AUSTIN — The debate over children's health care this year will be arduous, but the stakes are high: more than 160,000 Texas children whose cash-strapped parents can't get state help to pay medical expenses for maladies as common as chronic ear infections or as daunting as cancer treatment.

The argument among legislators will be whether to raise income eligibility levels so those children can join the 451,000 now covered by the Children's Health Insurance Program.

Supporters say reducing the number of uninsured youngsters — now one of every five — would benefit not only the children's physical health but the fiscal health of Texas taxpayers. The federal government picks up 72 percent of the cost, and providing health care in doctors' offices is almost always cheaper than treating children in public hospital emergency rooms.

Critics worry about undermining employer-sponsored health coverage and point to the growing costs for the state. CHIP enrollment increases over the past two years have driven the state's tab from $102 million to $267.5 million.

For Nikki Saldana of League City, there is no argument. An apartment complex manager who earns about $40,000 a year, the single mother of two can't afford her employer's insurance and was turned down by CHIP because her yearly income is too high.

Her coverage from work would cost $400 a month, which does not include the co-payment of $50 to see an ear, nose and throat specialist needed to treat 2-year-old Abigail's severe allergies and ear infections.

Abigail had been covered under her grandmother's employer health insurance until six months ago, when Saldana's mom left her job. Saldana's 9-year-old daughter, Victoria, is on her father's health plan.

Three times this month, Saldana has taken Abigail, crying with pain from earaches, to emergency rooms.

“It's a long wait when I know what she needs is antibiotics for an ear infection. Calling a primary physician would be nicer,” she said.

Saldana, 29, would be willing to pay for health insurance if it were more affordable, maybe half the cost of her employer's plan.

Families now covered by CHIP can select from a network of doctors similar to those provided under private plans. There are no monthly premiums, but families pay an annual enrollment fee of $50, and most co-payments for doctor visits or prescription drugs range from $3 to $10.

A pending federal bill that renews CHIP is expected to allow Texas to increase income limits so more can enroll. The current limit for a mother and two children of $35,200 could be increased to $52,800.

State health and human services officials estimate the income expansion could draw 164,000 additional children to the program by 2012 at an annual cost to the state of about $100 million.

Rep. Ellen Cohen, D-Houston, said the price tag could be lowered if middle-income families were charged premiums on a sliding scale. Cohen this week plans to introduce a bill that would expand CHIP and take advantage of the expected new federal funds.

“Since 2003, Texas has turned away almost $1 billion of federal matching funds by failing to invest in CHIP,” Cohen said. “As a result, we are left with the highest uninsured population of children in the nation.”

Cohen said getting the bill passed won't be easy in a tight budget year when competing needs include Hurricane Ike recovery, public education and transportation.

Gov. Rick Perry's spokeswoman, Allison Castle, said the governor does not support expanding CHIP's eligibility standards because of the higher-income families that would be covered. She said Congress is trying to lure the state into expanding programs in tough times and that doing so would put the state on a “slippery slope to socialized medicine.”

Lt. Gov. David Dewhurst said his priority is to enroll as many as 900,000 youngsters who are eligible under current income guidelines but not yet enrolled in CHIP or Children's Medicaid, a separate program that serves about 1.8 million Texas children living in low-income households.

“At the end of the day it's the moral thing to do, and over the long run, its the most economic thing to do,” Dewhurst said.

House Speaker Joe Straus, R-San Antonio, said that “as a property taxpayer in Bexar County,” where part of the taxes goes to fund the local hospital district, he thinks the Legislature ought to consider expanding CHIP.

Some critics say government-subsidized health care encourages families to drop their private health coverage to go to the cheaper government program. But only 1.8 percent of families who applied for CHIP last month said their children had prior insurance, state health and human services officials said.

In the current economy, in which pay is being frozen for many workers, an automatic 3 percent raise should have been a blessing for Josh Hebert of Pasadena. But he wants to turn back part of the pay increase because it bumped him over the CHIP limit.

The youngest of Hebert's two daughters, 3-year-old Katie, suffers from brain lesions that have triggered deafness in one ear, digestive problems and a host of other problems. His employer plan would cost 30 percent of the family's monthly income and does not offer the type of comprehensive coverage that Katie gets through CHIP.

His wife, Kyla Hebert, said, “It seems unbelievable that a cost-of-living raise can become a major crisis, but it is when our children's health hangs in the balance.”