A $1 Cigarette Tax Increase is the Solution to Medicaid’s Long-term Funding Problem

The Communities for a Clean Bill of Health (CCBH) is disappointed that Governor Haley Barbour’s proposal for funding Mississippi’s Medicaid program does not include a cigarette tax increase. It is even more disappointing when you consider that a great majority of Mississippians and even a majority of legislators favor a $1 cigarette tax increase to fund Medicaid.

The Governor’s current proposal and the parliamentary rules of the special legislative session limit the ability of legislators to consider all available options to provide stabile funding for Medicaid. We call on the Governor to amend his proposal and allow for all funding options to be considered—including a $1 cigarette tax increase.

Since 2002, CCBH has advocated for the increase of Mississippi’s excise tax on cigarettes. The coalition is made up of more than 40 national, state and local organizations, including AARP, The American Cancer Society, The American Heart Association, The American Lung Association, Children’s Defense Fund, Mississippi Health Advocacy Program, and the Partnership for a Healthy Mississippi.

The Governor’s plan would essentially levy a “bed tax” on every non-Medicare hospital bed in the state. It makes more sense to tax a product that puts people in the hospital and costs the state millions than establishments that take care of the sick and ill.

Mississippi’s Medicaid program has a structural deficit that results in a $90-$100 million funding hole each year. A $1 cigarette tax increase is the solution to Medicaid’s long-term funding problem. The Stennis Institute of Government found that a $1.00 per pack cigarette tax increase would result in $174 million in new revenue. It would also prevent 46,100 kids alive today from ever becoming smokers—leading to over $1 billion in long-term health-care cost savings.

Smoking directly affects Medicaid’s budget. The Division of Medicaid alone spends $264 million on smoking related healthcare costs each year while the state’s excise tax on cigarettes only generates $46.9 million annually.