Child Health Insurance and Lower Deficit Act

Child Health Insurance and Lower Deficit Act - Amends the Public Health Service Act to authorize each State to establish a children's health insurance program. Requires participating States to contract with insurance issuers, ensure that policies are available to all eligible children, and provide certain premium and cost sharing payments. Mandates coverage equivalent to the medical assistance available under title XIX (Medicaid) of the Social Security Act.

Requires each participating State, for each area served by a health center, to contract directly with the health center for direct services.

Bases eligibility on family income (as a percentage of the poverty line), with assistance paid to the issuer (or, for a child receiving direct services, to the provider).

Regulates the amount of grants to States. Provides for taking into account cost variations among States.

Authorizes appropriations.

Allows a State to use up to a specified percentage of the grants to meet the needs identified in the statewide needs assessments prepared under provisions of the Social Security Act relating to preventive and primary care services for pregnant women, mothers, and infants up to age one.

Prohibits an employer that elects to make health coverage contributions from conditioning or varying the contributions because of an individual's eligibility for assistance under provisions of this Act.

Provides for the application of specified provisions of title XXVII (Assuring Portability, Availability, and Renewability of Health Insurance Coverage) of the Public Health Service Act relating to preexisting conditions, portability, eligibility, guaranteed availability, and network plans and financial capacity.

Amends the Internal Revenue Code to increase the tax on cigarettes, cigars, cigarette papers, cigarette tubes, smokeless tobacco, and pipe tobacco. Imposes a tax on floor stocks of tobacco products and cigarette papers and tubes.