Letter Opposing H.R. 3162, the "Children's Health and Medicare Protection Act of 2007"

July 31, 2007

TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:

The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, opposes H.R. 3162, the "Children's Health and Medicare Protection Act of 2007." While the Chamber recognizes the importance of reauthorizing the State Children's Health Insurance Program (SCHIP) for currently eligible low-income children, the Chamber strongly opposes H.R. 3162 because it would, among other things, raise the federal excise tax on tobacco and make significant cuts to Medicare Advantage (MA) plans to fund this important public program. Additionally, the Chamber opposes a proposed tax on health plan premiums to fund a Center for Comparative Effectiveness Research.

Increasing the excise tax would significantly reduce the tobacco-related revenues that states receive under the Master Settlement Agreement and increasingly rely on to fund important programs. The Congressional Budget Office has also estimated that a federal excise tax increase would result in reduced payroll and income taxes. A sharp increase in the tobacco tax could also provide further incentive for illegal activities such as cigarette smuggling and counterfeiting. Prejudicing a narrow sector of the economy to fund a broad-based entitlement program hurts consumers, businesses, and regions in United States whose economic well-being relies upon tobacco-based agricultural and industrial activities.

A second serious concern to the Chamber is the included cuts to MA. MA plans provide consumer choice for Medicare-eligible populations and are a popular market-based alternative to the traditional government-run entitlement program. MA plans offer disease management, coordinated care and preventive health services that can reduce major cost drivers such as unnecessary hospitalizations. To cut MA plans would be a double blow to the employer priorities of reducing health care costs through market competition and promoting superior health care for all Americans.

Furthermore, the Chamber opposes a new tax levied on individual insurers and group health insurance premiums that would establish a trust fund to conduct comparative effectiveness research. While many employers are very interested in further analysis of outcomes and effectiveness of health care services, this tax increase on health insurance policies will negatively impact the ability of employers who are struggling to continue to provide affordable insurance for their employees.

The Chamber opposes H.R. 3162 as drafted, because it is harmful to specific American industries, consumers and regions. Accordingly, the Chamber may consider votes on, or in relation to, this issue in our annual How They Voted scorecard.

Sincerely,
R. Bruce Josten