Lawmakers hunt ways to fund added health care

Ways sought besides cigarette tax to expand health care

January 23, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

As two of the biggest lobbying camps in Annapolis - the medical community and Big Tobacco - spar over whether a cigarette tax increase should be used to expand health care coverage in Maryland, some in the legislature are quietly looking for another way to pick up the tab.

Lawmakers plan to unveil legislation today that would levy a $1-a-pack tax increase and generate more than $200 million to fund health care in the first year alone. But prospects for passage are uncertain, and even Del. Peter A. Hammen, the chairman of the House Health and Government Operations Committee who supports the idea, is scouring the state budget for spots where money could be squeezed from other programs.

"I want to pass a cigarette tax," said Hammen, a Baltimore Democrat. "But we also have to be mindful that we may not get a full dollar increase, and we need to find other options."

The scramble for dollars illustrates not only the difficulties surrounding passage of the controversial tobacco tax, but also the budgetary hurdles facing the General Assembly, which is expected to see shortfalls of more than $1 billion annually by 2008.

Legislative leaders and Gov. Martin O'Malley have made it a priority to improve health care access for the uninsured after the last high-profile proposal met with fierce resistance. That health care fix, a 2005 bill that would have compelled Wal-Mart Stores Inc. to spend more for employee health insurance, was dealt another legal setback last week when the U.S. Court of Appeals for the 4th Circuit upheld a lower court ruling that struck the law down.

While the so-called Wal-Mart bill targeted a corporation, this year's legislative efforts are focused on a range of initiatives including expanding government programs to cover more of the estimated 780,000 Marylanders with no health insurance.

"Everyone wants to expand health insurance; the only problem is figuring out how to pay for it," said Ronald W. Wineholt, vice president of government affairs at the Maryland Chamber of Commerce.

The cigarette tax has been eyed for years. Del. Sheila E. Hixson, a Montgomery County Democrat, and Sen. Verna L. Jones, a Baltimore Democrat, plan to introduce legislation this session that would use the added tax revenue for health care, and they say they have the support of 80 out of 188 lawmakers.

Nonetheless, passage might prove difficult without the backing of O'Malley, who "is not inclined to support the tobacco tax," according to spokesman Rick Abbruzzese. O'Malley announced proposals to reduce the ranks of the uninsured as part of his legislative agenda yesterday, including an expansion of the state-funded health insurance program for low-income children. He did not, however, say how it would be funded.

Top legislative leaders, including Senate President Thomas V. Mike Miller, confirm the hunt for funding sources other than a cigarette tax is on.

Health care will dominate much of the debate during the 90-day session, as the issue has caught on nationally. Massachusetts enacted a landmark law last year, and last week California Gov. Arnold Schwarzenegger proposed a mammoth plan for near-universal health insurance.

At hearings last week in Annapolis, legislators heard testimony on the scope of the uninsured problem in Maryland and on the particulars of the Massachusetts system. That plan is projected to cover about 515,000 of the commonwealth's 550,000 uninsured at a cost of $1.2 billion over three years, with only $125 million in new state money and the rest mostly from existing revenue sources.

The goal of writing a health care bill is complicated by Maryland's worsening budget picture, which can be traced to an income-tax cut and higher spending on education and other programs in the past decade. When the economy slowed a few years ago, cash reserves were tapped to balance the annual budget, as required by the state constitution, and bonds floated to pay for projects.

Now the state's debt outstanding is at 93 percent of capacity, under guidelines set by a committee that advises the Assembly, compared with 77 percent in 2000, according to a recent report. That puts the state within striking distance of breaching the limit, which could force a choice between cutbacks or losing the state's top bond rating.

House Speaker Michael E. Busch directed Hammen to cut the number of uninsured in half over four years. Hammen is hoping his bill will accomplish much of that goal by reducing the number by one-third, partly by expanding access to Medicaid, the state and federal health insurance program for the poor, at a cost of about $130 million.

If he can't get the votes for all or part of the cigarette tax increase, Hammen said other funding possibilities include taking part of a $100 million-plus surplus at the Maryland Health Insurance Plan, the state's insurer of last resort.

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