Letter Opposing H.R. 2, the "Children's Health Insurance Program Reauthorization Act of 2009"

January 14, 2009

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, urges you to oppose H.R. 2, the "Children's Health Insurance Program Reauthorization Act of 2009" when it is considered by the House this week. The Chamber appreciates the bill's attempt to refocus SCHIP funds to be used by low-income children rather than adults, but has concerns with significant expansion of the program. The Chamber also opposes raising the federal excise tax on tobacco to fund the program, which would make children's health insurance depend upon adults smoking. Additionally, the Chamber supports closing the self-referral loophole for limited service, physician-owned hospitals.

The Chamber believes that maximizing enrollment for currently eligible, uninsured, and low-income children should be the first priority of SCHIP legislation. However, federal and state governments are failing to meet this responsibility. More than 11 million individuals, including 6 million children, remain unenrolled in health insurance programs that are specifically designed to overcome financial burdens.

Unfortunately, H.R. 2 raises taxes on a narrow sector of the U.S. economy with the aim of funding a broad-based entitlement program, which is grossly unfair and burdensome to American businesses and consumers. Cigarette taxes are startlingly regressive – Americans with the lowest incomes are the hardest hit. Worse, regions of the United States whose economic well-being relies upon tobacco-based agricultural and industrial activities will bear the brunt of this tax increase.

The adverse consequences of this tax increase are numerous: increasing the excise tax would significantly reduce the tobacco-related revenue that states receive under the Master Settlement Agreement – money which states rely on to fund important programs. The Congressional Budget Office has estimated that the tax increase would result in reduced payroll and income taxes. Additionally, increasing the tobacco tax could provide further incentive for illegal activities such as cigarette smuggling and counterfeiting.

The Chamber urges you to consider the financial impact this legislation would have on one narrow industry, on state budgets, on rural areas that rely on tobacco-based agriculture, and on low wage-earners. The Chamber urges Congress to refine this legislation to ensure children currently eligible for SCHIP are enrolled before expanding eligibility.

Sincerely,
R. Bruce Josten