Federal tobacco taxes would increase by 61 cents per pack to pay for a major expansion of the State Children's Health Insurance Program (SCHIP) under a bipartisan deal in Congress, USA Today reported July 10.

Democrats and Republicans on the Senate Finance Committee endorsed a plan to raise the federal tobacco tax from 39 cents per pack to $1 to expand SCHIP to some of the more than 6 million children who are eligible for the program but currently have no coverage. The tax hike is expected to raise $35 billion for SCHIP over the next five years.

"It really does come down to a choice between children and tobacco," said Sen. Gordon Smith (R-Ore.). "This is a 'twofer.' It does decrease smoking, and it does connect public healthcare costs with one of the drivers of that cost, and that's tobacco."

A proposal in the House of Representatives would use a combination of tobacco taxes and lower Medicare payments to private insurers to add $50 billion to SCHIP. However, President Bush has criticized some state expansions of SCHIP and could veto the tax-driven proposal in Congress.

"The program is going beyond the initial intent of helping poor children. It's now aiming at encouraging more people to get on government health care," Bush said this week. "I'll resist Congress's attempt to federalize medicine."

The tobacco industry also opposes the plan. "We think that smokers are already paying enough," said Steve Kottak of R.J. Reynolds Tobacco.