Land: Getting the most bang for cigarette tax buck

A vast majority of South Carolinians agree that the time has come to raise the nation's lowest cigarette tax. I've been fighting for this change for nearly a decade. An increase in the state's tax on cigarettes will dissuade more people from smoking, especially young people. With more than 700,000 South Carolinians uninsured, a majority of lawmakers agree that the funds generated from a cigarette tax should be used for health care. We are all in agreement on these points.

But where the sides diverge is how to spend the money generated from the tax.

On one side is a proposal by the private insurance industry to use government money to administer a plan utilizing vouchers to cover the cost of health insurance coverage. On the other side is a plan that would keep administrative cost down, control health-care costs and cover thousands of our state's uninsured.

The private insurance industry's plan would give an individual a voucher worth up to $3,000 to purchase health insurance on the private market. The industry-driven plan is modeled on the plan Oklahoma enacted in 2004. After five years with this program, Oklahoma has seen only 13,348 individuals covered.

Missing from the big insurance companies' plan is an estimate of the administrative cost to set up and run a new health insurance program. What would insurance companies such as Blue Cross Blue Shield charge to administer a new program? Some have suggested it will cost 25 percent of every dollar spent to cover commissions, administration and profit.

One year ago, both the House and the Senate passed a cigarette tax plan that could have covered an additional 113,000 uninsured adults and an additional 70,000 children. More importantly, for every dollar the state put up, the federal government would have invested three dollars - a $500 million annual investment in our state's economy.

Administrative cost would have been kept to a minimum under the 2008 plan. Instead of creating another government bureaucracy, we could have used existing programs to administer an expanded health-insurance program.

Last year's plan also would have given our state greater ability to control rising health-care costs through managed care. As the number of participants in the state's program increases, so too does our ability to negotiate better pricing for health care services.

But this plan was defeated at the hands of Gov. Mark Sanford. The House was unable to override his veto. Now we are faced with a plan, being pushed by the insurance industry, whose only selling point is that it may be veto-proof. That's a shame. Once again, our state's leaders are forced to consider bad public policy, ignore real solutions for the uninsured and jeopardize a plan to cut the numbers of smokers in South Carolina - all because of Gov. Sanford's total disregard for the needs of his state.

I hope the state Senate will pass a cigarette tax this year. The Senate Finance Committee has offered a plan to raise the tax by 50 cents per pack and place the revenue in a new health-care trust fund.

We can no longer afford to have the nation's lowest cigarette tax. Too many young people daily take up this habit. An increase in the cigarette tax is one way we can discourage folks from becoming addicted to tobacco. It's another way to meet the challenge our state faces with the growing number of citizens lacking affordable health insurance for themselves and their families. But we as state leaders must look for ways to get the biggest bang for our buck. Handing over more money to the private insurance companies to cover only a few more folks doesn't make sense. Using the money to generate $500 million in economic activity in our state and cover hundreds of thousands of South Carolinians with health insurance is simply a better plan.

Sen. Land is the Democratic leader in the S.C. Senate. He can be reached at JCL@scsenate.org.