"It's speculative, but we're looking at it and it will have an impact on business," he said on a quarterly earnings call earlier this week. "None of that is in our [image-nocss] guidance yet; we're waiting to see what the final shape of the bill is.... [But] we're anticipating there will be a decline [in tobacco sales]."
The Democratic-controlled House passed the bill 290 to 135 on Wednesday, with 40 Republicans backing it. Obama signed it into law later in the day. The bill calls for spending an additional $32.8 billion on SCHIP, created more than a decade ago to help children in families with incomes too high to qualify for Medicaid but too low to afford private coverage. Federal money for the program was set to expire March 31, barring action by Congress.
Lawmakers generated that revenue by raising the federal tobacco tax. To cover the increase in spending, the bill will boost the federal excise tax on a pack of cigarettes by 62 cents, to $1.01 a pack.
Peter Sodini, chairman and CEO of the 1,648-store chain based in Sanford, S.C., is optimistic that the drop in sales will be temporary, however. "We've been in markets and states where we've seen 50-cent-plus increases in the cost of cigarettes," he said. "Over the short term, we're going to see a fair amount of that pass through. You're going to see an initial decline in unit consumptions and margins. I think it's reasonable to assume on the first-year basis we are going to be impacted."
On the other hand, Leo Vercollone, CEO of the 20-site VERC Enterprises chain based in Duxbury, Mass., sees opportunity among the fallout. "Price increases certainly are a challenge, and we know what that does to demand, he told CSP Daily News. "But that coupled with the potential FDA regulation, we need to remember that we're the entities that customers go to to buy that product. They think of us first, and they think of us because of our convenient locations and our wide variety of products."
Vercollone said he hopes the c-store industry can parlay those facts into becoming a stronger destination, especially if competition gets diluted.
"If your question is: Would I like this to happen? The answer is no," he said. "But if you ask how I view it, I view it as an opportunity. I think our industry sometimes dwells on the negative, but we need to get beyond that and look at how this can benefit us as an industry."
The bill's passages has long been a top priority of Democratic lawmakers, said the Associated Press. In late 2007, President Bush twice vetoed similar bills. The Senate passed the same bill last week. Obama made it a top priority in his first 100 days and one step in his push for universal coverage by the end of his first term.
Republicans said that they supported SCHIP and providing additional money for the program; however, they argued that Democrats were taking the program beyond its original intent and encouraging states to cover middle-class families who otherwise could get private insurance.
"This debate is about, do we want a children's health insurance program that covers every child in America with state and federal dollars regardless of their ability to pay?" said Rep. Joe Barton (R-Texas). "Do we want to freeze out the private sector for health insurance?"
Opponents of the bill also complained that the tobacco tax increase hits the poor the hardest, because they are more likely to smoke than wealthier people. Many also took exception to expanding the program and Medicaid to children of newly arrived legal immigrants.
But supporters said that ensuring children had access to adequate health care was a matter of priorities. Rep. Frank Pallone (D-N.J.) said an estimated four million people have lost employer-sponsored insurance in the past year. "Do they keep their families' health insurance or do they put food on the table at night? During this economic recession, these kinds of decisions are unfortunately becoming more common," Pallone said.
The National Alliance for Hispanic Health estimated that more than one-third of the children added to the program will be Hispanics who currently have no health insurance. Health officials project that there are about nine million uninsured children in the United States.
Scores of interest groups threw their support behind expanding SCHIP, including those representing insurers, hospitals and doctors. The American Cancer Society predicted that the tax increase would reduce youth smoking by about 7% and overall cigarette consumption by 4%.
Click herefor a transcript of President Obama's remarks at the bill's signing.
Click herefor recent CSP Daily News coverage. Also click here.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.