35 billion spending increase for SCHIP, but Bush has threatened to veto it. He has proposed a $5 billion increase. Some Democrats believe they can secure a political victory by sending him a bill they know he will veto, he said.

The president urged lawmakers to send him a simple, temporary extension of the current program, which would give lawmakers more time to work out their differences over a long-term renewal.

“If they fail to do so, more than a million children could lose health coverage,” Bush said at a press conference. “Health coverage for these children should not be held hostage while political ads are being made and new polls are being taken.”

But even Republicans, like Iowa’s Sen. Chuck Grassley are calling on the president to compromise, reports Axelrod.

SCHIP is a state-federal partnership designed to provide health coverage to families with incomes too high to qualify for Medicaid, but not high enough to afford private coverage. More than 6 million people, primarily children, participate. The program's future has become this year's most important health policy debate.

Pelosi said said the nation's governors are seeking a more permanent resolution.

“I don't know what the point is of an extension. So that we can have this conversation again and have another extension?” Pelosi said. “The moment of truth is now.”

The proposal that Democratic lawmakers support would bring total spending to about $60 billion over the next five years, or twice the level sought by the Bush administration. Several Republican senators also voted for that spending level when that chamber approved a bill last month. Negotiators are still working behind the scenes on a final proposal, which is expected to come to a vote in the House next week.

Bush said he opposed a $35 billion increase because it would encourage states to extend health coverage to middle-income families now using private insurance.

“I believe this is a step toward federalization of health care,” Bush said.

Democratic lawmakers said their proposal does not call for a government takeover of health care.

“The president hides behind the word 'federalization' because his political base opposes doing what is decent and humane,” said Sen. John Kerry, D-Mass. “The Senate and the House both approved legislation that would extend health care coverage for poor kids, not cut it back.”

States have flexibility to set eligibility criteria for participants. New York, for example, recently applied to expand coverage to families whose incomes are up to four times the federal poverty level - $68,680 for a family of three. However, the administration rejected New York's proposal. A doubling of SCHIP spending would encourage states to expand eligibility, the administration says.

“Instead of expanding SCHIP beyond its original purpose, we should return it to its original focus, and that is helping poor children, those who are most in need,” Bush said. “And instead of encouraging people to drop private coverage in favor of government plans, we should work to make basic private health insurance affordable and accessible for all Americans.”

The House previously had called for a $50 billion expansion of SCHIP that would have been funded by an increase in tobacco taxes and lowering subsidies to private insurers offering Medicare health benefits. But the provision to lower the subsidies was opposed by some key Senate Republicans as well as by nearly 20 Democrats in the House, making it more difficult to overcome a veto.

The $35 billion increase is a compromise crafted by a handful of lawmakers from each chamber. Most, or all, would be funded by the tobacco tax.

Pelosi said the House will return later this year to address the changes that most Democratic lawmakers supported, including a cut in payments for some insurance plans serving beneficiaries. Those cuts would help pay for an increase in the reimbursement rates for physicians who treat Medicare beneficiaries. Those physicians now face a 10 percent pay cut beginning Jan. 1, unless Congress intervenes.

Health and Human Services Secretary Mike Leavitt said most states would have enough money to continue their programs for a while even if SCHIP expires at the end of this month. However, he said about 12 states may not have enough money to keep going for a sustained period. He did not provide a list of the states.

House Republican leader John Boehner, R-Ohio, said he supported Bush's call for a temporary extension of the program. He described the legislation to be offered by Democrats as flawed and partisan. However, Grassley said an extension leaves many children without health coverage.

“I talked to the president this morning,” Grassley said. “I pointed out that his limit of $5 billion over five years isn't enough to accomplish what he said he wants to do, and that's cover more kids.”

And the president may have another incentive to play tough, says Axelrod. It lets Democrats know that if they're thinking he's a "lame duck" -- he's still here slugging.

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