Panel Backs Tobacco Tax Boost To Fund SCHIP At $35B

7/11/2007

From the AP:

The Senate Finance Committee has agreed to a roughly $35 billion package to reauthorize and expand the State Children's Health Insurance Program funded almost exclusively by a cigarette tax increase, committee members said today. The bill, which will be released Friday in advance of a markup next Tuesday, also includes language that will phase out adult enrollment in the program to make room for more children.

The $35 billion that comes from a 61-cents per pack cigarette tax is short of the $50 billion allotted for SCHIP under the budget resolution, but Sen. Gordon Smith, R-Ore., said the phase-out of adult coverage would allow about 2 million children who are currently eligible but not enrolled in SCHIP to receive benefits. "The compromise that was struck has savings in it because adults are moved off of it so that kids can be moved on to it," said Smith, who proposed an increase earlier this year from the 39-cent tax on a pack of cigarettes. 

The White House is preparing a veto announcement because the administration believes the SCHIP expansion is too broad. "If the Democrats insist on this massive expansion of government-run health care, the president's senior advisers would recommend a veto," a White House official told CongressDaily today. The White House's stance on SCHIP is likely to be reflected among conservative Senate Republicans outside the Finance Committee. They are aiming to attach healthcare tax language to the bill for individuals and families to buy their own coverage. Finance Chairman Baucus warned against that move. "Congress has to make sure the successful Children's Health Insurance Program can help more low-income American kids. Turning to untested proposals, like the president's tax provisions, could put these children at risk," he said.

The Finance Committee SCHIP package avoids cutting any of the extra payments to Medicare Advantage programs, a relief to insurers in the private-sector Medicare program. Insurers will still be forced to fight efforts to cut Medicare Advantage in the House, where House Ways and Means Health Subcommittee Chairman Fortney (Pete) Stark, D-Calif., has said the extra payments should be eliminated, freeing up about $50 billion over five years. "It's a false choice to set up seniors in Medicare Advantage plans against kids in SCHIP," said a spokesman for America's Health Insurance Plans. AHIP supports an SCHIP expansion as well as the cigarette tax increase as an offset. "We believe getting kids covered is the first step to getting everyone else covered," the spokesman said.