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Big Tobacco Takes Last Stand Against Child Health Insurance

The tobacco industry is fighting a lonely battle against health insurance for poor kids.

A coalition of tobacco industry groups ran a full-page ad in the influential Capitol Hill newspaper, Roll Call,* *on Monday warning President-elect Barack Obama that a proposed tobacco tax hike to cover the expansion of the popular State Child Health Insurance Program (SCHIP) would be an “economic disaster.”

The ad is sponsored by the National Association of Tobacco Outlets (NATO), the American Wholesalers and Manufacturers Association (AWMA), and the Southern Association of Wholesale Distributors (SAWD), which claim, jointly, to represent the employees of tobacco sellers, wholesalers, and manufacturers. [To view full-sized ad, click on thumbnail, above.]

Congressional Democrats hope to score an early victory by passing an SCHIP expansion. The bill is expected to face vote in the House and a markup in the Senate Finance Committee this week. The legislation will reauthorize the program before it expires on March 31.

The expansion of the SCHIP rolls would be funded with a tobacco tax hike. The size of the proposed increase hasn’t been officially announced, but an earlier version of the bill vetoed by president Bush in 2007 would have added 61 cents to the price of a package of cigarettes–an extra $222.65 per year for a pack-a-day smoker.

The ad in Roll Call asserts, without supporting evidence, that the tobacco tax would cause “economic and employment devastation” by putting more than 117,000 tobacco industry workers, such as convenience store clerks, warehouse workers, and tobacco farmers out of work.

However, a $35 billion expansion program to cover an additional 4 million people could create at least that many new jobs, if the money were spent on expanding public programs like Medicaid, according, at least, to one advocate for expanding SCHIP.

“If the bulk of that spending were going into Medicaid, I can imagine that something on that order jobs could result.” said Michael Lighty, Director of Public Policy for the California Nurses Association.

The greatest job growth from an SCHIP expansion would be expected in those states that put the money directly into private programs like Medicaid, as opposed to private health insurance programs, Lighty explained.

Opponents of the tax increase, like Big Tobacco, argue that increasing cigarette taxes burdens the poor disproportionately because lower income people are more likely to smoke. However, by the same token, lower income Americans will disproportionately benefit from both reduced tobacco consumption and expanded health insurance coverage for poor children. Plans vary, but private health insurance for one child typically costs more than $223 per year. So, even families with smoking parents could easily come out ahead if they get healthcare for their kids, despite paying more per pack of cigarettes, explains Ron Pollack, Executive Director of Families USA, a national consumer health organization that supports the plan to expand SCHIP with tobacco taxes.

SCHIP serves the children of America’s working poor–kids whose parents make too much to qualify for Medicaid, but not enough to afford private health insurance. Currently, about 6 million children are covered by SCHIP. The proposed expansion would relax eligibility standards to cover an additional 4 million children, according to Pollack.

The proposed expansion is popular with Democratic legislators, unions, pharmaceutical and insurance trade groups, physicians, and the general public. Even some moderate Republicans support the plan. An earlier version of the legislation passed Congress in 2007 only to be vetoed by President Bush.

The rhetoric in the Roll Call ad suggests that the prospect of a Democratic president is making the tobacco industry very nervous. This time, when the SCHIP bill reaches the oval office, George Bush won’t be there to veto it.

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