Last week, the U.S. House of Representatives failed to override the President's veto of legislation to reauthorize the State Children's Health Insurance Program (“SCHIP”) [H.R. 976] for another five years. The $35 million package, financed in part by a 61 cents per pack hike in the federal cigarette tax, would have raised current enrollment levels from 6.6 million children to 10 million. Although the Bush Administration has expressed interest in reaching a compromise with Congressional proponents of the vetoed bill, policymakers remain at odds over income eligibility limits, financing and cost. A continuing resolution (CR), passed by Congress in late September, provides funding for the SCHIP program through November 16, 2007. If a resolution on funding priorities for the federal government does not occur before then, Congress will likely pass another, or a successive series of CRs, to keep SCHIP (and the federal government) afloat while both sides work to resolve their differences. Meanwhile, the Senate Finance Committee is drafting a Medicare reform package that is likely to contain many of the Medicare reform provisions that had been stripped from the original House SCHIP reauthorization bill. If compromise language is adopted for SCHIP, it could get paired with the Committee's package on Medicare reform with both measures being folded into an omnibus budget reconciliation bill. This could trigger another spending showdown between Congress and the President, who has threatened to veto 10 of the 12 appropriations bills for FY 2008 (including the Labor-HHS-Education spending bill) because they exceed his spending targets.