Governor Spitzer is on a collision course with the Bush Administration over one of the governor’s signature policy proposals, an expansion of the State Children’s Health Insurance Program. Earlier this year, the governor signed legislation that would allow SCHIP to cover children from families making as much as 400% of the federal poverty level. That amounts to $82,600. The plan also would also permit uninsured children to start receiving subsidized health care as little as six months after losing their insurance. Those who are under the age of 5 and whose parents were unemployed could enroll in the government plan immediately.

The Bush administration has effectively halted the expansion, introducing a requirement that before states can raise their coverage levels, they must first enroll at least 95% of the children who are below 200% of the poverty level. New York – as well as every other state – falls short of that threshold. So the practical consequence of the new rules will scuttle Mr. Spizter’s scheme. The administration also insisted that children have to wait a minimum of one-year before enrolling in SCHIP, so as to prevent crowding out of private coverage.

Mr. Spitzer, however, doesn’t seem to be getting the message and, amid his other travails, is spoiling for a legal fight. At a press conference on Monday he threatened to sue America over the new rules. The governor was joined at the press conference by Congressman Rangel, who suggested that the war in Iraq was somehow related to the Administration’s decision to limit SCHIP. Part of Spitzer’s rationale for SCHIP’s expansion is that the $82,600 threshold is not too grandiose in a state like New York where the cost of living and salaries are much higher than the national average.

They fail, however, to address the Bush Administration’s concern about crowding out private health insurance is a legitimate worry. Nor have they advanced a persuasive argument that the long-term strategy for middle-class families that have lost their health insurance needs to be a government program. Medicaid is one thing. Medicare is one thing. But government insurance for working age families four times over the poverty rate is going to strike a lot of taxpayers as an awfully radical step at a time when one can posit all sorts of incentive structures to encourage private health care insurers to step into the breach.

Particularly when there is scant evidence that expanding SCHIP would eliminate the problem of uninsured children. Even though the state has an estimated 400,000 children that are uninsured, the majority are already eligible for subsidized health care without the Spitzer plan. There is also a danger that SCHIP expansion would prove a backdoor to a more nefarious government health care system. The governor’s socialistic rhetoric on this issue is not reassuring; he has openly admitted that government subsidized health insurance should not just be for the poor.

A similar debate has played out recently in Washington, D.C., where where both chambers of Congress were attempting to pass SCHIP reauthorization legislation that would tack on between $35 billion and $50 billion more dollars in funding. The president opposed those efforts too, saying that members of Congress were expanding SCHIP beyond its original goal. Certainly state governors can help in finding a solution to our health insurance woes, particularly in fashioning market-oriented programs. But protracted lawsuits between the state and federal government and over-the-top rhetoric from politicians with ulterior motives are the last thing we need.