Stop funding children’s health care with my tobacco

Congress is at it again. They want to increase the FET on tobacco. Go to Stop the FET and send a letter to your representatives:

I recently learned that Congress is again considering increasing the federal excise tax on cigarettes by as much as 156%.

At a time when Congress is talking about passing a multi-billion dollar stimulus package, it doesn‘t make sense to raise any type of taxes. Moreover, I understand that as cigarette sales continue to decline it becomes an increasingly unreliable source of revenue for the government and that a cigarette excise tax impacts lower income households more than higher income households. That’s not fair!

I urge you to vote against any legislation to raise the federal excise tax on tobacco products.

This is an issue of great importance to me and I will remember how you vote on it.



Just say NO! to taxes on smokers to fund children’s health care.

Here is Senator Kay Bailey Hutchison’s (form) reply:

Dear Mr. Siems:

Thank you for contacting me regarding tobacco taxes. I welcome your thoughts and comments on this issue.

The federal tax rate on cigarettes remained unchanged at eight cents per pack from 1951 to 1982. Since 1982, the rate has been increased several times, and the current federal tax on cigarettes is 39 cents per pack.

S. Con. Res. 21, the fiscal year 2008 Senate Budget Resolution, authorized an increase in the federal cigarette tax from 39 cents to $1, a 61 cent increase, to raise money for the State Children’s Health Insurance Program (SCHIP). The increased tax would have raised an estimated $7.6 billion per year for this important program. However, I voted against the Senate Budget Resolution, and the Conference Report, because it increased spending to nearly $15 trillion over five years and included a historic $732 billion tax increase. The Budget Resolution failed to extend vital tax cuts that are driving our growing economy and instead creates the steepest tax hike in history.

An increase in the tobacco tax was considered as part of H.R. 976, the Children’s Health Insurance Program Reauthorization Act of 2007. SCHIP provides health insurance benefits to children in low income families that cannot afford health insurance, but are ineligible for Medicaid. While I am a strong supporter of the SCHIP program, I also supported three different amendments which would have provided relief from the proposed taxes on tobacco products. Senate Amendment 2554, introduced by Senator Elizabeth Dole (R-NC), sought to amend the Congressional Budget Act of 1974 to provide for a 60-vote point of order against legislation that includes a Federal excise tax rate increase which disproportionately affects taxpayers with earned income of less than 200 percent of the Federal poverty level (such as any tobacco tax). The amendment failed by a vote of 32-64. Senate Amendment 2558, introduced by Senator Lindsey Graham (R-SC), sought to sunset the increase in the tax on tobacco products on September 30, 2012. A budget point of order was raised against the amendment, and a motion to waive the point of order failed by a vote of 39-60. Senate Amendment 2619 was introduced by Senator Bill Nelson (D-FL) to reduce the cap on the tax on large cigars from $10.00 to $3.00. This amendment passed with my support. The Children’s Health Insurance Program Reauthorization Act of 2007 passed the Senate on August 2, 2007 by a 68-31 vote. Additionally, when the Senate considered the Conference Report for this legislation, I joined 66 of my colleagues in support of this important program. On October 3, 2007, President Bush vetoed the Children’s Health Insurance Program Reauthorization Act of 2007. It is now my hope that the President will sit down with Congress so that together we can continue the SCHIP program within the scope of its original mission.

Other legislation proposing tax increases on tobacco products include S. 1799, which was introduced by Senator Blanche Lincoln (D-AR) on July 17, 2007. The bill seeks to apply rate parity to the excise tax on small cigars and small cigarettes by raising the tax from $1.828 cents per thousand to $19.50 per thousand units. Currently, there is a maximum federal tax of 4 cents per small cigar and 5 cents per large cigar (or 20.719% of the sales price, not to exceed $48.75 per 1,000 units). This legislation has been referred to the Senate Finance Committee, on which I do not serve. Should this legislation come before the full Senate, you may be certain I will keep your views in mind.

I appreciate hearing from you and hope you will not hesitate to keep in touch on any issue of concern to you.

Kay Bailey Hutchison
United States Senator

284 Russell Senate Office Building
Washington, DC 20510
202-224-5922 (tel)
202-224-0776 (fax)

PLEASE DO NOT REPLY to this message as it is not a valid e-mail address. Due to the tremendous volume of mail Senator Hutchison receives, she requests that all email messages be sent through the contact form found on her website at .

If you would like more information about issues pending before the Senate, please visit the Senator’s website at . You will find articles, floor statements, and press releases, along with her weekly column and monthly television show on current events. You can also sign up to receive Senator Hutchison’s weekly e-newsletter.

Thank you.

