Fund SCHIP By Hiking Tobacco Tax, Say AAFP, Other Groups

The AAFP has urged Congress to increase the federal tobacco tax to help pay for the reauthorization of the State Children's Health Insurance Program, or SCHIP, and to enable the program to expand to cover more children.

In May, the Academy and 66 other health-related organizations sent virtually identical letters to the House Energy and Commerce Committee and the Senate Finance Committee, asking for a minimum increase in the federal tobacco tax of at least 61 cents per pack to help provide $50 billion in financing for SCHIP during the next five years. The $50 billion would enable the joint federal/state program to add 3 million children to its rolls, which currently include about 6 million low-income children and 600,000 adults.

SCHIP, which was enacted in 1997, is up for reauthorization this year and will expire on Sept. 30 unless Congress acts. The 2008 congressional budget resolution says Congress can have as much as $50 billion during the next five years for SCHIP reauthorization and expansion. That provision has given added impetus to the legislative proposals to expand the program that now are pending in Congress. A federal tobacco tax increase would satisfy the "pay as you go rules" mandated by Congress in that it would generate new revenues and create savings in other program areas to offset expenditures for SCHIP expansion, the letters state.

"Reauthorization offers us the opportunity to strengthen and build on the success of this important health insurance coverage program," say the letters, which were signed by the AMA; America's Health Insurance Plans; WellPoint Inc.; and dozens of medical, consumer and advocacy groups.

The number and diversity of signatory organizations give the letters enormous credibility on Capitol Hill and could be the deciding factor in successfully advocating an increase in the federal tobacco tax to fund an SCHIP expansion, said Kevin Burke, director of the AAFP's Government Relations Division.

Bruce Lesley, president of First Focus, a bipartisan children's advocacy group in Washington, agrees with Burke's assessment, saying that the letters demonstrate a "broad level of support" for a tobacco tax to expand SCHIP.

"The range of support by groups that do not normally come together on issues is impressive," commented Lesley.

The letters point out that the "public health benefits resulting from higher tobacco costs are well documented."

"Studies show that every 10-percent increase in the price of cigarettes reduces youth smoking by 7 percent and overall cigarette consumption by 4 percent," say the letters. "Increasing the tobacco tax will also generate hundreds of millions of dollars in health care savings because fewer smokers mean fewer people with strokes, heart attacks, cancer and other smoking-related health conditions."

In the meantime, Sens. Edward Kennedy, D-Mass., and Orrin Hatch, R-Utah, authors of the original SCHIP legislation, issued SCHIP reauthorization goals on June 6; those objectives include a federal tobacco tax increase to pay for SCHIP. The objectives also call for greater outreach efforts to bring more uninsured children who qualify for SCHIP or Medicaid into the health care system. In addition, the goals urge the implementation of national standards to measure the quality of care that children receive through the program.

The Senate Finance Committee is expected to address an SCHIP reauthorization bill, S.B. 1224, (at the THOMAS Web site, type "SB 1224" in the search box after selecting "Bill Number") in mid- to late June. The House Energy and Commerce Committee is likely to address its own SCHIP reauthorization bill in July. The House bill may contain a provision blocking enactment of a 9.9 percent reduction in Medicare physician payments -- dictated under the current sustainable growth rate, or SGR, formula -- that is scheduled to take effect on Jan. 1, thus providing a short-term SGR fix that could be included in a final reauthorization bill.