SC cigarette tax hike bill expected to move fast

by Lesley Politi on May 14, 2009

The artilce has nothing to do with California or California Health Insurance but seems like the program may help a lot of people.

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Plans to raise the nation’s lowest cigarette tax to generate money for a new health insurance program are expected to move quickly, South Carolina senators said Monday.

But they’re finding no fan with South Carolina Gov. Mark Sanford, whose veto of a 50-cent tax increase last year killed a similar bill.

The tax is now 7 cents a pack and hasn’t increased since 1977. The 50 cent increase would generate $139 million for a new health insurance program for low income workers. It cleared the House with a 97-22 vote last month.

On Tuesday, the bill is expected to be sent to the Senate floor for debate. Because the tax is the same and the concept similar to what the Senate approved last year, supporters doesn’t expect delays, said Sen. Thomas Alexander, R-Walhalla and the chairman of the subcommittee handling the bill. Alexander says the bill could be out of the Finance Committee Tuesday afternoon.

The bill creates a $139 million fund to cover 75 percent of a health care policy for individuals who make up to roughly $21,600. The maximum credit would be $3,000. Employers with 25 or fewer low-income workers could get a 67 percent credit for each worker insured with the same limit.

Supporters say the measure would cover 160,000 of the state’s estimated 700,000 uninsured residents.

The bill also generates nearly $8 million for programs to curb smoking and to help market South Carolina agriculture products.

“I feel very comfortable with the plan,” Alexander said. “The quicker we can have this tax increase, the quicker we can help people. With the unemployment we have and everything else, I think it’s important that we move forward as quickly as we can.”

South Carolina’s jobless rate was the nation’s third highest in March at 11.4 percent and has persistently been among the nation’s worst.

Senate Minority Leader John Land, D-Manning, serves on the subcommittee, too, and wants the bill on the floor for debate. But he’ll only go along with the House version of the legislation if there is proof the state can use the tax collections to draw down a three-for-one match in Medicaid dollars.

Sanford instead is calling on legislators to increase the tax so the state’s income tax rates can be lowered. And, in March, as the House prepared to debate the bill, Sanford wrote a letter saying the bill fell far short of making needed reforms in the state’s health care system.

“While the bill provides a so-called premium credit to either a small business owner or an individual, what it really amounts to is government spending. This ‘credit’ is really a subsidy to insurance companies” in the form of payments from consumers or businesses, Sanford said in the letter.

Alexander said it’s far more than that. The uninsured, he notes, get health care that they don’t pay and “are not contributing the financial aspect of it.”

Sanford encouraged legislators instead to change the insurance system and encourage people to get healthier. He noted Georgia had addressed part of its uninsured population by eliminating premium taxes on health savings accounts, a $250 tax credit for setting up those accounts, incentives for health behavior such as losing weight and kicking cigarettes.

Sanford’s role, the fear of a veto and a planned May 21 adjournment raise doubts.

“My prediction is nothing will pass this year,” Land said.

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This is a great idea and program to help Health Insurance for low income.  With Unemployment so high, more people will be turning to such programs to take care of their medical expenses.

Source: www.forbes.com

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