Congress Asks the Public to Smoke in Order to Fund Expanded Children's Health Insurance

Well, in essence that's what Congress is asking the public to do.

Today, the House passed a bill that expands the State Children's Health Insurance Program (SCHIP) by $32.8 billion, thus enacting it into law pending President Obama's signature, which is expected as early as this afternoon. The bill generates the needed revenue by increasing the federal excise tax on cigarettes by 62 cents per pack, from 39 cents to $1.01 per pack. The measure will provide health insurance coverage to 4 million uninsured children.

The Rest of the Story

The enactment of this legislation raises several interesting policy questions.

First, does it make sense to tie a critical government program (children's health insurance) to cigarette tax revenue, thus making continued levels of cigarette consumption necessary to maintain health insurance for children?

If cigarette consumption falls significantly, there will - by definition - not be enough money in the SCHIP program to continue to cover all children in the program. Congress will either need to find an additional revenue source or cut children off from health insurance. This creates a strong incentive for the federal government not to take any action which might threaten to substantially decrease cigarette consumption.

You see - this is the problem. The sustained provision of health insurance to children is now dependent upon continued high levels of cigarette consumption. The federal government literally does need smokers to continue to smoke, and at high amounts, to be able to provide health insurance to these additional 4 million children.

One automatic argument against any subsequent policy proposal that would seriously threaten to reduce cigarette consumption in the future is that it would also threaten children's health insurance coverage.

We already saw the negative ramifications of this type of cigarette revenue dependence with the Master Settlement Agreement, which made the states dependent upon high levels of continued cigarette consumption in order to balance their budgets, build roads and bridges, and provide health care to their residents. When a potential policy came along that could have seriously reduced cigarette consumption, the Attorneys General all joined in immediately to prevent it from happening. Specifically, the Attorneys General intervened in a tobacco lawsuit in Illinois, trying to get Philip Morris off the hook for a $10 billion punitive damages bond it otherwise would have had to pay. Literally, the Attorneys General became the best friends that Big Tobacco could ever ask for.

This is now the position in which the federal government has placed itself. The fiscal survival of the SCHIP program in its current state now depends on high levels of continued cigarette consumption. No doubt the Congress will bend over backwards to help Philip Morris and the other tobacco companies fend off any policy proposals that would otherwise seriously threaten their profits.

In other words, this is the last thing in the world that people in tobacco control should have wanted to have happen.

Another edge to this double-edged sword is that the enactment of this tax makes it extremely unlikely - in fact impossible - that Congress will take any action to seriously reduce smoking in America. This is because the one thing Congress could do to make a dent in smoking - raising the cigarette tax and allocating the revenue towards a national anti-smoking media campaign - is now a non-possibility. There is no way that Congress will enact another large cigarette tax increase. And there is no way Congress will implement any anti-smoking campaign that would actually work, now that a balanced budget is contingent upon future cigarette consumption levels that are close to current levels.

Surprisingly, the major anti-smoking groups all supported this legislation. Have they not considered these adverse consequences of this policy? Or are they just looking for a short-term victory, and not concerned about the long-term impacts upon the public health practice of tobacco control in the United States?

A third problem with the SCHIP legislation is that a group that is disproportionately made up of people who are poor is being asked to bear the burden for paying for children's health insurance. The added tax will have serious financial consequences for poor families with parents who are addicted to smoking. Most of these smokers will not quit, despite the increased tax, but will instead simply pay more for their cigarettes. Thus, they will spend a lower proportion of their income on food and other essential items that are necessary for health. It is a double whammy for these families.

The policy also raises questions of justice. Is it just for the poorest sector of society to have to shoulder the financial burden of providing health insurance to America's children?

The situation would be very different if the tax revenues were being used for anti-smoking media campaigns and services for smokers, as I have proposed in some detail previously. In such a situation, there would be no adverse incentive against reducing smoking prevalence, because as revenues fell, the need for these expenditures would decrease as well. The purpose of the program, in fact, would be to put itself out of business. In addition, taxes on smokers would be fair because the money is being used directly for smoking-related purposes, including direct services for smokers, such as research and treatment of smoking-related diseases.

The most effective potential national strategy for reducing tobacco use in this country has now been effectively eliminated.

Absurdly, we now need people to smoke in order to provide health insurance to our nation's children.

It is thanks to the smokers out there that 4 million of our children now will have health insurance. The nation owes these smokers a debt of gratitude. And let's hope you keep smoking, because otherwise the health coverage of our nation's children will be threatened.