Growing support for tobacco tax increase to fund SCHIP by lawmakers

Congressional support "appears to be growing" for an increase in the federal tobacco tax as a way to fund the reauthorization and expansion of SCHIP, the Wall Street Journal reports.

Tobacco taxes are seen by many as a "logical way" to fund SCHIP because an increased tax could reduce smoking and related health costs, according to the Journal. Congress also has a "history of bipartisan support for funding health programs" through tobacco tax increases, the Journal reports. Sen. Orrin Hatch (R-Utah) has noted that tobacco taxes were used to create the program in 1997.

Senate leaders have discussed increasing the federal tax on tobacco, currently set at 39 cents per pack, to as high as 60 cents per pack, although it is "unclear how broad Senate support would be for such a large increase," according to the Journal.

A coalition of health industry groups last month ran a series of advertisements supporting a tobacco tax increase to fund SCHIP. Health industry groups would experience a "big win" if the Senate solely used a tobacco tax increase to fund SCHIP because "it would mean at least a temporary reprieve from cutbacks in the payments they receive from government programs such as Medicare," according to the Journal. Anti-tobacco groups also support a tax increase.

However, some senators and the tobacco industry are lobbying against the increase. Bill Phelps, a spokesperson for Altria Group, said a tobacco tax is "unfair" and would not provide sufficient funds to support SCHIP in the long term.

Bipartisan Efforts

According to the Journal, "huge issues remain in the SCHIP debate, which will heat up this month in both the Senate and House and will show the deep divisions between Republicans and Democrats on health care." A bipartisan group of senators reportedly is working on compromise legislation that would provide less than the additional $50 billion for the program that many Democrats support and would phase out coverage for childless adults.

Democrats might "win an effort" to allow states to continue coverage of children in families with annual incomes greater than 200% of the federal poverty level, the Journal reports. Meanwhile, House Democrats are likely to propose more spending on SCHIP than the Senate and include in legislation cuts to Medicare Advantage plans (Lueck, Wall Street Journal, 7/10).