A bill to expand the State Children's Health Insurance Program (H.R. 976) was approved by the House of Representatives on Tuesday and the Senate on Thursday. The bill would increase funding for the program by $35 billion by increasing the federal tobacco tax for cigarettes from 39 cents to a dollar per pack.
President Bush has threatened to veto the bill, which did not pass the House by the two-thirds majority needed to override a veto. The White House argues that expanding SCHIP will "crowd out" private insurance. The Congressional Budget Office has found that two thirds of the children receiving health care as a result of an SCHIP expansion would be those who would otherwise not have health insurance.
Health care economist Jonathan Gruber has pointed out that the "crowd-out" effect of SCHIP is probably the lowest of any health care proposal. He has argued that, in comparison, the President's tax proposals to expand health care have benefits much more concentrated among those who already have health insurance.Citizens for Tax Justice has noted that cigarette taxes (whether on the federal or state level) are regressive, meaning they take a larger proportion of income from a poor family than from a wealthy family, but they may nevertheless be the most viable option for funding an important health care initiative at this time.
It's true that if two smokers, one poor and one wealthy, are smoking the same amount and paying the same tax of one dollar a pack, that one dollar equals a larger percentage of total income for the poor smoker than for the wealthy smoker. It's always better to fund important programs with progressive taxes, but the health care crisis among low- and middle-income families requires compromise. Unlike President Bush, Democrats and many Republicans in Congress have shown that they are willing to make such a compromise.