WASHINGTON -- The Senate late Thursday by a veto-proof margin of 68-31 approved a $35 billion, five-year expansion of the State Children's Health Insurance Program after Senate Finance Chairman Max Baucus, D-Mont., shepherded the bill through a weeklong debate.

"I'm thrilled," Baucus said in an interview. "It's just clearly the right thing to do."

Sen. Jon Tester, D-Mont., also voted for the bill. Wyoming GOP Sens. Mike Enzi and John Barrasso both voted against it.

Lawmakers said the Senate bill would add 3.3 million kids to the program -- in addition to the 6.6 million currently covered. The increase would be paid for largely by a 61-cent tax increase per pack of cigarettes.

Under the Senate bill, Montana's program would receive about $28 million next year, which is $12 million more than last year, Baucus said. The money would provide coverage to as many as 12,000 more Montana kids while continuing coverage for the 14,000 kids currently enrolled, he said.

President Bush has vowed to veto the bill, objecting to expansion of the government-run program. The measure received enough support in the Senate to override a veto, but not in the House.

The House passed a more sweeping health care bill 225-204 on Wednesday. It would add $50 billion to SCHIP. The House bill also contains Medicare provisions, which include halting a scheduled cut to physicians' fees. Any SCHIP increase would be on top of the $25 billion now available over five years.

A group of House and Senate negotiators, including Baucus, must now hammer out a compromise. Baucus said he has focused on passing the Senate bill and hasn't talked with House leaders. "We'll cross that bridge when we get there," he said.

Congress established SCHIP a decade ago to insure children whose families earn too much to qualify for Medicaid but still cannot afford private insurance. It will expire on Sept. 30 unless Congress acts to extend it.

The Senate bill would gradually reduce the benefits for parents now covered under SCHIP and prevent more parents to be added. Adults without children now covered would be transitioned to Medicaid. Over the decade, 14 states applied for and were granted waivers to cover adults under SCHIP.

Bush has proposed adding only $5 billion to the program. He also wants Congress to consider health care tax proposals and to cap SCHIP eligibility at 200 percent of the poverty level, an annual income of about $34,000 for a family of three.

The Senate bill would allow states to cover children in families with incomes up to 300 percent of the poverty level, the House bill up to 400 percent. States must match federal money with state funds.

The House bill would raise the cigarette tax by a lower amount than the Senate bill, by 45 cents per pack, and would cut extra payments to private Medicare Advantage plans to fund SCHIP.

Bush said both bills represent federal encroachment on the health care system. They would provide incentive for people to switch from private to government health insurance, he said. Some Senate conservatives called the expansion a step toward "socialized medicine."

Enzi said the Senate bill provides for an expansion of inefficient federal bureaucracy.

"Most of my colleagues on the other side of the aisle are aching for government-run health care and they are using this as a vehicle to get closer to that goal, but I did not support this unruly expansion of big government," he said.

Asked about the veto threat, Baucus called the bill "very modest" and said it doesn't overreach.

"I'm baffled," he said. "I'm perplexed. I'm scratching my head. What in the world is he thinking of? This is low-income kids."

The legislation also would provide $200 million in grant money for states to improve children's dental health.

The bill also includes Indian Country provisions. It provides new funds for outreach and enrollment in Medicaid and SCHIP, allows American Indians to use tribal documents to prove citizenship for Medicaid and gives states a higher federal match for translation and interpretation services in the program, Baucus said.

It also requires the government to monitor racial and ethnic disparities in care, he said.

Although American Indian children are eligible for Indian Health Service and tribal facilities, the IHS is only funded at 60 percent of need, Baucus said. "It is abominable," he said.

In a speech on the Senate floor, Baucus said that in Montana, 19,000 kids were eligible for Medicaid or CHIP but not enrolled. He said Montana's high rate of uninsured kids comes in part because fewer than half of all employers in Montana offered health coverage in 2005, and many families can't afford to buy it on their own.

The average cost of a family health plan on the open market in Montana is about $8,000 per year, Baucus said. That's about a fifth of the income of a family of four making twice the poverty level, or $41,300.

"CHIP offers affordable, comprehensive health coverage for working families," Baucus said. "CHIP works and has helped thousands of Montana families."

The 2007 Montana Legislature increased the family income eligibility cutoff for CHIP from 150 percent of the federal poverty level to 175 percent. That's a yearly income of just more than $36,000 for a family of four, Baucus said. That change will add 2,000 children next year, he said.

As chairman of the Finance panel, which has jurisdiction over the program, Baucus has been one of leaders in its renewal. The committee began hearings early in the year, and negotiations started in earnest several months ago. Last week Baucus' committee passed the bill 17-4.

Baucus stayed on the Senate floor much of this week running the debate with "ideas and amendments and requests flying left and right."

"I feel like I'm a goalie sometimes with all the pucks flying at me all the time," he said. "It's all with the goal of doing the right thing."

During the week the Senate rejected amendments that would have changed the carefully negotiated compromise, including one by Sen. John Kerry, D-Mass., that would have increased SCHIP spending by $50 billion. It also voted down a Republican alternative that would have increased the program by $10 billion and limited it to 200 percent of the poverty level, while including health savings accounts and small business health plans.