Plan aims to help uninsured

Md. House leaders seek to double cigarette tax for $600 million program

General Assembly

February 08, 2007|By Laura Smitherman | Laura Smitherman,Sun reporter

Maryland House leaders unveiled a plan yesterday that would extend medical coverage to nearly 250,000 uninsured residents, a proposal that immediately ignited a debate over the key funding mechanism - a doubling of the state's cigarette tax to $2 a pack.

The $600 million health care proposal aims to provide coverage for every child in Maryland by expanding Medicaid, while requiring that higher-income individuals and families buy insurance or pay a fee. It also would give subsidies to small businesses to provide insurance to workers and require that private insurers allow adults up to age 25 to stay on their parents' plan.

"There's a lot of momentum out there for this in the general public," said House Speaker Michael E. Busch, who presented the proposal at a news conference yesterday along with its chief sponsor, Del. Peter A. Hammen, a Baltimore Democrat who chairs the House health committee.

"We ought to be at the forefront of taking on initiatives like this," Busch said.

The debate in Annapolis comes as states around the country work to address who should bear the cost of rising health care costs. Massachusetts enacted groundbreaking legislation to cover most of its uninsured last year, and California Gov. Arnold Schwarzenegger recently unveiled a proposal for near-universal health care. The Hammen bill would cover about one-third of the uninsured in Maryland.

The tobacco tax is a political lightning rod that could occupy much of the discussion over extending health care coverage.

Senate President Thomas V. Mike Miller said the $1 increase in the tobacco tax is dead on arrival. The powerful Democrat said Maryland cannot afford to enact expensive social programs without addressing a state deficit that reaches $1.3 billion in the next fiscal year.

"If we pass a cigarette tax this year, it will go to balancing the state budget," he said. "We have a deficit, and it's a hole that's getting deeper and deeper and deeper."

Gov. Martin O'Malley has shied away from supporting the tobacco tax increase, or any other tax increases, until he has a chance to look for ways to make state government more efficient.

O'Malley also has put together a legislative package addressing coverage for the uninsured, including some of the provisions that are in Hammen's bill. The governor indicated yesterday that the state's precarious financial situation could dictate how quickly he would seek to expand coverage.

"There will be some people who feel we can go a lot farther a lot faster, and I look forward to that debate," O'Malley said.

The state's uninsured population has swelled to nearly 800,000 residents, or more than 10 percent of the population, according to the U.S. Census Bureau.

Funding for the Hammen bill would come from a number of sources, including the federal government, which matches a portion of Medicaid costs. The $600 million annual cost estimate includes about $400 million in state funds.

But the biggest revenue-raiser would be the tobacco tax increase, which would generate $211 million in the first year and less in later years, as more people are presumably discouraged from smoking. Hammen said that future declines would be made up from savings realized when more people are insured.

The proposed $2-per-pack tax is less than New Jersey's $2.58 and in the middle range of all other states. Virginia ranks among the lowest, at 30 cents a pack.

Legislators were hard-pressed yesterday to say how they would pay for the measure without a tobacco tax increase. Miller said the legislature needs to approach impending deficits with solutions that could include increased sales taxes, budget cuts and slot machines that could be taxed.

Sen. Thomas M. Middleton, chairman of the Finance Committee and a Charles County Democrat, said the House proposal may need to be scaled back. He also pointed out that other states have increased payroll taxes to pay for expansions of health care coverage but added that he would not push for that in Maryland.

One of the biggest costs of treating the uninsured - unpaid hospital care - has increased to more than $800 million a year in the state. Under Maryland's system, hospitals are reimbursed for treating uninsured through higher rates charged at all hospitals. That pushes insurance rates higher, adding an estimated $1,000 to the annual premium of the average family plan.

"There's a growing consensus that there needs to be action this year," said Nancy Fiedler, senior vice president of the Maryland Hospital Association, which has been lobbying for greater access to health care coverage.

O'Malley and Busch signaled early this year that health care would dominate much of the legislative session, and a number of special interest groups have forwarded their own ideas.

The Maryland Citizens' Health Initiative, a nonprofit group that has been pushing for expanded health care coverage for years, is distributing a 140-page book profiling scores of the state's uninsured.

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