NEW YORK (Reuters) - New York Gov. Eliot Spitzer on Monday threatened to sue the federal government on charges that new regulations on children’s health insurance violate an existing program that covers children from lower-income families.

New York Governor Eliot Spitzer is seen in New York April 12, 2007. Spitzer on Monday threatened to sue the federal government on charges that new regulations on children's health insurance violate an existing program that covers children from lower-income families. REUTERS/Eric Thayer

At issue is New York’s plan to expand coverage under the State Children’s Health Insurance Program to children whose parents earn up to 400 percent of the federal poverty level, from 250 percent currently.

But under new federal regulations that the Centers for Medicare and Medicaid Services published on August 17, states would have to cover 95 percent of poverty-level families before expanding access to middle-income children.

The rules also require children to have no health coverage for a year before they can join the state plans.

“There is a moral imperative that we cover our children with health care,” Spitzer, a Democrat, told reporters.

Congress renewed the Children’s Health Insurance Program in early August, adding $50 billion, partly funded with a 45-cent-per-pack cigarette tax hike.

Spitzer said the federal government’s new regulations conflict with the existing law.

Spitzer noted the current federal children’s health insurance plan lapses on September 30, and said he might wait until then to consider a lawsuit.

New York plans to expand coverage to an additional 70,000 children, from 340,000 currently eligible. The change in income levels would mean that a family with income of up to $69,000 would be eligible for coverage, from $43,000.

New York is one of 18 states expanding the Children’s Health Insurance Program.

President George W. Bush has threatened to veto the federal plan, calling it a move toward nationalized health care.

While New York already has enrolled 88 percent of children from poor families, several governors call the 95 percent threshold required to expand coverage to the middle-class unrealistic. Health policy experts say many families are unaware that they qualify for benefits.

Ohio Gov. Ted Strickland on Friday called on U.S. Health and Human Services Secretary Michael Leavitt to drop the new rules and instead “work with the states to develop guidance that will promote the best interests of uninsured children.”

New Hampshire Gov. John Lynch concurred Monday in a letter to Bush.

“These new rules put the health of children at risk, at a time when we should be doing more to provide access to quality health care,” Lynch wrote.