Editorial: Medicaid funding hole provides incentive for cigarette tax hike

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For the past two legislative sessions, we’ve urged state lawmakers to raise the state’s cigarette tax to help reduce the number of Hoosier smokers, cut tobacco-related deaths and lower health care costs for employers and the state at large.

We hope this third plea for action is more than charmed. The need for a cigarette tax hike has become even more apparent as legislators complain of a $1 billion hole in the state’s Medicaid budget that could limit funding increases for K-12 education and other state services next year.

A cigarette tax hike is a clear answer to the predicament. Not only could the increased revenue be dedicated to Medicaid funding, but a tax increase also promises to reduce the number of Hoosier smokers, thereby reducing the number of smoking-related ailments that help drive up the state’s Medicaid costs.

Interest groups such as the Indiana Chamber of Commerce, the Indy Chamber and the Indiana chapter of the American Cancer Society have been pushing for a cigarette tax hike much longer than we have—and are probably even more frustrated by the Legislature’s lack of action.

They have called for increasing the tax to $2 a pack, up from the current 99.5 cents. That seems reasonable because the current rate is the 39th-lowest in the country and hasn’t been increased since 2007.

Such an increase would generate an additional $365 million in revenue, which could help close the Medicaid funding gap. It also would reduce the health care costs that would have to be covered by Medicaid by deterring some Hoosiers from smoking, further closing the funding hole.

The additional money would give lawmakers a lot more wiggle room as they prepare to craft the next two-year state budget and look for ways to provide additional funding for K-12 education, roads and more.

The tax hike also holds the promise of providing tremendous health care savings for businesses. Some estimates say tobacco use results in $7.6 billion in health care costs and lost productivity in Indiana each year. Each additional employee who smokes costs the business $5,800 yearly.

More important, the tax hike would save lives by discouraging more Hoosiers from smoking.

More than 11,000 people in Indiana die prematurely each year from cigarette smoking, and more than 1,400 die prematurely from exposure to secondhand smoke, according to Rethink Tobacco Indiana.

And Indiana has more than its fair share of deaths. The Hoosier adult smoking rate is 10th-highest in the country, at 19.2%; the national rate is 13.7%.

Despite all the reasons to enact a tax hike, one hurdle the proposal likely will have to overcome is what one lawmaker called “idea fatigue”—the concept that the proposal has been around so long that it may never generate enough momentum to succeed.

Then there’s also opposition from the powerful tobacco lobby to overcome.

It’s time for lawmakers to look past those objections. We are all paying a price for Indiana’s heavy tobacco use. It’s past time for the Legislature to increase the cigarette tax.•

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2 thoughts on “Editorial: Medicaid funding hole provides incentive for cigarette tax hike

  1. When seeking a raise in the cigarette tax, why not go BIG and raise the tax to $3 per pack as our neighboring state Illinois? What are we afraid of? The benefits to our state would be huge on so many levels.

    And start the process at the beginning of this Legislative session – not a few days before the end. Be bold, look forward, Hoosiers lives and health would be better served.

  2. The points in this article for raising the sin tax on cigarette products would also apply to another product that is also causing high costs to our State economy and tragic damages to our communities . That product is ammunition . Put a sin tax on that !! Now there is a new funds raising idea for you ! If only our bought politicians had nerve to put the people’s well being above the gun lobbyists money .

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