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Budget Leaves Door Open for Increased Tobacco Tax to Pay for Children's Health Care

Press Release

Location: Washington, DC

Senator Gordon H. Smith (R-OR) expressed his disappointment today that his amendment to authorize an increase in the federal tobacco tax to fund the State Children's Health Insurance Program (SCHIP), which passed by a vote of 59-40 in the Senate earlier this year, was not included in the final 2008 Budget. The budget however does not restrict the use of the tobacco tax to fund the program which provides health care coverage for low-income children.

"Although I am disappointed that my tobacco tax amendment was not included in the final budget measure, the fight is certainly not over. An increase in the federal tobacco tax will take us beyond simply talking about helping children to actually delivering the real dollars to make a difference. This policy is supported by over 50 organizations and is the only large-scale funding source that has strong bi-partisan support. I plan to work with my colleagues on the Finance Committee to see that this policy is a part of any SCHIP reauthorization package to ensure America's children have access to care."

The SCHIP program is set to expire at the end of 2007. Without adequate funds to continue the program, children currently enrolled in SCHIP would lose coverage by the end of this year. Senator Smith's amendment would provide the funding needed for those children currently enrolled in the SCHIP program to maintain coverage and to expand coverage for more low-income children and pregnant women. The Senate Finance Committee, on which Senator Smith sits, is expected to consider the reauthorization of the SCHIP program this spring.

An increase of 61 cents (total of one dollar) on the federal excise tax on tobacco products is estimated to generate $35 billion in funds for the SCHIP program. Senator Smith's goals for the program is to ensure all those who are currently enrolled continue to receive coverage, cover those currently eligible, but not enrolled, and expand coverage to all pregnant women and children up to 200 percent of the federal poverty level ($27,380 for a family of two).

If additional funds exist, Senator Smith would like the program to expand coverage for pregnant women and children up to 300 percent of the federal poverty level ($41,070 for a family of two).

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