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.

Sustained Revenue

The featured graph, presenting data from Massachusetts, shows how state cigarette tax revenues do not decline sharply in the years following a significant cigarette tax increase.

CCBH Addendum to the Governor's Tax Study Commission

A $1 CIGARETTE TAX INCREASE IS A HEALTHY INVESTMENT IN MISSISSIPPI’S FUTURE

Throughout your deliberations this summer the Communities for a Clean Bill of Health (CCBH) strongly encourages you to consider Mississippi’s full income statement. The recommendations of this body should come as a result of measured counsel on not only state revenues but state expenditures as well.

As our remarks will entail, tax policy can have a direct effect on not only the economics but the health and wellbeing of Mississippians. Due to the encompassing nature of this study, CCBH believes this should be the first of several opportunities for public comments to this Commission. Also, all subsequent meetings, including those of the newly announce subcommittees, should be open to the public.

The Governor’s Tax Study Commission is a noble undertaking and the service of those on this body is commendable. The recommendations you put forth should serve as an investment in Mississippi’s future. Any long-term investment in the state would be incomplete if it does not include policy aimed to improve the health and productivity of Mississippians. To that end, we recommend a $1 cigarette tax increase as the best option to ensure a health and financial impact that would move Mississippi forward.

Dr. Ed Thompson, State Health Officer, coined the phrase “worst firsts” to describe the fact that Mississippi leads the country in prevalence of diabetes, heart-disease death rate, population served by primary-care physicians and age-adjusted death rate.

Mississippi is also one of the worst in nation in terms of taxation on cigarettes. The state’s excise cigarette tax, 18 cents, has not been increased since 1985 and ranks 49th lowest in the nation. A $1 cigarette tax increase would provide both immediate revenue gains and a long-term health care investment because of the resulting reduction in youth and adult smoking.

Smoking declines produce enormous public and private sector savings that more than offset any state revenue reductions from fewer packs being sold. More specifically, smoking reductions among pregnant women and lower income households translate directly into reduced smoking-caused expenditures by the state’s Medicaid program.

Study after study— from the Centers for Disease Control and Prevention, the John C. Stennis Institute of Government, and even tobacco giant Phillip Morris – reveal that cigarette tax increases are the strongest way to reduce smoking, particularly among youth. It is only with a $1 increase that we reach the maximum health and financial benefits of a cigarette tax. Numerous studies have found that for every 10 percent increase in the price of cigarettes there is a 3 percent to 5 percent reduction in overall cigarette consumption.


A $1 cigarette tax increase would result in:

Ø 46,100 kids alive today, who will never becoming smokers
Ø 26,600 adults who would quit smoking
Ø 21.4% reduction in youth smoking
Ø $174 million in additional revenue
Ø $1 billion in Long-term healthcare

Looking at revenue side of $1 cigarette tax increase alone, cannot begin to tell the entire story of the impact it would have on Mississippi or the costs the state incurs due to smoking. The state spends $719 million annually on tobacco related health care expenditures. The Division of Medicaid alone spends $264 million to treat tobacco related illnesses while the current cigarette excise tax only generated $46 million in revenue in 2007. The state is essentially providing millions of dollars in health care subsidies for smokers. Smoking costs everyday Mississippians:

Ø 4,700 tobacco-related deaths annually in Mississippi
Ø $8.37 in smoking caused costs per pack of cigarettes sold in Mississippi
Ø $564 per Mississippi household to treat tobacco-related disease
Ø $1.41 billion smoking caused productivity losses

Significant tobacco tax increases always produce substantial net new revenues that last. In every single instance where a state has passed a significant cigarette tax increase, the state has enjoyed a substantial, sustained increase to its state cigarette tax revenues. This occurs, despite significant declines in smoking rates and taxed pack sales, because the increased tax per pack brings in much more new revenue than is lost by the declines in the number of packs sold and taxed.

House Concurrent Resolution 68

Rep. George Flaggs has put forth House Concurrent Resolution 68, which calls for the both the Senate and House to suspend deadline rules to consider HB 1013. The Medicaid Technical Amendment bill, which contained a $1 cigarette tax increase, died in the senate when it was not brought up for consideration by Senator Hob Bryant, chair the Senate Public Health & Welfare and Senator Dean Kirby, Chair Senate Finance Committee before the March 18 deadline.

HC 68 urges the House and Senate to take up HB 1013 now and address the funding problem of a program that provides health coverage to a fifth of Mississippi's residents. Passage of the resolution to suspend the rules requires a 2/3rds vote.

