AUGUSTA — A bill working its way through Congress could stabilize and possibly allow expansion of a program that provides health insurance for poor children in Maine.
But the way it would be funded – through a substantial increase in federal cigarette taxes – is expected to decrease state revenues to the tune of millions of dollars.
The U.S. House of Representatives voted 289-139 last Wednesday to expand government-sponsored insurance nationally to 4 million more children in working families with income too high to qualify for Medicaid. About 7 million children now get health care through the State Children's Health Insurance Program, known as SCHIP.
Maine Democratic U.S. Reps. Michael Michaud and Chellie Pingree both voted for the bill. The Senate has yet to take up the legislation, but is expected to in coming weeks.
Congress passed similar legislation in 2007, but it was vetoed both times by President Bush. President Obama is expected to support the legislation.
There are 14,000 Maine children now insured through the program, according to Brenda Harvey, commissioner of Maine's Department of Health and Human Services.
The program was funded at $40 million in the last fiscal year, three-quarters of which comes from the federal government, with the state picking up the remaining 25 percent.
More than anything else, the bill would stabilize the program.
Maine had been allocated around $14 million for the program from the federal government in past years. It has gotten additional millions each year – including last year – when the government redistributed funds that other states had not used.
"We're always at risk of 'What if there isn't enough redistributed?' " Harvey said.
The bill would stabilize Maine's allocation at about $40 million, according to Edwin Park, a senior fellow at the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank.
Harvey estimates there are 1,700 to 1,800 uninsured Maine children who could be eligible for coverage under the program.
If the bill passes, she said, her department would use funding to get more of those children covered.
But there is a hitch.
The bill would increase the federal excise tax on cigarettes by 61 cents, to $1 a pack, to pay for the $32.3 billion cost of expanding the health insurance program for the next 4 1/2 years.
Other tobacco products would experience a comparable tax increase. When taxes on tobacco products increase, usage goes down.
This means a decrease in revenue for states that tax such products – like Maine.
In fiscal year 2008, Maine received $143.8 million from cigarette taxes and other tobacco products brought in $6.7 million, according to the state Department of Revenue.
If the bill gets passed, the department expects cigarette tax collection to go down $2.7 million in the current fiscal year, which ends June 30, and $10.6 million in the next fiscal year.
The state expects to lose $299,572 and $756,463 from taxes on other tobacco products in the current and next fiscal years, respectively.
On one hand, Harvey said, the action by Congress to increase funding for the program is "the beginning of health-care reform."
On the other, "It may, in fact, reduce our ability to provide the state match," Harvey said. "It's sort of a two-sided coin."
Harvey said the state hopes to work with the Obama administration to mitigate any drop in revenue due to new federal taxes.
– The Associated Press contributed to this report.
Staff Writer Matt Wickenheiser can be contacted at 791-6316 or at:
mwickenheiser@pressherald.com
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