Cigarette Tax Necessary for Health Medical System

Gov. Timothy M. Kaine and his staff are well aware of the impact the cuts they’ve recommended will have on average Virginians. The governor and his advisers, in scouring the state’s budget for areas to trim, tried their best to limit the damage to sensitive, core areas such as public safety, public education and social services. Unfortunately, though, even core services had to come under the budget-cutters’ scalpels, including health care for the most vulnerable in our society. Kaine’s budget cuts include a proposal to decrease the Medicaid reimbursement rate to hospitals from 75 percent to 70 percent of the cost per patient. Doing so would achieve a savings of More than $400 million. To protect Medicaid recipients from deeper cuts, the governor is asking the General Assembly to increase the state’s tax on a pack of Cigarettes from 30 cents to 60 cents. Doing so would raise approximately $155 million for Medicaid. (Virginia, by the way, has the 47th-loWest cigarette tax in the nation, lower even than North Carolina.) smokers themselves cost the economy More than the general population. The Centers for Disease Control estimates they cost the state economy $2.2 billion annually in increased medical expenses. Under the governor’s proposal, the state’s health care system would endure painful cuts. If the Republican-dominated House of Delegates refuses to increase the cigarette tax, the results would be catastrophic. Here in Central Virginia, Centra Health is already dealing with the effects of the recession. Hospital CEO George Dawson, speaking with The News & Advance editorial board last week, detailed the steps the nonprofit’s board of directors has already taken, including salary freezes for at least the first three months of 2009 and keeping a close eye on the critical patient care positions. If the Assembly were to pass the governor’s budget as proposed, hospital inpatient reimbursements for Medicaid would drop by $83 million across the state; Centra would be in for a $4.4 million hit. If the Assembly’s anti-tax wing of the Republican Party succeeds in killing the higher cigarette tax and fails to find $155 million in other areas of the budget, hospitals across the state could be devastated. The miserly 70 percent reimbursement Gov. Kaine proposes in his 2009 budget amendments would drop to just 50 percent. Under that worst-case scenario, Centra alone would be in for a hit of More than $17.3 million. Centra operates with a 3 percent margin, according to Dawson. That money is reinvested in Central Virginia in the form of health care and education programs, state-of-the-art equipment, physician recruitment and so on. That would be gone in a puff of smoke … pun definitely intended. And from there matters grow More dire for hospitals on the frontlines of health care in Virginia. Hospitals already lose money on Medicaid admissions with the current reimbursement rate of 75 percent of costs. They also lose money, though not as much, on Medicare admissions, which are the largest portion of patients at Centra. The only patient group left to recoup those losses from are people with traditional insurance, and at Centra they account for only 28 percent of the inpatient admissions. And this would not be a problem only for Centra and Central Virginia. Hospitals across the commonwealth would be adversely affected by these cuts. Insured patients could see their bills rise. Premiums will increase, putting More pressure on employers trying to provide benefits to their employees and perhaps forcing companies to stop providing health insurance all together. And in turn many of those formerly insured patients could become Medicaid patients, putting further strain on the system. It’s a vicious circle that would only feed on itself. The anti-tax wing of the Republican Party in the General Assembly seems deadset on killing the cigarette tax hike, and the odds of their finding money elsewhere in a tight budget to replace the $155 million it would have generated are remote. It’s therefore highly ironic that, in their zeal to be seen as fulfilling their “no new taxes” promises, the anti-tax Republicans will in fact be enacting a cost, albeit a hidden tax, on millions of working Virginia families and employers. Folks who work hard and pay their bills and employers trying to do the right thing by providing health benefits could see their costs increase exponentially. They’ll be the ones paying for the anti-tax wing’s political purity. The anti-tax Republicans who want to kill the hike in the tobacco tax so they can say they held the line on new taxes are just not coming clean with the public. They know full well the consequences of their inaction; they know costs would likely rise for the state’s middle class. They just place More importance on their ideological purity More than they do on doing what’s best for the commonwealth and its citizens. We urge the members of Central Virginia’s legislative delegation, whose contact information we’ve listed with this editorial, to realize that this is one of those times when ideology and politics need to be set aside. They need to exhibit the leadership we expect of them and vote to raise the cigarette tax to prevent deeper Medicaid cuts. Be courageous; stand up and do the right thing.