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Poll: Tax Tobacco to Pay for Medicaid?

by ARLnow.com January 13, 2011 at 12:48 pm 6,065 60 Comments

Del. Patrick Hope (D), who represents part of Arlington in the Virginia House of Delegates, has proposed a bill that would raise taxes on tobacco products to fill several gaps in the state’s Medicaid budget.

The bill would raise the tax on cigarettes from the current $0.015 per cigarette to the national average of $0.0725 per cigarette, or $1.45 per pack. Virginia currently has the lowest cigarette tax in the U.S.

The bill would also raise the tax on snuff and other tobacco products. Cigars would be taxed at 50 percent of the wholesale price, up from 10 percent.

Hope’s legislation would direct 52 percent of the additional tax revenue (estimated at about $250 million) to fund Medicare waivers for intellectual and developmental disabilities. Forty percent of the revenue (about $150 million) would go to Medicaid reimbursement for physicians and hospitals. And 8 percent (about $30 million) would be split among the state tobacco quitline and a youth tobacco prevention program.

“Virginia’s Medicaid budget is on an unsustainable course,” Hope said in a statement. “Cuts to Medicaid only result in higher costs down the road. The sick end up in the hospital and ERs for costly medical procedures and avoidable hospitalizations; and individuals with disabilities wind up in institutions rather than being served in their communities for a fraction of the cost. This proposal will take a significant step in preserving and protecting the Medicaid program for future generations and will fulfill a promise to Virginia’s families.”

What do you think?

Virginia has traditionally been one of the more tobacco-friendly states in the country, making consideration and passage of such a bill an uphill battle. Hope has received public words of encouragement, however, from a number of influential health-related organizations, like the Medical Society of Virginia, the American Cancer Society and the American Heart Association.

See the press release prepared by Hope’s office, after the jump.

RICHMOND – As the General Assembly begins its work for the 2011 legislative session, Del. Patrick Hope announced legislation that will raise the cigarette tax to $1.45 and dedicate the revenue to fill several gaps in Virginia’s Medicaid budget.

“Virginia’s Medicaid budget is on an unsustainable course,” Del. Hope said. “This bill will not only sustain the program but it will put it on a pathway to slow the growth and save taxpayers money.”

Hope’s bill, HB 1815 – Medicaid Preservation and Protection Act will:

  • Raise the excise tax on cigarettes by $1.15, from $0.30 to the national average of $1.45
  • Raise the excise tax on other tobacco products from 10% of the wholesale price to 50% of the wholesale price
  • Direct 52% of the new revenue (approximately $253.8 million) to fund Medicaid waivers for intellectual and developmental disabilities
  • Direct 40% of the new revenue (approximately $155.9 million) to Medicaid reimbursement for physicians and hospitals
  • Direct 8% (approximately $31.2 million) to fund tobacco cessation and prevention programs in the Commonwealth.

Virginia currently ranks in the bottom ten states (45th) for its spending per capita income towards services for people with developmental disabilities. More than 6,400 people with intellectual and related developmental disabilities are on waiting lists for the Intellectual Disability (ID) and Developmental Disability (IFDDS) Waivers, the funding mechanisms that provide community-based services. The Department of Behavioral Health and Developmental Services has reported that over 50% of the people on the ID Waiver waiting list, 2,946, meet the state’s “urgent need” criteria

“Del. Hope’s bill will help the Commonwealth keep its promise to eliminate the ID and IFDDS Waiver waiting lists,” said Jill Egle, co-executive director of The Arc of Northern Virginia. “In 2009, the General Assembly unanimously passed legislation stating the intent to eliminate the ID and IFDDS Waiver waiting lists by the 2018-2020 Biennium. Unfortunately, the funding necessary to achieve this important goal has not been made available and the waiting list has grown due to inaction.”

Medicaid payment rates for physicians and other healthcare providers are scheduled to be cut by four percent on July 1, 2011. Revenue from HB 1815 would offset that cut.

“It is becoming increasingly difficult for physicians to maintain their practices and continue to care for the growing number of Medicaid enrollees when they are providing services at below cost. In a recent survey over half of the physicians who responded said that the additional cuts scheduled for July 1 will force them to make personnel changes or stop taking new Medicaid patients. It’s an unfortunate and personally difficult dilemma for many of us who chose this profession so that we could help those in need,” said Medical Society of Virginia President Cynthia C. Romero, M.D., FAAFP.

