Cigarette-tax hike would fund kids’ healthcare

Times Staff Writer

The plan moving through Congress to provide health insurance for more children in low-income families is highlighting a pointed question: Are cigarette smokers the only people left in America for whom politicians think it’s fine to raise taxes?

The health program, created in 1997, is up for renewal this year, and Democrats are pushing to extend benefits to more children. Many Republicans, with an eye to next year’s elections, want to support the expansion. And that means buying into huge increases in tobacco taxes.

The Senate version of the bill calls for adding 61 cents a pack to the cigarette tax, a 156% increase over the current 39 cents. The House version would add 45 cents in taxes, an increase of 115%. Those would be the biggest percentage boosts since Civil War days.

But stirring up sympathy for smokers is not easy, said Robert Blendon, a public opinion expert at the Harvard School of Public Health. “You are raising a tax where the majority of Americans know they will not pay it,” Blendon said. “And there is a sort of moral dimension to this tax, since many people think you’re taxing something that should not be done at all.”


Smokers and the tobacco industry have teamed up with anti-tax conservatives to oppose the plan. The R.J. Reynolds Tobacco Co. has issued a “call to action” on its website and has set up a toll-free number where callers can be connected with lawmakers’ offices. President Bush has threatened a veto. And House GOP leaders say they will fight higher taxes.

“People are beginning to be concerned about the size of the tobacco tax increases that are being talked about,” said Rep. Jim McCrery (R-La.), an opponent of the proposed levy. “We ought to take into account the impact on Joe Six-Pack and on small shop owners.”

But some Republicans already have signaled they will break with the party line on this issue. Some have predicted it could be the first Bush veto to be overridden since he took office in 2001.

Mitch Daniels, Bush’s former budget director and now the Republican governor of Indiana, is relying on a tobacco tax hike to fund his plan to expand health insurance coverage in his state.

Asked recently about the Senate proposal, Daniels responded: “I can only applaud something that is going to reduce smoking and all the costly consequences of it.”

Even some smokers say fighting a tobacco tax, especially one that would bring medical care to children, is an uphill battle.

“Obviously cigarette buyers are an easy target,” said Steven Durose of Tarzana, a pack-a-day smoker who works as a mortgage broker. “If you are looking for public support, you are going to put smokers on one side of the aisle and kids on the other.

“I don’t enjoy being singled out,” he said. “There are a lot of products out there that are bad for your health besides cigarettes.”


Public health advocates say a stiff tax increase is exactly what’s needed -- the economic equivalent of shock therapy -- to convince smokers to quit and reduce the cost to themselves and society of lung cancer, emphysema and other smoking-related illnesses.

“If they only increase taxes by a little bit, the cigarette companies can monkey around with prices and promotions, and it will get lost in the shuffle, and no smoking behavior will be changed,” said Eric Lindblom, research director for the Campaign for Tobacco-Free Kids. Teenagers are particularly likely to be deterred from smoking by higher taxes, he said.

At issue is legislation to renew and expand the State Children’s Health Insurance Program, a popular and successful partnership between Washington and the states, which provides coverage for about 6 million children of low-income working parents. In California, the program is known as Healthy Families. Renewing the program is considered the most important healthcare decision Washington faces this year.

Both the House and Senate plans are expected to see floor action next week.


The last change in federal cigarette taxes came 10 years ago, when Congress passed a two-step increase, raising it 10 cents in 2000 and 5 cents more in 2002. That brought the tax from 24 cents in 1997 to the current rate of 39 cents a pack.

Many smokers have not yet heard about the proposal to make them pay more for their habit. When told about it, most react negatively, although some say it might nudge them to quit.

Marilyn Epps, a preschool teacher from Washington, D.C., said a $1-a-pack tax would hurt, particular on days when she was stressed and bought two or three packs, what she called her “safety net.”

Epps pays about $5 a pack now. “If it went up to $6, I would quit,” she said.


Epps said she was skeptical the government would really use the money for children’s health insurance. However, she added, “I think it would be all right -- if it is being used for children. I’d be for it.”

Tobacco companies say their products already carry a disproportionate share of taxes -- both state and federal levies as well as the cost of funding the massive 1998 settlement between tobacco companies and attorneys general in 46 states, including California.

But public health advocates say revenue from such taxes doesn’t come near the cost to Medicare and other government programs for treating smoking-related illnesses.

Because the number of Americans who smoke -- now about one in five adults -- is slowly but steadily declining, the companies also question the logic of tapping tobacco to pay for healthcare.


“You are looking at taking a declining source of revenue and using it to fund a program that is growing,” said John Singleton, a spokesman for R.J. Reynolds. “At some point you are going to reach an impasse where the money is not going to be there. For long-term sustainability, you have to look at broader funding.”

Some independent economists agree with that assessment but note that Congress is only voting to extend the children’s program for five years.

“Using [tobacco taxes] as a long-term strategy to pay for healthcare is problematic because you’re setting up two conflicting goals: If you can get everybody to stop smoking, you’ll lose your revenue source,” said Kim Rueben of the nonpartisan Urban Institute.

But, “as an interim solution, I think this is better than many other possibilities, because it is feasible to get it passed,” she said.