Today, the Democratic-led Congress officially waved the white flag of surrender on its top domestic issue. That would be SCHIP, the State Children's Health Insurance Program. It's been 11 months and two presidential vetoes since Democratic leaders voted to expand the program. Today, the House passed a bill that will essentially continue the program in its current form until 2009.

NPR's Julie Rovner reports.

JULIE ROVNER: With Christmas fast approaching, Democrats in Congress were in a fix. They had two health funding emergencies. First, temporary funding for the Children's Health Insurance Program was about to run out again. And on January 1st, a 10 percent cut in pay to doctors under Medicare was set to take effect, something Democrats, Republicans and the Bush administration agree shouldn't be allowed to happen.

But President Bush and Republicans ruled out most of the ways Democrats wanted to pay for either the Medicare changes or the SCHIP expansion. That basically gave Republicans the upper hand and left the Majority like California's Pete Stark with little more to do than fume.

Representative PETE STARK (Democrat, California): What we have before us gives the lowest common denominator a bad name. It shows the Republicans in their truest form - help the rich at the expense of the poor and deny government services to anyone and only help to profit industries who pay them so generously through their campaign contributions.

ROVNER: And adding insult to injury, Republicans insisted on continuing SCHIP at its current levels not just until next September as Democrats wanted, but until March of 2009 instead. Four months after the November 2008 elections. House Republican Whip Roy Blunt defended the delay.

Representative ROY BLUNT (Republican, Missouri): I think this 18-month extension gives us the time we need to make SCHIP an even better program. It extends the current program. It increases funding for the current program. It helps the states that have a shortfall.

ROVNER: Nearly half the states would suffer such funding shortages. According to the Congressional Research Service, 21 states will run out of money under the current funding formula by next September, 10 of them by next March. So the bill includes $800 million for those states. But that doesn't mean that every child now enrolled in SCHIP could stay on the program. That's because the bill doesn't cancel controversial Bush administration eligibility rules issued last August. As a result of those rules, which take effect next summer, said Illinois Democrat Rahm Emanuel.

Representative RAHM EMANUEL (Democrat, Illinois): If you live in 14 states in the United States, kids in those states will actually come off the rolls in August, and they will begin in those states. The governors will have to begin to develop plans to notify those kids and their parents.

ROVNER: But Emanuel says that may not be such a bad thing for the Democrats particularly when children start getting bumped off the program.

Rep. EMANUEL: August '08 is two months before the election, and I don't think that's a problem. As a matter of fact, we can't protect the American people from the consequences of the president's decision. And a number of Republicans stand by him. We did right. There was a bipartisan bill to resolve a major problem and give 10 million children health care. We didn't accomplish it. We'll be back and we'll get it done.

ROVNER: The SCHIP debate however might not be over just yet. Congress will be forced to pass yet another health funding bill by next June because the Medicare doctor payment fix they just passed only lasts for six months. And some Democrats say they may try to bring back the SCHIP issue then.

Julie Rovner, NPR News, Washington.

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