Md. House Leaders Offer Plan to Widen Health Coverage

House Speaker Michael E. Busch, left, and Senate President Thomas V. Mike Milller Jr. differ on how to use  funds from a possible cigarette tax increase.
House Speaker Michael E. Busch, left, and Senate President Thomas V. Mike Milller Jr. differ on how to use funds from a possible cigarette tax increase. (By James M. Thresher -- The Washington Post)
By Lisa Rein
Washington Post Staff Writer
Thursday, February 8, 2007

House leaders unveiled an ambitious plan yesterday to extend health coverage to at least 250,000 of Maryland's uninsured, but it quickly touched off a fight over whether the state can afford so much new spending with a budget shortfall looming.

The plan relies on $212 million a year from a $1-a-pack increase in the cigarette tax -- new revenue some lawmakers say would be better used to help erase a projected deficit next year of $1.3 billion.

The Children and Working Families Healthcare Act would use the tobacco money, with millions leveraged from the federal government, to enroll tens of thousands of poor adults in the Medicaid program and offer public and low-cost insurance to moderate-income children. The state also would give subsidies to small businesses that provide coverage for their employees. And about 80,000 workers who can afford insurance but choose not to buy it would be forced to -- or face penalties of up to $2,000 when they file their income tax returns.

"We have a crisis in the state of Maryland, and it's incumbent on every elected official to find a solution to this," House Speaker Michael E. Busch (D-Anne Arundel) said of the $603 million program. He has pledged to provide health insurance to half of the 780,000 Marylanders without coverage during his four-year term. "For a state as wealthy as Maryland to be in this position is wrong."

But opposition from key Senate leaders threatened to make the proposal one of the most contentious issues the legislature will consider in its 90-day session, which began last month. A skeptical Senate President Thomas V. Mike Miller Jr. (D-Calvert) said yesterday that lawmakers may need to raise the tobacco tax -- but not to provide access to health care.

"It's not happening," Miller said. "If we raise the cigarette tax, it will be part of a solution to balance the state budget. We have a hole that's getting deeper and deeper."

Under the House bill, Maryland would join Massachusetts, California and a handful of other states that are mapping a path toward universal coverage in the absence of federal action. Yet even as several states have raised the price of cigarettes to pay for health care -- and seven governors are pushing increases this year -- talk of a new tax in Maryland is proving to be the first battleground over how to balance next year's budget.

Gov. Martin O'Malley (D) has put off decisions on where the money will come from until then. But the cigarette tax, raised in 2006 from 66 cents to $1 to pay for school improvements, is likely to be the only major tax the legislature takes up this year.

Miller renewed his call to legalize slot machine gambling, saying revenue from slots and spending cuts could also help balance the budget next year. "If the House wants to posture" on raising taxes for a new program, "that's all it is," he said.

O'Malley has embraced a more modest health-care plan that would expand Medicaid rolls and, like the bill sponsored by Del. Peter A. Hammen (D-Baltimore), require private insurance companies to allow young adults to remain on their parents' plans until age 25. Small businesses would set up accounts for their workers to use tax-free dollars to buy coverage.

But it does not rely on the tobacco tax, and the governor has pledged not to raise taxes this year. Yesterday, he said his proposal -- which would cost the state a few million dollars -- is achievable during the legislative session.

"There will be some people who feel we can go ahead a lot further a lot faster," O'Malley said. "We look forward to the debate."

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