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Cigarette tax on hold for insurance plan questions

By: Olga

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Plans to raise the nation's lowest cigarette tax to expand health care coverage stalled Tuesday as the Senate's top Democrat said he would block the bill because it wastes money by creating a new insurance program.

The Senate Finance Committee had been expected to approve a 50 cent-a-pack hike from the current 7 cent tax. Instead, the committee agreed to delay action until Thursday amid persistent questions about money being spent to create a new bureaucracy and profits for insurance companies.

"I am not supporting this in any way, shape or form," Senate Minority Leader John Land, D-Manning, said. He spoke as a Senate Finance subcommittee discussed the proposal to increase the state's cigarette tax by 50 cents a pack.

The House-passed version of the bill now before the Senate would generate about $145 million.

Amendments adopted in the subcommittee Tuesday as it approved the bill with a 3-1 vote would use about $135 million for health care programs.

About $100 million of that would create a fund to cover 75 percent of health care policies 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.

The plan calls for the rest of the money to go into health care coverage for the people in high-risk health groups, cancer research, smoking cessation and agricultural marketing.

But the health insurance programs require federal Medicaid waivers to handle the 160,000 people supporters say the plan would cover. The state Department of Insurance would be in charge of setting up and administering aspects of the new program.

Land said that made no sense because there's no assurance a waiver will be granted. And he noted the state will waste money on administrative expenses at state agencies, and insurers that could be used directly to expand the reach of the existing Medicaid program.

A similar program in Oklahoma spends 17 percent of the cash it takes in for administrative costs, said Emma Forkner, director of South Carolina's Department of Health and Human Services. And insurance companies could be expected to spend a fifth or more of the money generated on commissions and overhead, Land said.

It makes more sense, Land said, to put the $150 million generated directly into the Medicaid program and have that money draw a $450 million federal match for programs with much lower operating costs.

"This is one of the silliest things that I have seen proposed in South Carolina," Land said. While the bill cleared a subcommittee with a 3-1 vote, supporters decided to halt action on it Tuesday in the full committee to give legislators time to come together.

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