Amid Partisan Debate on Health Reform, Panel Votes for Huge Hike in Cigarette Tax : Congress: Federal levy would rise from 24 cents to $1.49 a pack, but it’s not certain that House subcommittee will pass overall legislation.

The House Ways and Means health subcommittee, moving into the final phase of deliberations on a bill to overhaul the nation’s health care system, voted Tuesday to increase the federal cigarette tax from 24 cents a pack to $1.49.

But with a vote on the overall measure expected as early as today, it remained far from clear whether the subcommittee would approve it.

The panel is the first of many congressional committees and subcommittees that will consider health legislation this year in response to President Clinton’s call for major reform. Partisan tension often erupted into angry outbursts Tuesday as ranking Republican Bill Thomas (R-Bakersfield) repeatedly accused Chairman Pete Stark (D-Hayward) of treating his side unfairly.

Clinton had proposed increasing the cigarette tax to 99 cents a pack. Rep. Michael A. Andrews (D-Tex.), sponsor of the amendment to raise it to $1.49, said that would offset part of the cost that tobacco use places upon the nation’s health care system and would discourage young people from taking up the habit. The amendment passed, 6 to 5.

Only a few years ago, Andrews said, the clout of the tobacco lobby was so strong that such an increase would have been hard to imagine. “The light today is shining on this product and what it means to 1,000 Americans a day. It kills them,” Andrews said.

Earlier in the deliberations, Andrews had proposed hiking the present 24-cent tax to $2, but committee members could not agree on how to use the revenues that such a levy would raise.

Under the version of the cigarette tax that finally passed, about two-thirds of the $6 billion in new revenues would go to small businesses to help them handle the costs of a proposal that they pay 80% of their workers’ health insurance premiums.

The remainder would go to teaching hospitals, programs to remove lead paint from old buildings, health providers who work in underserved parts of the country, health education programs and campaigns to discourage teen-age pregnancy. A small fraction would also go toward assisting tobacco farmers in finding new careers.

Still unresolved, however, is the fate of Clinton’s proposed tax increases on other tobacco products. The President’s bill greatly increases taxes on pipe tobacco, smokeless tobacco and other products that historically have been subject to lighter levies than cigarettes.

Andrews initially wanted to go beyond the Clinton proposal on those products but withdrew that part of his amendment. But he warned: “I don’t want Skoal (a snuff company) dancing in the hall outside. We’re going to come back (to the issue) in full committee.”

Once it finished with amendments, the panel defeated a series of alternatives to the overall bill that were offered by Republicans.

However, Stark said he did not know whether he had the votes to pass the overall bill, a modified version of the plan he put before the subcommittee two weeks ago.

“I’ll only know when the clerk calls the roll--seriously,” Stark said. “There is no deal.”

The Stark bill achieves Clinton’s goal of health coverage for all Americans, but through somewhat different means. Like Clinton, Stark would require employers to provide coverage for their workers. However, he rejected Clinton’s plan to set up mandatory government-organized purchasing cooperatives and, instead, would cover the uninsured by expanding the Medicare program.

Stark’s bill also imposes a 0.8% payroll tax, while Clinton’s contains no such broad-based levy.

The subcommittee’s four Republicans have served notice that they will vote against Stark’s bill, which means that Stark can afford to lose no more than one of the subcommittee’s seven Democrats.

Andrews plans to defect, and Rep. Sander M. Levin (D-Mich.) has said he will not vote for the package as long as it contains the payroll tax.

Also on Tuesday, the President hosted a meeting of several hundred small-business owners from around the country who support his health reform plan. During an 80-minute forum, 12 speakers shared their experiences in struggling to provide health insurance for employees.

Some cannot afford to buy health coverage for workers. Others are hard-pressed by soaring premiums. All praised the President’s plan.

Among them was Garth Sheriff, who has owned a small architecture firm in Los Angeles for 19 years. Until about two years ago, he covered all his employees. But because of skyrocketing insurance premiums, which exceeded 13% of his payroll, Sheriff had to lay off an employee or drop health insurance for everyone.

Sheriff dropped the insurance. “It hurt deeply,” he said.

The President appeared relaxed throughout the meeting, often making a connection between an individual’s problem and how it would be solved by the Administration’s proposals. Clinton also cracked numerous jokes, including several at his own expense.

The meeting at the Old Executive Office Building, next door to the White House, was part of a weeklong focus on health care by the President, First Lady Hillary Rodham Clinton and other Administration officials.

This morning the President is to deliver a 20-minute talk via satellite to the California Medical Assn. delegates who are meeting in Anaheim. Clinton’s speech will be followed by a question-and-answer period.

The CMA long has been on record in support of most of the principles in Clinton’s plan, including the employer mandate, universal coverage, insurance market reforms and even cost controls on health services, according to Danielle Walters, a top CMA official.

This afternoon, Clinton, the First Lady and Vice President Al Gore will play host to more than 200 health care providers at the White House. Mrs. Clinton also is scheduled to attend a seniors’ health care forum on Capitol Hill in the morning.

At Tuesday’s small-business forum, Clinton acknowledged that his plan would force some small firms to pay more for health insurance--especially those that do not now provide workers with any coverage.

“I am frank to say that while most of the people who are on this panel who are providing health insurance today would actually pay less under our plan, some would pay more, and they know it,” Clinton said.

“But they also know that for the first time their competitors would as well, putting them on a more even footing,” the President added.

In a departure from past practice, Clinton struck a conciliatory note toward the insurance industry.

After Betty Hall, a Brookline, N.H., small-business owner, complained about being charged high insurance rates, the President noted:

“While, certainly, I have been critical of insurance practices of which I do not approve, I think it is also important for us to understand that given the organization of the insurance business today, it is economically impossible for a lot of these health insurance companies to do other than they do because they are dealing with a very small pool of people.”

Clinton then took the opportunity to promote another pillar of his reform agenda: the creation of mandatory alliances that pool consumers into large groups to increase their buying power--a feature that has met stiff resistance in Congress and the business community.

“You’ve got to have these folks able to go into big enough pools so that the insurance companies themselves do not go broke,” Clinton said. “They’re in business too, and the economics have to work out. And the only way the economics can work out is if the risks which all small businesses are subject to can be widely spread over a bigger pool.”