Townsend backs 36-cent increase in Md. cigarette tax

Move would generate $200 million for health care

Ehrlich aide derides proposal

Election 2002

August 07, 2002|By David Nitkin | David Nitkin,SUN STAFF

Sidestepping a no-new-taxes pledge, Lt. Gov. Kathleen Kennedy Townsend said yesterday she supports a 36-cent-a-pack increase in Maryland's cigarette tax to pay for health care for the uninsured.

Townsend said she would ask for the increase in the second year of her administration if elected governor, maintaining her commitment not to raise taxes in the first year - when state officials will grapple with an estimated $900 million budget shortfall and an uncertain economy.

"I want to make sure the money is used for expanded coverage, not filling in gaps," Townsend said.

Maryland's $1-a-pack cigarette tax is already among the highest in the nation. It was raised 34 cents by the General Assembly this year to help pay for state aid to public schools.

A further increase in the tax is part of a three-pronged pledge that a nonprofit coalition called the Maryland Citizens' Health Initiative is asking candidates for governor and the state legislature to sign.

Townsend, a Democrat, said she signed the pledge last week and supports its three components, which include keeping CareFirst BlueCross BlueShield a nonprofit company and making prescription drugs more affordable for senior citizens and others.

A spokesman for Rep. Robert L. Ehrlich Jr. said the expected Republican nominee for governor does not support the pledge.

"The legislative leadership [in Annapolis] has trashed this proposal as one of the most anti-business ideas to come around in a long time," said Paul E. Schurick, an Ehrlich aide. "This is nothing more than a step toward universal health care. ... We are pro-business. Therefore, we will not be signing this."

Ehrlich has said he would not raise income or sales taxes if elected, but has not ruled out a gas-tax increase for transportation projects.

Vincent DeMarco, executive director of the health initiative, said Ehrlich is making a political mistake. He said polling done for the group shows bipartisan support for expanded health care.

"This is not a Democratic or Republican issue. This is a people of Maryland issue," DeMarco said.

"He's [Ehrlich's] gotten $23,000 from tobacco companies, more than any other member of Congress from Maryland. I hope he's not doing what they want, rather than what the people of Maryland want," DeMarco said.

The health initiative launched an effort at universal health coverage about three years ago, but has since altered its campaign to make it more palatable to voters. The group had previously called for a 3 percent payroll tax to cover Maryland's estimated half-million uninsured residents.

Robert O.C. Worcester, president of Maryland Business for Responsive Government, called the initiative's latest iteration "a more salable, modest proposal in an election year that they think they can get by. ... Their goal is to have Maryland have the model for government-run health care for the country."

DeMarco said the group is pushing a more limited health plan, having abandoned its proposal for a Canadian-style single-payer system.

As of yesterday, 185 General Assembly candidates had signed the pledge, including Sen. Walter M. Baker of the Eastern Shore, chairman of the Judicial Proceedings Committee, and Del. Sheila E. Hixson of Montgomery County, chairwoman of the House Ways and Means Committee.

But support for the pledge is far from universal. House Speaker Casper R. Taylor Jr. has been working on his own health care reform package, which would rely in part on extending Maryland's insurance-premium tax to HMOs.

"I still think that signing pledges in advance of seeing actual proposals for substantive statutory law is always premature," Taylor said, adding that he would not vote for another increase in the tobacco tax.

"The HMO tax is a leveling of the playing field in a very large insurance industry marketplace," the Allegany County Democrat said. "Whereas the idea of the cigarette tax is not. ... It is simply singling out one product that is causing health problems and treating it in a completely unique way."

The cigarette tax increase would generate an estimated $100 million a year, which would be matched by federal funds, generating $200 million annually for health care spending.

Townsend said she would like to see the money spent, in part, on insuring the parents of children who receive state-funded health coverage.

She also said the state should reject an application to allow CareFirst to become a for-profit company and be sold to WellPoint Health Networks Inc. for $1.3 billion. Maryland needs to keep the nonprofit company as an insurer of last resort, she said.

State Insurance Commissioner Steven B. Larson is reviewing the CareFirst sale proposal.

"There's a very strong sense he will decide it's not in the best interest of Maryland," Townsend said, adding that she had no inside information on Larson's thinking.

CareFirst issued a statement yesterday saying the company "strongly supports access to health care for all citizens. ... We believe our proposed transaction with WellPoint provides the means by which we can seriously address the issues of the uninsured and underinsured."

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