A U.S Senate panel has voted to hike the taxes on tobacco in order to expand health insurance for children of low-income working families. The move came in the face of a threat from the President himself and had 6 of the 10 Republicans on the panel , join all 11 Democrats in supporting the plan.
Until now, the State Children's Health Insurance Program (S-CHIP) has been a federal-state collaboration with broad support from both parties. The program subsidizes insurance for children and some adults with incomes too high for Medicaid but not high enough to afford private insurance. Legal authority for the program expires by Sept. 30, and its renewal is considered the most important vote Congress will take this year on health insurance.
The program began 10 years ago. It was generally designed to help families whose income does not exceed 200 percent of the poverty level, or $34,340 for a family of three. But several states have extended coverage to children with higher incomes and to adults. The latter expansion has particularly incensed some lawmakers who disapprove of waivers the Bush administration has granted to those states.
The program now costs the federal government about $5 billion a year, with states contributing additional money. Now, the Senate plan would add about $35 billion in federal money over five years, enough to cover 3.3 million more out of as many as 9 million uninsured children.
In order for this to happen, the plan would have to boost taxes on tobacco products. Cigarette tax would increase to $1 a pack, from 39 cents now. And taxes on cigars would more than double, to as much as $10 for the most expensive ones.
Opines Sen. Orrin Hatch: "It doesn't make me comfortable to advocate for such a large increase in spending. But it's important to note that (the program) has been tremendously successful. And one of the lessons we've learned is that it's going to cost more to cover additional kids."
Yet, Bush wants to hold the line on spending, adding about $5 billion more to the program over five years. Critics say that is too little, and with the rising cost of health care, it will not be enough to cover all the children now in the program.
Though House Democrats want to spend another $50 billion or more to cover the majority of uninsured children, the Republican backers of the Senate plan have said they could not go along with the big funding increase the House is contemplating.
In a letter to the Senate panel, Health and Human Services Secretary Mike Leavitt warned that the legislation would "dramatically shift costs to the federal government and increase the number of individuals who become dependent on government programs for health insurance." Leavitt called the tobacco levy a "massive, regressive tax increase."
yet, Sen. Max Baucus, the chairman of the Finance Committee who accused the administration of blocking the way for children, adding that he sees the cigarette tax increase as a public health measure that will save lives, in response, was quoted: "When given the choice between standing with big tobacco companies and standing with kids, I stand with America's children."