Obama expands children's health care

US President Barack Obama has signed a law expanding a health insurance programme for children and raising tobacco taxes to pay for it, a big legislative victory a day after his pick to lead a healthcare industry overhaul stepped aside.

Obama signed the law just hours after the House of Representatives voted 290-135 for the $US32.8 billion expansion of the State Children's Health Insurance Programme, or SCHIP, which was approved by the Senate last week.

"In a decent society, there are certain obligations that are not subject to trade-offs or negotiations - healthcare for our children is one of those obligations," Obama said.

The bill was "a downpayment on my commitment to cover every single American," he added.

President George W Bush twice vetoed similar bills, arguing it would raise taxes and encourage businesses and families to drop private insurance and switch to the program.

The bill signed by Obama aims to increase the number of children covered by SCHIP to 11 million from the 7.4 million currently enrolled.

The expansion is being paid for by raising the federal tax on cigarettes to $1 per pack from the current 39 cent-per-pack tax. Taxes on cigars and other tobacco products will also rise.

The signing ceremony provided a lift for Obama a day after he acknowledged mistakes in his handling of the nomination of Tom Daschle, a former Senate majority leader, to lead a broad overhaul of the US$2.3 trillion US healthcare industry.

Daschle withdrew his name from consideration as secretary of health and human services because of income tax problems.

Obama pledged in his campaign to expand healthcare coverage to an estimated 46 million uninsured Americans and to control medical costs. Healthcare advocates said the SCHIP bill would help him meet that goal.

"We see this as an important small downpayment in our quest to insure everybody in the United States," Dennis Rivera, who heads the Service Employees International Union's healthcare division, said in an interview.

Others said the bill would help achieve another important healthcare goal - discouraging smoking.

"By using a tax on tobacco, we are not only keeping kids healthier now, but also protecting their long-term health by discouraging smoking - a habit that causes deadly, costly and largely preventable diseases," said Bill Novelli, chief executive of the AARP, an advocacy group for people over 50.

The SCHIP program is designed to help working families who cannot afford private health insurance but earn too much to qualify for Medicaid healthcare coverage for the poor.

Republicans had criticized provisions in the bill that allowed states like New Jersey and New York to provide coverage for higher-income families, some earning as much as US$88,000.

They also criticized a provision backed by Democrats that ended a ban on legal immigrants enrolling in the program until they had lived in the United States for at least five years.

Republicans had argued that lawmakers could have achieved their goal of providing healthcare for more low-income children for less money. Despite those concerns, 40 House Republicans joined the Democratic majority in backing the legislation.

- Reuters