The S.C. House gave smokers a break Thursday when it rejected a cigarette tax increase to pay for health care costs.

Supporters of a cigarette tax hike sought to include the increase in a broad proposal that seeks to revamp health care spending, reorganize agencies and improve services. After hours of intense debate, the House adopted legislation that supporters called the "most substantial restructuring bill" in a decade.

"This -- standing alone -- is a major reform effort," said House Speaker David Wilkins, R-Greenville.

Within that proposal is a controversial plan to restructure the state's tobacco bonds to help provide steady income for South Carolina's Medicaid program -- its health care initiative for poor people, senior citizens and disabled residents -- that touches one in five in the Palmetto State.

Key leaders within the Republican-led House say the plan offers a viable alternative to pay for Medicaid without raising taxes.

"The restructuring of the bonds really isn't a political issue; it's a financial issue," said Rep. Bobby Harrell, R-Charleston, the House chief budget writer.House Democrats labeled the measure a "Wall Street scam" whose intricacies were not fully disclosed.

Democrats also decried efforts of the House leadership to steamroll the 40-plus page legislation, which hit their desks Thursday, through the chamber. Through legislative maneuvering, the House placed the Medicaid reform bill at the top of its calendar, leapfrogging other measures awaiting consideration.

To slow momentum and extend debate, House Democrats sought to alter the bill in what was described as a "filibuster by amendment." In all, the House had to dispense with nearly 800 amendments -- more than twice the number considered during budget talks.

House leaders say they sought to give the measure high priority so it could track along with the state budget which was given final approval Tuesday.

The Medicaid reform bill, which must receive a routine third vote next week, would:

• Reorganize health care agencies and alter their missions

• Create two new Cabinet agencies whose directors are appointed by the governor

• Move the Department of Alcohol and Other Drug Abuse Services under the Department of Health and Human Services

• Establish a Joint Legislative Committee on Medicaid and Health and Human Services and a State Office of Medicaid and Health Care Audits

To maintain current services, the Medicaid program needs about $192.5 million for the next budget cycle that begins July 1. House budget writers say they had narrowed that need to about $52 million.

Restructuring the tobacco bonds is designed to help plug the hole by generating nearly $45 million. House leaders say they added extra money to cover the balance.

But House Democrats say the funding plan is shaky and puts legislators in the quandary of having to scrounge for between $50 million and $80 million to keep the Medicaid program operating when writing another budget next year. They also fear some 6,700 families will be kicked off Medicaid under the House budget.

Key Senate leaders, the state treasurer and the governor have raised concerns about restructuring the tobacco bonds.

A cigarette tax hike -- possibly as much as 53-cents per pack -- would provide between $150 million and $176 million in steady income for Medicaid, according to state estimates. But in a 71-37 vote, the House defeated a proposed 53-cent hike in a pack of cigarettes to fund Medicaid.