The Cato Institute on SCHIP

Cato Scholar Comments on the Revised SCHIP Plan

Wednesday 24 October 2007

Michael F. Cannon, director of health policy studies:

The Democrats just don’t get it – and neither do the Republicans. SCHIP’s supporters are hell-bent on expanding this poorly targeted program, despite having no evidence that it is the best way to help low-income kids and plenty of evidence that it would trap families in low-wage jobs. Yet SCHIP’s supporters will succeed – unless its detractors begin questioning SCHIP’s very existence, and demand that Congress repeal the program and replace it with the freedom to purchase health insurance from any state. In other words, SCHIP’s detractors need to grow a spine.

And now the Dems are being sneaky with a vote when several Reps wont be in Washington. As California burns it looks like politics is heating up.

GOP cries foul on timing of children’s health vote

Thursday, October 25, 2007

Deirdre Walsh and Jessica Yellin, CNN

House Republicans are fuming over Democrats’ decision to hold the next vote on the State Children’s Health Insurance Program on Thursday — when many Republicans will be in California as President Bush tours areas hit by wildfires.

Paul Howard on SCHIP on National Review Online

Congress Is Full of SCHIP

Expansion isn’t the best way to help the uninsured.

By Paul Howard

Nicole Garrett is not one of the uninsured. Her family is covered by Michigan’s Medicaid program. And so when her daughter Jada developed painful joint inflammation and needed to see a specialist, she turned to her Medicaid plan. But if she had coverage, she lacked access: there was only one rheumatologist in her network, and the wait to see him was more than three months. Unfortunately, her story is all too common, an example of the failure of public programs — designed with the best of intentions — to produce acceptable outcomes. With Congress debating a massive expansion of such programs, the better prescription is for a smarter safety net, not a pricier one.

For millions of Medicaid patients, finding access to a doctor who accepts Medicaid’s low reimbursement rates is an agonizing struggle. As Ms. Garrett told the Wall Street Journal recently, “when we had real insurance, we could call [a doctor] and come in at the drop of a hat.” In fact, according to 2006 study by the Center for Studying Health System Change, over 20 percent of doctors have stopped accepting new Medicaid patients – a rate “five times higher than for privately insured patients.”

Today, states spend more money on Medicaid than they do on K-12 education. And many states have lavish plans that (on paper) cover at least as many services as private insurance. But they offer doctors only a fraction of what private insurers pay.

The irony is that as states expand public programs for the uninsured, including many middle-income families, they are weakening private insurance markets through a phenomenon known as “crowd out.” For instance, in May the Congressional Budget office issued a report on the State Children’s Health Insurance Program (SCHIP) that found that “the increase in public coverage [as a result of SCHIP] has been partially offset by a reduction in private coverage.” This may be because SCHIP is cheaper than insurance offered through some employers, leading many parents to refuse coverage.

In fact, “about 60 percent of the children who were eligible for [SCHIP] were covered by private insurance in the year before the program was enacted.” The CBO also estimated that for every 100 new SCHIP enrollees, between 25 and 50 children lost private coverage.

Besides crowd out, legislators also ignore the fact that public insurance often makes it harder for poor patients to stay healthy because of an onerous bureaucracy and pervasive cost controls.

A 2003 study in The Journal of Health Economics found that HIV+ patients fared better in private insurance, in part because “many anti-retroviral drugs [required] prior authorization from Medicaid that restricted use to advanced illness.” Privately insured patients started effective drug treatment sooner and stayed healthier. Another study in Health Affairs (2005) found that Medicaid patients had nearly as much trouble getting prescription drugs as the uninsured (22 percent v. 26 percent).

Despite these problems, the political temptation to expand Medicaid and SCHIP into middle class entitlements is nearly irresistible. Today, according to the Government Accounting Office, over 40 states enroll children from families at 200% or higher of the federal poverty level, around $40,000 for a family of four. Seven states cover children in families at 300 percent or higher, about $60,000. (New Jersey tips the scales at 350 percent.)

This week, Congress is set to massively expand SCHIP without doing anything to help make private health insurance more affordable. Last Thursday, the Senate Finance Committee approved a bill that increases federal SCHIP funding by $35 billion over five years; a family of four making over $80,000 would even be eligible for coverage. The House is expected to endorse even more spending.

The president has announced that he will veto any bill that includes over $5 billion in new funding as an unwarranted government takeover of health care. He’s right, and Congress can do much more to help the uninsured without breaking the bank.

The president has a better plan: creating an individual tax deduction up to $15,000, or an equivalent tax credit. Any individual could take advantage of the deduction, provided they purchased at least catastrophic health insurance. While expanding SCHIP funding would cover a few million uninsured at enormous cost to taxpayers, the administration predicts that fixing the tax code could lead up to 20 million uninsured to purchase private coverage without substantial new outlays.

