Washington is abuzz with predictions of health care system reforms after the 2008 presidential elections but an unexpectedly bitter impasse over insuring poor children is a telling reminder that few things stir up partisan passions like health care.

And when Democrats and Republicans feud, the outcome is often ... nothing.

The State Children's Health Insurance Program is a popular 10-year-old program backed by both parties, but lawmakers and President George W. Bush have deadlocked over extending and expanding it. The U.S. Congress was leaving for a two-week Thanksgiving break on Friday without a solution.

Some policy experts predict that if politicians cannot agree on insuring poor kids, it is going to be challenging even for a new president and a new Congress to move ahead in 2009 on far broader changes to the health care system.

We have a big dysfunctional sector of the economy with lots of money floating around, said Michael Cannon, a health analyst at the libertarian Cato Institute.

Shaking up that system inevitably creates winners and losers, he said, so most of the time we're at this stalemate where everyone's second best option is the same: Do nothing.

And any debate over health coverage, whether for children or larger populations, means a highly ideological fight about the appropriate role of government, said Ed Howard of the nonpartisan Alliance for Health Reform, a veteran of many Washington health care battles.

Reformers have been trying to overhaul the U.S. system for decades. The last big legislative push came in the early 1990s under Democratic President Bill Clinton and first lady Hillary Clinton. Now a senator from New York, a revamped health coverage plan is a key theme in her 2008 presidential bid.

PROBLEMS HAVE DEEPENED

In the last decade, many U.S. health care problems have deepened. Health spending has soared and now makes up one-sixth of the U.S. economy. The number of uninsured has reached 47 million. Researchers have identified troubling levels of medical errors and lapses in quality.

We had a big attempt (at reform) 13 years ago. It didn't work. Then we decided to work incrementally and that's been a pretty spectacular failure. The problems are getting worse, said Karen Pollitz, of Georgetown University's Health Policy Institute.

Bush vetoed the children's health coverage bill and has vowed to kill future versions unless it shrinks to his specifications.

He said the plan, which would increase funding to $60 billion from the current $25 billion over five years, was too costly and could shift middle-income kids from private insurance to government-run care. He also objected to raising tobacco taxes to pay for the program.

Democrats say the extra money is needed to continue coverage for the roughly 6.6 million children currently enrolled and provide coverage to about 3.4 million more.

Conservatives call the children's health program socialized medicine or a government-takeover of health care, rhetoric that echoes previous debates and may foreshadow Republican attacks on coverage proposals if a Democrat wins the White House next year.

Name calling is a tried and true weapon, said Pollitz.

Republican candidates have their own health proposals, many relying on tax credits and changes to private insurance markets. Democrats often dismiss them as fig leafs that may help businesses with a stake in health care but do little for people who cannot afford coverage.

(Editing by Lori Santos and Vicki Allen)

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