Douglas willing to support cigarette tax increase for health care

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(Host) The Douglas Administration says it’s now willing to support an increase in the cigarette tax to help finance health care reform.

But Administration Secretary Michael Smith says Douglas remains strongly opposed to a fee for companies that don’t offer coverage to their employees.

VPR’s Bob Kinzel reports.

(Kinzel) A month ago Governor Jim Douglas said he opposed a plan to raise the state cigarette tax to help pay for health care reform because he didn’t want to increase tax burdens in the state. Now the governor has had a change of heart.

Administration Secretary Michael Smith says Douglas is willing to back a cigarette tax increase to help reach a compromise with lawmakers over health care reform.

Smith says the revenue from the tax increase coupled with an expansion of employer based coverage should provide a solid financing package for health care reform.

(Smith) “That’s $58 million. We should be able to design a health care system that we can all agree to that be a benefit to everyone. If we can’t do that then I don’t know then I wonder whether people are just doing this to have an issue for the fall or if they really want a bill here.”

(Kinzel) Smith says the governor isn’t willing to compromise on a plan to impose a fee on companies that don’t offer coverage to their employees.

This provision is a key part of a draft plan being developed in the Senate Health and Welfare committee. Committee chairman Jim Leddy says the fee for small companies could be as low as $100-a-year per employee.

(Leddy) “The governor doesn’t want to ask employers that don’t provide insurance to pay anything. And we have asked and are looking not to require employers who don’t provide insurance to provide insurance, but we think it’s only fair that they pay a modest fee per employee to help defray the costs of employers who are paying for health insurance. So we think it’s a question of equity and fairness.”

(Kinzel) Leddy thinks the cost of private health insurance policies could be reduced by as much as 5 % if the Senate plan is adopted.

(Leddy) “If you provide insurance to folks who don’t currently have insurance, that is going to bring income into the hospitals that they presently don’t receive. And that alone will result in reducing the impact of a cost shift on employers whose premiums now are higher than they should be because they’re actually helping to subsidize the care for folks who have no insurance.”

(Kinzel) Administration Secretary Smith says the Senate is taking the wrong approach with their bill.

(Smith) “We have a responsibility here at state government to make insurance affordable for everyone and that includes those people right now that can’t offer an affordable package to their employees.”

(Kinzel) The governor is also strongly opposed to a legislative plan to use the second installment of the national tobacco settlement fund for health care. Douglas wants to target this money for a new college scholarship program.

For Vermont Public Radio I’m Bob Kinzel in Montpelier.

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