Bipartisan Deal Seeks Tobacco Tax Increase for Kids’ Insurance
Senate Finance Committee members on Tuesday announced that they have reached a tentative agreement on legislation that would reauthorize and expand State Children's Health Insurance Program, although the deal "is smaller than Democrats had hoped and reliant on a politically difficult" 61-cent-per-pack federal cigarette tax increase, CQ Today reports. The program is set to expire on Sept. 30.
Under the bipartisan agreement, the tobacco tax increase would provide $35 billion over five years to expand SCHIP, according to committee members Gordon Smith (R-Ore.), Orrin Hatch (R-Utah) and John Kerry (D-Mass.) (Wayne, CQ Today, 7/10). Democrats originally proposed providing an additional $50 billion over five years for the program (Freking, AP/Baltimore Sun, 7/11).
The deal would require more stringent eligibility requirements for the program, including set income limits on children. In addition, no additional parents would be eligible to enroll in SCHIP, although pregnant women would continue to be eligible. Childless adults would be moved to Medicaid (Wolf, USA Today, 7/11).
Moving adults to Medicaid would allow an additional two million eligible children to enroll in SCHIP, according to Smith (Johnson, CongressDaily, 7/10). Smith said such a move likely would allow the bill to gain additional bipartisan support (Johnson, CongressDaily, 7/11).
Committee members said several details of the agreement need to be finalized before the committee can vote on the legislation, including a Congressional Budget Office analysis on the proposal's cost (CQ Today, 7/10).
To generate an additional $35 billion in revenue, the 61-cent tax increase also would have to apply to cigars and smokeless tobacco, according to the AP/Baltimore Sun (AP/Baltimore Sun, 7/11). The cigarette tax currently is 39 cents per pack.
The committee likely will vote on the legislation on July 17 (CQ Today, 7/10).
President Bush, who has proposed providing an additional $5 billion for SCHIP over five years, on Tuesday said, "The program is going beyond the initial intent of helping poor children. It's now aiming at encouraging more people to get on government health care." Bush added, "I'll resist Congress' attempt to federalize medicine" (USA Today, 7/11).
A White House official said, "If the Democrats insist on this massive expansion of government-run health care, the president's senior advisers would recommend a veto" (CongressDaily, 7/10).
Rep. Chet Edwards (D-Texas) said, "Our goal ultimately should be to try to see that every child in America has health care," adding, "The Democratic proposal moves us an important step in the right direction" (Doerr, Waco Tribune-Herald, 7/11).
Senate Finance Committee Chair Max Baucus (D-Mont.) said, "Congress has to make sure the successful [SCHIP] can help more low-income American kids. Turning to untested proposals, like the president's tax provisions, could put these children at risk" (CongressDaily, 7/10).
Smith, who originally proposed the 61-cent increase, said, "It really does come down to a choice between children and tobacco." Smith added, "This is a 'two-fer.' It does decrease smoking, and it does connect public health care costs with one of the drivers of that cost, and that's tobacco" (USA Today, 7/11).
Kerry in a statement called the agreement a "good start" and said that he "strongly believe[s] Congress can and should do more to improve the health care for our country's poorest children." Kerry added, "I intend to work hard to see if we can achieve a larger increase so that no eligible child is left out of the program" (CQ Today, 7/10).
The "debate in Washington on SCHIP has quickly become badly polarized," Michael Gerson, a senior fellow at the Council on Foreign Relations, writes in a Washington Post opinion piece.
Democrats' "barely hidden agenda" is to "bloat SCHIP beyond its original purposes" to provide coverage to adults, Gerson writes. However, "this overreach actually reduces the prospect of political agreement that would bring swift help to uninsured children," according to Gerson.
Gerson writes that the "serious gaps" in coverage for adults could be solved through a generous and refundable tax credit, which "would allow the working poor and the lower middle-class to purchase their own health coverage, while maintaining the benefits of private medicine." According to Gerson, it would be a "reasonable compromise to expand SCHIP significantly, while offering adults a generous tax credit to purchase health insurance" (Gerson, Washington Post, 7/11).
The Wall Street Journal on Wednesday published several letters to the editor responding to a June 29 opinion piece by columnist Kimberley Strassel. Strassel wrote, "If Republicans don't unify now" in support of "free-market reform to replace today's fattening employer-based system," the expansion of SCHIP could "prove the beginning of the end of today's private model" (California Healthline, 6/29). Summaries of the letters appear below.
- Jennifer Howse, Wall Street Journal: Strassel "mischaracterizes" SCHIP reauthorization and "misinterprets the facts" in the opinion piece, Howse, president of March of Dimes, writes in a Journal letter to the editor. Howse writes that states can set their own SCHIP eligibility rules, and if "a state went above and beyond SCHIP enrollment mandates, ... they did that with the administration's blessing through a waiver." She adds, "There shouldn't be threats to disrupt a successful 10-year program by changing the rules, particularly when it means more children and families could lose coverage." In addition, Howse says, "The $50 billion over five years that Congress agreed to provide for SCHIP reauthorization ... is three one-thousandths of 1% of the projected amount of spending by the federal government over the next five years. This is not an expansion" (Howse, Wall Street Journal, 7/11).
- John Graham, Wall Street Journal: "What the Republicans need is a handful of Fortune 500 CEOs to stand by the president and his allies and declare their immediate commitment to take advantage of the proposed tax reform (be it deduction or credit) by giving health care dollars back to their employees so that each one of them can buy the health care he or she needs," Graham, director of Health Care Studies at the Pacific Research Institute, writes in a Journal letter to the editor (Graham, Wall Street Journal, 7/11).
- Uwe Reinhardt, Wall Street Journal: U.S. residents "incessantly demagogue 'socialized medicine' as the ultimate bogeyman of health reform" while reserving for veterans a "health system that is owned, operated and financed by government -- the [Department of Veterans Affairs] health system," Reinhardt, a professor of economics and public affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, writes in a Journal letter to the editor. He continues, "Socialized medicine does not get purer than" the VA health system, but no Republicans "openly advocate the abolition and privatization" of the system (Reinhardt, Wall Street Journal, 7/11).