Dingell says tobacco tax increase might not be good source of funding for SCHIP

Apr 2 2007

House Energy and Commerce Committee Chair John Dingell (D-Mich.) on Thursday at a forum sponsored by the Center for American Progress said increasing the federal tobacco tax might not be a practical way to fund a reauthorization of SCHIP and indicated that a better funding source would be to reduce Medicare Advantage payments, CQ HealthBeat reports (Reichard, CQ HealthBeat, 3/29).

Earlier this month, the Senate voted 59-40 to approve an amendment sponsored by Sen. Gordon Smith (R-Ore.) that could provide additional funds for an expansion of SCHIP by increasing the federal cigarette tax by as much as 61 cents per pack. The amendment is not binding and allows the Senate Finance Committee to consider other proposals to provide additional funds to expand the program (Kaiser Daily Health Policy Report, 3/26). Dingell said, "As a long-term solution," the tobacco tax "probably wouldn't get us the funds that we need" to fund SCHIP. Dingell said he is considering "overpayments in certain other insurance programs" as funding sources, noting that there are "fairly large amounts" available through cuts to such overpayments (CongressDaily, 3/29). According to CQ HealthBeat, Dingell, whose committee does not have jurisdiction over the issue, "didn't mention Medicare Advantage by name, but clearly was referring to the program" (CQ HealthBeat, 3/29). The Congressional Budget Office has estimated that reducing Medicare Advantage payments to the same level as those of the traditional fee-for-service plan could save $65 billion over five years. MA plans receive, on average, 12% more than traditional Medicare plans (CongressDaily, 3/29). A health care lobbyist said the White House likely will fight all attempts to lower MA plan payments, CQ HealthBeat reports (CQ HealthBeat, 3/29).

Support for Tobacco Tax Increase
A spokesperson for House Ways and Means Committee Chair Charles Rangel (D-N.Y.) on Thursday said that Rangel in the past "has not been in favor" of tobacco tax increases, "but he is more inclined to support them in the context of health policy." Rep. Pete Stark (D-Calif.), chair of the House Ways and Means Health Subcommittee, supports a tobacco tax increase but does not view it as politically feasible, according to an aide. An aide for Senate Finance Committee Chair Max Baucus (D-Mont.) said, "Everything is on the table to find funds for (SCHIP). We've never met an offset that wasn't controversial to someone, but this one did get 59 votes in the Senate. Bottom line, we're going to look at all the ways we might fund (SCHIP) going forward" (CQ HealthBeat, 3/29).