Will federal tobacco tax talk snuff out state increase?

Plan to double the state tax intended to provide health care to uninsured residents

Friday, July 20, 2007

Smokers would pay an extra 61 cents per pack of cigarettes if the federal proposal, the chief funding source for the reauthorization of the State Children’s Health Insurance Program, or SCHIP, passes. The federal tax is now 39 cents per pack.

Such a substantial hike might change the strategy at the state level, said Del. James W. Hubbard (D-Prince George’s). Proponents might scale back their proposal to 75 cents per pack to maintain support among lawmakers, he said.

The expanded federal health coverage also may fulfill some programs that the General Assembly wanted to enhance, Hubbard said. ‘‘We may be able to subtract from the $1 [proposal] and come up with another figure that would be sufficient for a total health care package.”

The federal plan could raise between $35 billion and $50 billion over five years, which would represent the largest expansion of SCHIP since it began a decade ago. The current version of SCHIP will expire Sept. 30.

U.S. House Majority Leader Steny H. Hoyer (D-Md., 5th) met with Maryland Health Secretary John M. Colmers and several state legislators late last week to discuss the implementation of SCHIP, which covers more than 100,000 low-income children in Maryland.

But Congress first must agree on a revenue source to fund the program. The Senate Finance Committee is likely to approve the tobacco tax proposal this week, but Hoyer said the House is considering additional funding streams, such as reducing federal subsidies given to health insurers through the Medicare Advantage program. House leaders have not yet decided how much their chamber’s proposed tobacco tax increase will be.

The House might look beyond SCHIP in its health care bill by seeking to expand aid for physician reimbursements under Medicare, rural hospitals and more, Hoyer said in an interview on Monday. ‘‘The House is looking at a more expansive alternative, but whether or not 61 cents on the cigarette tax is part of that component has not been decided.”

President George W. Bush (R) has threatened to veto the Senate plan if it reaches his desk.

Maryland has one of the most aggressive SCHIP systems in the country: Children whose families earn up to 300 percent of the federal poverty level are eligible.

Still, recent estimates from the Maryland Health Care Commission show 140,000 uninsured children in the state — two-thirds of whom are eligible for SCHIP.

Advocates in Maryland are closely monitoring the federal proposal and say that its passage could strengthen their cause at the state level.

‘‘Voters understand that increasing tobacco taxes is smart policy and they want their elected officials to do it,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, which is leading the charge for a state cigarette tax increase.

It costs more than $7 in health care expenses for each pack of cigarettes sold in Maryland, DeMarco said, citing data released in 2004 from federal Centers for Disease Control and Prevention.

‘‘We’ve got a long way to go with tobacco taxes before we cover that and the fact is that increases in tobacco taxes, even in states that have a higher tax than Maryland have always had two results,” he said. ‘‘It reduces teen smoking and brings in money for health care expansion or other needs.”

The Maryland House of Delegates this year easily passed a $1-per-pack increase for expanded health coverage, but the bill was scuttled in the Senate. Proponents have pledged to redouble their efforts next year.

‘‘There’s always a public health benefit attached to increasing the tobacco tax, and we save money on the back end over time from reduction in health care expenditures when we increase the tobacco tax because people remain healthier,” said Del. Heather R. Mizeur (D-Montgomery), who attended last week’s meeting with Hoyer.

Opponents argue that the tobacco tax is an unstable revenue source that won’t answer the state’s unmet health care needs.

‘‘Is the juice really worth the squeeze from a financial perspective?” asked House Minority Whip Christopher B. Shank (R-Washington).

Some lawmakers who might have supported the tax increase last year won’t stomach a state hike on top of a federal one, warned Del. Ronald A. George (R-Anne Arundel). ‘‘I think people on the cusp will have a problem with that.”

Voting for a statewide tobacco tax would be thorny for some lawmakers if the federal government plans to do the same, said John Bambacus, a former state senator and a political science professor at Frostburg State University.

‘‘It would make it both less likely and more difficult if the feds were to exert their primacy in this particular area because the smokers in this state ... are going to get hit twice,” he said.

However, DeMarco pointed to polling data from the late 1990s when the tobacco settlement caused cigarette prices to increase by more than 50 cents per pack and support for a tobacco tax increase did not wane. Maryland increased its tobacco tax by 30 cents in 1999 and by 34 cents in 2002 to help pay for the landmark Thornton education plan.

‘‘We believe, both from a policy and political perspective, the support should not change,” DeMarco said.

E-mail Alan Brody at abrody@somdnews.com.