Members of the public health community applauded the proposal to raise the cigarette tax. “The evidence is clear that increasing the price of cigarettes is one of the most effective ways to reduce smoking, especially among children and pregnant women,” said Keenan Caldwell, director of government relations for the American Cancer Society. “Preliminary evidence confirms that every state that has significantly increased its cigarette tax in recent years has enjoyed substantial increases in revenue, even while reducing cigarette sales. Virginia has nothing to lose and everything to gain from raising its cigarette tax.”

The Annual health care expenditures in Virginia directly caused by smoking are $2.08 billion, with $401 million covered by the state Medicaid program.

According to the Campaign for Tobacco-Free Kids, a $1.15 increase in Virginia’s cigarette tax would prevent more than 73,800 Virginia kids alive today from becoming smokers and prompt 45,500 adult smokers to quit, saving 35,600 Virginians from a premature, smoking-caused death.

“A significant tobacco tax increase combined with funding for tobacco prevention and cessation programs will deliver the maximum health and economic benefit for Virginia. These steps will prevent kids from starting to smoke, help smokers quit, save lives, and save taxpayers money by reducing smoking-caused health care costs,” said Cathleen Smith Grzesiek, senior director of government relations for the American Heart Association.

Del. Hope concluded, “We cannot afford doing business as usual. Cuts to Medicaid only result in higher costs down the road. The sick end up in the hospital and ERs for costly medical procedures and avoidable hospitalizations; and individuals with disabilities wind up in institutions rather than being served in their communities for a fraction of the cost. This proposal will take a significant step in preserving and protecting the Medicaid program for future generations and will fulfill a promise to Virginia’s families.”

Patrick A. Hope is a Member of the Virginia General Assembly as the Delegate from the 47th District representing part of Arlington County. He serves on the House Courts of Justice Committee and House Health, Welfare, and Institutions Committee.

  • Michelle

    As a former smoker, this is great news. VA has the cheapest cigarettes in the area compared to DC and Maryland. However, I don’t think that having more expensive cigarettes will deter people from smoking. I lived in Chicago where smokes were $10+ per pack and I still smoked a pack a day.

    • NPGMBR

      I think its hillarious how the anti-smoking lobby talks about how much smokers burden the medical systems with their illness yet its the smokers that pay for the medical issues of people that don’t smoke.

      Sure do whish im alive the day smoking becomes a thing of the past cause I’d love to see what product they attack next to make up for the tax revenue lost from tobacco.

  • Jason S

    We could save money by spending less on Medicaid.

    • mehoo

      Death panels? 😉

      • Jason S

        Well, I wouldn’t say, “death panels” which is a loaded phrase. Rather than say “who must die” (all of us), it would be “who cannot get treatment paid for by society at large.” People cannot seem to wrap their minds around two immutable facts: people die, we have finite resources. When people accept these two things, they will become more content.

        • mehoo

          “who cannot get treatment paid for by society at large.”

          What’s that mean though? People who can’t get help shouldn’t get help? Huh?

    • Thanks for the Laugh, Arlington

      Exactly. Why raise taxes first to pay for a program that Delegate Hope admits is unsustainable? Start with Medicaid reform first. Get the program to where it is sustainable. Then we’ll debate how much money to take from people in order to pay for it.

  • ClarendonKing

    I would like a poll-tax to be instituted. You pay 5 dollars for every time you want to go out and vote. Money should go to the deficit.

    • mehoo

      Hey, awesome idea! Except for being completely forbidden by the Constitution.

  • S

    As a smoker myself, I have no problem with this. While it pleases my pocket, I am disgusted at how cheap cigarettes are here. I would totally support any increase in the cost, especially given where the increased funding is proposed to be spent.
    Raising the age at which one can purchase cigarettes by one each year would be a better option if reducing the number of smokers is the goal, but that will never happen.

  • Jacob

    Let’s tax poor people to help poor people. That makes sense.

    • Snookie

      Obama and Boehner- picture of the poor.

    • Sgt. Hartman

      “Skin in the game….”–BHO

    • R.Griffon

      If they’re so poor then why are they spending money on such a frivolous item (and harmful ones at that) in the first place? Are you also afraid they might raise the price of alcohol for winos?

      • Jacob

        A typically arrogant view of upper middle class. Maybe people smoke because they enjoy it?

        • S

          Yes, people smoke because they enjoy it, and yes, there is a higher proportion of smokers among the poor – but let’s not confuse causation with correlation. Just because someone is poor does not mean that they must smoke.

        • R.Griffon

          Maybe that response is typical for a reason. There’s nothing arrogant about responsibility and a sense of priorities.

