Without Anti-Smoking Bill, Archer's Health Proposals May Come Up Short

Thursday, April 16, 1998

OnLine

Tax incentives for health care will be the subject of hearings this spring, but House Ways and Means Committee Chairman Bill Archer, R-Texas, will have a hard time paying for the incentives if the tobacco legislation working its way through Congress fails to materialize, congressional sources said.

Archer hopes to use the proceeds from the anti-smoking bill’s proposed $1.10-per-pack increase in the excise tax on cigarettes to pay for his tax proposals to encourage all workers to get health insurance and to help pay for medical research.

The tobacco industry’s decision to pull out from tobacco talks will make reaching a consensus on the anti-smoking legislation more difficult. Without support from the industry, legislators from tobacco states will find voting for the legislation difficult, especially in this election year.

Despite the setback, proponents of the tobacco bill, such as Sen. John McCain, R-Ariz., and Health and Human Services Secretary Donna Shalala, promise the bill will move forward this year, despite the industry’s decision to back out from the negotiations.

Archer plans to use the receipts from the proposed cigarette tax increase to pay for health incentives that include allowing employees who currently pay their own health care costs to take a tax deduction for the cost of any health insurance for themselves and their dependents, letting small businesses take a larger deduction than they now receive for their health insurance costs, and providing tax incentives so medical researchers have more money to develop new ways to fight diseases.

Archer’s interest in health care probably is fueled by his desire to reduce the nation’s tax burden as much as by his desire to improve the nation’s health care system.

"Instead of keeping taxes at today’s record-high rate or increasing government spending, I believe health care tax cuts represent a wise policy that will help people solve the problems in their lives, while being consistent with the Republican principle of lower taxation," Archer wrote in a April 2 "Dear Colleague" letter.

If the tobacco excise tax is increased, Archer wants to grab some of the revenue that will flow into federal coffers to reduce the income tax, and health-care incentives are a good way of achieving that goal.

Larger implications

The decision by the tobacco industry to walk out of the negotiations also could leave a big hole in other plans the lawmakers have this year.

The Senate GOP’s plans to reform Medicare and President Clinton’s plans to fund health and child care spending programs were to be funded by the tobacco settlement receipts, so if a bill fails to materialize, these items could find themselves along with other items on this year’s wish list, such as marriage penalty relief, in search of a revenue offset.

As the competition for acceptable tax increases or spending cuts heats up, Congress will have an even harder time coming up with ways to pay for extending the research and development tax credit, the exclusion for employer-provided education expenses, and other expiring provisions.

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