Landover, Md. - President Bush on Wednesday reiterated his threat to veto Senate legislation that would substantially increase funds for children’s health insurance by levying a 61-cent-a-pack increase in the federal excise tax on cigarettes.

The tax increase would be used to subsidize health insurance for children and some adults with incomes too high to qualify for Medicaid but not high enough to afford insurance on their own.

The renewal of the State Children’s Health Insurance Program, or SCHIP, is considered by many to be the most important health legislation that Congress will take up this year.

"Members of Congress have decided, however, to expand the program to include, in some cases, up to families earning $80,000 a year - which would cause people to drop their private insurance in order to be involved with a government insurance plan," Bush said in a speech in suburban Maryland.

"If Congress continues to insist upon expanding health care through the SCHIP program - which, by the way, would entail a huge tax increase for the American people - I’ll veto the bill," he said. 

Democratic leaders called for adding $50 billion to the program over the next five years. Bush had recommended a $5 billion increase.

On Friday, a bipartisan group of lawmakers in the Senate signaled their support for a $35 billion increase, bringing total funding to $60 billion over five years. The Senate proposal would provide health-insurance coverage to current participants as well as an additional 3.3 million uninsured children, according to estimates from the Congressional Budget Office.

The American Hospital Association, the American Medical Association and the American Cancer Society support the increase.

But the administration, which has consistently referred to SCHIP as government-run health care, says billions of dollars in insurance costs will be shifted from the private sector to the federal government under the Senate proposal.

Bush spoke after attending a round-table discussion at Man & Machine Inc. in Landover with small-business leaders the president said feel pinched by high health-care costs.

"They don’t like the idea of having to make the decision between providing health care for their employees and not expanding their businesses," he said.