If this was combined with an interstate market for health insurance, where consumers could shop for low-cost policies across state lines, Congress could add modest new SCHIP funding and fundamentally improve health care access for the uninsured.

Past experience has shown that expanding public programs is not a sustainable alternative to private insurance. Helping low-income uninsured children get access to public health insurance is a noble cause; but making good, private health insurance more affordable for all working families is a better one.

Paul Howard is a senior fellow at the Manhattan Institute’s Center for Medical Progress and is editor of the daily blog

Source: Paul Howard on SCHIP on National Review Online

Tax Cigarettes To Keep Children Healthy

Administration Fights Cigarette Tax Hike

The Associated Press
Tuesday, July 17, 2007; 9:03 PM

WASHINGTON — As a Senate committee prepared to approve an additional $35 billion for children’s health insurance, the Bush administration spelled out its objections to how the increase would be paid for _ a 61-cent increase on the excise tax for a pack of cigarettes.

“Ironically, the proposed legislation would increase taxes on low-income taxpayers as a way to fund health coverage for low-income individuals,” Health and Human Services Secretary Mike Leavitt said Tuesday in a letter to Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa.

Baucus replied with his own letter to Leavitt. “When given the choice between standing with big tobacco companies and standing with kids, I stand with America’s children,” said the chairman of the Senate Finance Committee.

The renewal of the State Children’s Health Insurance Program is considered by many to be the most important health legislation that Congress will take up this year. Democratic leaders called for adding $50 billion to the program over the next five years.

The program subsidizes the cost of insurance for children and some adults with incomes too high for Medicaid but not enough to afford private insurance.

On Friday, a bipartisan group of lawmakers in the Senate signaled their support for a $35 billion increase, which would bring total funding to $60 billion over five years. The Senate Finance Committee is expected to take up that proposal Wednesday. President Bush had recommended a $5 billion increase.

The Senate proposal would provide health insurance coverage to current participants as well as an additional 3.3 million uninsured children, according to estimates from the Congressional Budget Office.

Among the organizations that have announced their support for the proposal are the American Hospital Association, the American Medical Association and the American Cancer Society.

The Bush administration has consistently referred to SCHIP as government-run health care. Leavitt said the program is important and should be renewed, but that billions of dollars in insurance costs will be shifted from the private sector to the federal government under the Senate proposal.

But Baucus said the program’s structure is not unlike that of the prescription drug benefit. He noted that private insurers administer the coverage for most children in return for a government subsidy.

“The vast majority of states contract with private companies to deliver all or some CHIP services to children,” Baucus said.

In his 10-page letter to Baucus and Grassley, Leavitt also assailed the Senate proposal for using a “massive budget gimmick.” In the proposal, funding would drop from about $16 billion to $3.5 billion in 2013, which he said is an admission that the expansion is unsustainable.

Baucus said revenue from the higher tobacco taxes would more than offset the program’s cost in the first five years. By the end of fiscal year 2012, he believes that Congress and the next president would set appropriate funding levels for future years.

Here are the players from my part of Texas:

U.S. Senator Kay Bailey Hutchison 202-224-5922
U.S. Senator John Cornyn 202-224-2934
U.S. Congressional District 17 Chet Edwards 202-225-6105

To fight this legislation search for these keywords: stop cigarette excise tax, FET, tobacco tax, federal excise tax.

Some opposition resources I found:

I encourage everyone to send congress the message that cigarette taxes (or any “sin taxes”) are not available for children’s health care or education or anything else related to children.

Here is the email I sent from

I am a voting-smoker and last year’s Texas tobacco tax of $1 per pack pushed me to the brink. I do not support funding children’s programs – be they education or health care or whatever – on the pocketbooks of tobacco users. I think funding children’s programs should be targeted to those that use those programs: schools funded by property tax of parents in school districts. For these reasons, and the reasons listed on the web site I submitted this from, I do not support cigarette tax increases to fund SCHIP.

HIGHER CIGARETTE TAXES BURDEN LOW-INCOME AND WORKING-CLASS FAMILIES – Cigarette taxes are extremely regressive, affecting the poor more heavily than the rich — the tax represents a larger portion of the lower-income smoker’s budget. Since most smokers are low- or middle-income Americans, increasing cigarette taxes forces those who can least afford it to shoulder the burden.

SMOKERS MAY GO OUT OF THEIR WAY TO PURCHASE UNTAXED CIGARETTES – Studies show that revenues from increased cigarette taxes often fall short of projections, partially because some smokers will go out of their way to purchase tobacco via untaxed channels: international Web sites, Native American reservations and even the black market.

Source: Administration Fights Cigarette Tax Hike –