HC 68 may be brought up by the full House of Representatives next week. Urge your representative and your senator to vote for the rules suspension so that the members of legislative both bodies are allowed to vote on this important issue.

You may remember that in last year's legislative session, an attempt in the state senate to suspend the rules to bring up legislation that would increase the cigarette tax by $1 fell a few votes short. A rule's suspension was needed after former Senator Finance Committee Chairman Tommy Robertson-at the urging of the governor- refused to allow the bill to be considered in committee. Robertson and several other senators who voted against the rules suspension are no longer in the senate. Robertson failed to be re-elected-due in large part to cigarette tax issue.

A $1 cigarette tax increase is a win, win for Mississippi. It would save lives and save money by leading to a reduction in youth smoking while supplying the state with a dedicated source to fund Medicaid.

Contact your Representative or Senator @ (601) 359-3770

HC 68

Rep. George Flaggs has put forth House Concurrent Resolution 68. The resolution calls for the both the Senate and House to suspend the rules to consider HB 1013.

HB 1013 died in the senate when it was not brought up for consideration by the chairman of the Senate Public Health & Welfare and Finance Committees.

CALL THE CHAIRMEN

TAKE ACTION THIS WEEKEND!!!

Tell Chairmen Hob Bryan and Dean Kirby to let your senator vote on

HB 1013

CALL PUBLIC HEALTH & WELFARE CHAIR
HOB BRYAN @ (662) 256-9989

CALL FINANCE CHAIR
DEAN KIRBY @ (601) 932-1966

Thank you for your calls to the Lt. Governor and your support of a $1 cigarette tax increase. Your calls to Phil Bryant are having an impact on the status of HB 1013. It is vital that these two chairmen here from you on the importance of your senator being allowed to vote on HB 1013.

HB 1013 is the Medicaid technical amendment bill. The $1 cigarette tax increase in the bill would provide a dedicated source of funding for Mississippi's Division of Medicaid. The secure funding source- the cigarette tax increase-is much needed as the program is faced with a grave deficit. Without review of the legislation, thousands of children and elderly could loose their health insurance.

Over 630,000 of Mississippi's most vulnerable, the elderly and children, are at risk of loosing their health coverage if an agreement is not reached on Medicaid. The only viable option for a dedicated source of revenue to support Medicaid is the $1 cigarette tax increase. Medicaid and the cigarette tax must be addressed this session before legislators go home. Health care is too important to be loss in the game of politics!

H.B. 1013 is currently before the Senate Public Health & Welfare and Finance Committees.

Call Bryan and Kirby and tell them to LET YOUR SENATOR VOTE!!!

Senate chairmen should allow all senators to vote on a $1 cigarette tax increase and show their constituents how they stand on this important issue. The $1 cigarette tax increase would generate $174 million in new revenue while preventing thousands of kids from ever becoming smokers.

All senators should be given an opportunity to let their constituents know how they stand on this important issue. Committee chairmen should not make this decision in isolation. Chairmen should not pocket veto this bill by prohibiting their committee from voting. A vote by Senate committees is necessary and important to ensure that the democratic process works.

Tell Bryan and Kirby to LET YOUR SENATOR VOTE!

CALL THIS WEEKEND

HOB BRYAN @ (662) 256-9989

DEAN KIRBY @ (601) 932-1966

CALL PHIL

Ask the Lt. Governor to
LET THE SENATE VOTE!!!

H.B. 1013 has been referred
to the Senate Public Health & Welfare and Finance Committees.

Call Phil Bryant and tell him to
let the process work.

His Chairmen should allow Senators to vote on a $1 cigarette tax increase and show their constituents how they stand on this important issue.

Call the Lt. Governor @ 601-359-3200
Wednesday, March 5, 2008

Tell Phil Bryant to ensure there is:
Ø No Pocket Veto by his Chairmen
Ø A Floor Vote by the full Senate on a $1 Cigarette Tax increase

HB 1013 passed the Mississippi House of Representatives and is now before the state Senate Public Health & Welfare and Finance Committees.The measure contains a $1.00 cigarette tax that would raise $174 million in new revenue. These additional resources will be used to fund Medicaid, a health care safety net for our children and elderly, and a trauma care system

Call Lt Governor Bryant and tell him Let the Senate Vote. All Senators should be given an opportunity to let their constituents know how they stand on this important issue. Committee chairman should not make this decision in isolation. Chairman should not pocket veto this bill by prohibiting their committee from voting. A vote by Senate committees is necessary and important to ensure that the democratic process works.

Call the Lt. Governor @ 601-359-3200