Tobacco tax boost keeps health care accessible

Not surprisingly, there’s been some pushback against my legislation to increase Illinois’ cigarette tax an additional $ .50 per pack the first year and another $.50  per pack the next year . The underlying rationale behind the plan is two-fold: First, the proceeds of the increase will go exclusively into a fund that will leverage additional matching federal funds to pay outstanding Medicaid-based healthcare expenses. Assuming that Illinois meets the criteria of the federal stimulus initiative of reducing its payment cycle to 30 days for providers of Medicaid-reimbursable healthcare services, e.g., hospitals, nursing homes, community-based agencies serving the mentally ill and developmentally disabled, every $1.00 earmarked to meeting our state’s Medicaid obligations has an actual value of $2.50 over the next couple of budget years.

Consequently, over the next two fiscal years the proposed cigarette tax increase will generate over $1 billion towards paying our outstanding healthcare bills. That calculation inherently acknowledges a drop in tax revenues the second year of the tobacco tax increase as the result of reduced usage, which is a behavior that is the second objective of the cigarette tax increase. Supporters of this proposal like the Campaign for Tobacco-Free Kids, the American Lung Association, the American Heart Association and the Respiratory Health Association of Metropolitan Chicago effectively argue that each 10 percent price increase reduces youth smoking rates by 6.5 percent, adult smoking rates by 2 percent and total consumption of tobacco by 4 percent. According to recent estimates by the advocates, an estimated 16,600 Illinois residents die from smoking-related diseases each year, and smoking is linked to $4 billion in annual health-care costs and $1.5 billion in Medicaid costs in Illinois.

Those are numbers that simply can’t be shuffled off the state’s healthcare ledger without acknowledgement. There is indeed a tangible financial cost to tobacco-related illness, one which we all end up paying.

Keep an eye on Senate Bill 44.  It took two tries to pass the Senate with nary a vote to spare; the battle now moves to the House.