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House OKs Expanding Kids Health Insurance

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By BILLY HOUSE

bhouse@tampatrib.com

Published: January 15, 2009

WASHINGTON - The U.S. House on Wednesday approved a major expansion of federally funded health coverage for children, a measure that would slam cigar manufacturers in Tampa and across the country with a big tax increase.

The bill, which passed on a mostly party-line 289-139 vote, would authorize about $33 billion over the next 41/2 years to renew the State Children's Health Insurance Program.

The measure would also expand the coverage to an added 4.1 million children, on top of the current 7 million now enrolled.

The Democratic-controlled Senate is expected to pass a similar bill this week. Unlike President Bush, who vetoed the measure twice, incoming President Barack Obama has promised to sign the bill into law.

Supporters of the measure, including Tampa's Democratic Rep. Kathy Castor, say they hope the legislation will help make the 800,000 currently uninsured children in Florida eligible for coverage.

The measure would primarily be paid for through a 61-cent-a-pack increase in the federal cigarette tax.

Also, as much as $2.1 billion of the costs will come from a revised federal excise tax on cigar manufacturers, with a maximum of 40 cents on big cigars, an increase of 800 percent over the current cap of five cents.

Small cigars, also wrapped in brown papers but sized like cigarettes and sold in packs of five, 10 or 20, would be taxed at a rate of $1 a pack.

Even so the cigar industry, including local cigar manufacturers in West Tampa and Ybor City within Castor's district, was in fear that the cap would be much higher. An original version of the bill in 2007 called for a $10 cap on big cigars, and later versions had a cap of $3 a cigar.

"It's ironic that Congress is ready to spend $25 billion to bail out other industries. We didn't even want a 25-cent bail out. We just wanted to be left alone," said Eric Newman, president of the J.C. Newman Cigar Co. Newman is also president of the Cigar Manufacturers Association of Tampa and chairman of the Cigar Association of America representing manufacturers and importers.

Despite Castor's high-profile involvement in the bill that includes such a drastic tax hit on a home industry, Newman and others in the industry on Wednesday were not critical of her. Rather, they credited Castor and Rep. Kendrick Meek of Miami, the state's Democrat on the tax-code writing Ways & Means Committee, as being instrumental in softening the tax increase from the earlier, higher proposals.

"Kathy and Meek were very helpful and supportive of our positions," Newman said. "She helped us make the best of a tough situation. We don't like any tax. But we compromised and saw an opportunity to stay in business."

Florida KidCare is the state's children's health insurance program for uninsured children under age 19.

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