by Daniel C. Vock and Pamela M. Prah, Stateline.org Staff Writers

Reversing course from last year, the Bush administration announced Monday (Feb. 4) that it plans to spend an additional $19.7 billion over five years to see that more of America’s children have health insurance.

But the new budget proposed by the president would impose several new restrictions on the State Children’s Health Insurance Program (SCHIP), which currently covers 6 million Americans a year. That could mean headaches for states that have aggressively used the program to provide subsidized health insurance to middle-class families.

President Bush’s $3 trillion fiscal 2009 budget comes at a time when many states face a budget shortfall. Unlike the federal government, states must balance their budgets each year.

Bush plans to ask Congress to limit SCHIP to families of four making less than $53,000 a year. His proposal would grandfather in already-enrolled kids in families making more than that level, but states couldn’t sign up anyone else beyond that level.

Bush’s budget also calls for controversial changes in Medicaid, the state-federal health insurance program for the poor. One would eliminate a requirement that drug companies sell their medicine to Medicaid at the cheapest price on the market.

The budget includes $110 million to help states comply with the 2005 Real ID Act, which will cost an estimated $4 billion to create tougher national standards for driver’s licenses.

Bush’s $59.2 billion proposal for education — nearly equaling the money spent last year — is unlikely to jump-start talks on his stalled signature education initiative, the No Child Left Behind Act of 2001.

Read more about other these and other elements of Bush’s budget proposal at stateline.org.