WASHINGTON – Brushing aside threats of a presidential veto, a Senate committee on Thursday approved a five-year, $35 billion expansion of a children's health insurance program that would be financed through higher tobacco taxes.
A majority of Republicans on the Senate Finance Committee joined all of the committee's Democrats in voting to reauthorize the State Children's Health Insurance Program. The program subsidizes insurance for children and some adults with incomes too high for Medicaid but not high enough to afford private insurance. The vote was 17-4.
"There are more kids without health insurance than there are kids in the first and second grades," said Sen. Max Baucus, D-Mont., the committee chairman. "Americans overwhelmingly support getting kids covered."
The additional spending the committee approved would bring total SCHIP funding to $60 billion over five years — double what the administration has proposed. The tax on a pack of cigarettes would increase by 61 cents to help pay for the expansion. Taxes on cigars and chewing tobacco also would jump.
The committee's Democratic leaders had wanted to add $50 billion to the program, and their House counterparts are determined to pursue that amount. The compromise forged by the committee could become extremely fragile if GOP senators are forced to vote on an expansion much beyond what the committee approved.
"I hope they understand it takes 60 votes to get anything done in the United States Senate," said Sen. Charles Grassley, R-Iowa.
The 60 votes would be needed to overcome a filibuster. Baucus said he believes his proposal has enough support to overcome such a hurdle, as well as a promised veto from the president.
"The vote speaks for itself," Baucus said.
Lawmakers said the $35 billion expansion would allow 6.6 million people to maintain their current health coverage, and it would provide coverage for another 3.2 million uninsured children.
The administration reacted to the vote by saying that sending the president a bill he cannot sign puts at risk millions of needy children who would lose health insurance when the program's funding expires Sept. 30.
"We are ready to renew our commitment to low-income children today, but we cannot agree to a gradual government takeover of health care — and neither will the American people," said Health and Human Services Secretary Mike Leavitt.
Some dissenters on the committee believe the legislation raises taxes unnecessarily and does not do enough to refocus the program on low-income children.
"The Democrats are playing a game of reverse Robin Hood with this legislation," said Sen. Trent Lott, R-Miss.
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 SCHIP program is going in the opposite direction from where it should be going, said Sen. John Ensign, R-Nev., who voted against the proposal along with Lott, Jim Bunning, R-Ky., and Jon Kyl, R-Ariz.
The Senate proposal would gradually move adults who don't have children out of the program. States would have the option to cover them through Medicaid. The federal government also would lower the percentage, or matching rate, that it pays for parents' coverage. In addition, the federal government won't be allowed to grant new waivers to states allowing them to cover parents. But states will have the option of providing coverage to pregnant women through SCHIP.
Congressional Budget Office officials testified that spending on adults would drop by $1 billion over the next five years under the Senate proposal.
"We've been handed a mess by this administration," said Sen. Kent Conrad, D-N.D., referring to the adult coverage. "This takes steps to change that. That's a fact."
Several advocacy groups are supporting the higher tobacco tax because it would not only fund the program's expansion, but because higher taxes also lead to less smoking.
For every 10 percent increase in the price of cigarettes, overall cigarette consumption drops by about 4 percent, and the rate drops even more for children.
"Research shows a clear health benefit from higher tobacco taxes," said William Carr, executive director of the Campaign for Tobacco-Free Kids.
Overall, the federal tax on a pack of cigarettes would go up to $1 a pack
The tax on cigars is much more complicated to calculate. But Norm Sharp, president of the Cigar Association of America, said the tax for large cigars could go from a cap of about 5 cents a cigar to a cap of $10 a cigar.
"We're looking at cigars going up in price at retail 2.5 times to 3 times current prices," Sharp said.
"How do we explain that, justify that, or do we even care?" Lott said at one point when asking colleagues about the tax increase on cigars.
"A $10 cap on a very expensive cigar would not be terribly onerous," Baucus replied.