          I enjoy high quality imported beers, but I didn’t get any when I was broke. Care to guess why?

          • mehoo

            When you’re poor, Bud Lite tastes awesome?

          • find4more

            When you were broke, did you cut out beer and all other kinds of alcoholic beverage altogether? It’s nice to have a choice of how much to pay for what you want. The government, on the other hand, is giving smokers the choice of buying cigarettes the normal route and getting raped, or buying on the black market. At the moment, Virginia is getting tobacco sales from smokers in surrounding states with higher taxes. That tax revenue from out-of-state will go away; and instead of American cigarettes, poorer VA smokers will be buying bootlegged Chinese cigarettes. As Ryan points out, what happened to the MSA money?


  • KalashniKEV

    This guy is just full of good ideas…

  • NorthArlingtonHE

    Enough of the damn taxes.

    And what’s up with all the Arlington delegates coming up with these freedom eliminating bills?

    • Quit Whining

      Could not agree more!

    • tax the stupid

      Since I don’t smoke, I would pay no additional tax. I’ve never understood the logic behind the ‘no taxes’ crowd…in this way. If the smoking companies raised the price of cigarettes by, let’s say 25 cents a pack, would there be a public outcry that the smoking companies are raising revenue and keeping the profits themselves? Would the public decry the action as an attack on our freedom (to keep money in our pocket)? No, probably not. But when, We The People, aka the government, raises revenue to pay for a service created by “The People” then the ‘no new taxes’ crowd complains that we are headed towards tyranny. How so? We elected these people. There is no monarch or dictator that said so. The government officials are not keeping the tax revenue for themselves. They are using it to counter-effect all of the negative effects from the number one cause of preventable cancer and preventable heart disease. My father died because of smoking. He probably would have smoked no matter what the price, since he was addicted to nicotine, but the price of smokes is a factor in whether a kid starts smoking. I am all in favor of less kids smoking, so raise the price, make it unaffordable. Use the tax revenue to help pay for the victims of smoking. It is not an attack on freedom, it is called governance. You are free to smoke or not smoke. The Constitution does mandate cheap cigarettes.

    • t-cough

      What the heck are you talking about? “Freedom eliminating bills”? You are still free to purchase cigarettes! Get a grip! You may pay more for them, but you can still purchase them. Bad analogy on your part – very bad.

      • Darwin

        Yes but not in many public places, if people demanded no smoking in bars then owners would have done that on their own and their business would take away business from smoking bars and they would prosper. The government instead legislated this. Why not offer smoking licenses at least like a liquor license? Customers going into a place with one would do so willingly and not be a “victim” of second hand smoke.

    • KalashniKEV

      Even I wouldn’t call it “freedom eliminating.”

      I don’t smoke or know anyone who smokes… and I *should* support this on the grounds that it punishes poor people, but I just don’t see how they’re inventing these crazy taxes, especially the bizarre annual car tax we all pay.

      Can we just lower this guy’s salary and throw that money into Medicare? Or at least garnish his wages until he starts acting right…

      • mehoo

        You want to punish the poor and disabled? Just cut Medicaid (not Medicare). Some will get much more expensive emergency care that you’ll have to pay for indirectly anyway, but a few will just get sicker and poorer, so there’s that.

  • G

    While he’s at it I wish he would introduce some legislation that would allow condo associations to ban smoking in individual condos. The guy in the unit above mine smokes like a chimney and even though he does it within his own unit, it spreads throughout the entire building and seeps into everyone else’s unit. The guy next door to him complained because his wife is pregnant and also has an infant that is being forced to inhale this stuff on a daily basis. Of course the smoker still refuses to go outside after several complaints and the condo board has no power to stop him…

    • Quit Whining

      And why doesn’t he introduce legislation that would allow condo associations to ban people from cooking foods that stink in their condos because it stinks up the whole building and I can smell it in my unit. I understand smoking is a health hazard to others, but enough with wanting legislation and laws for every little thing. If a condo association wants to create a smoke free building and make that a by-law/requirement when buying into it then fine. But if you don’t like having to deal with living with neighbors in close quarters like in condo buildings, don’t buy a condo. What other legal activities do you want them to legislate when you are inside your own residence?? And no, I’m not a smoker.

      • mehoo

        “And why doesn’t he introduce legislation that would allow condo associations to ban people from cooking foods that stink in their condos because it stinks up the whole building and I can smell it in my unit. I understand smoking is a health hazard to others”

        You answered your own question.

        It’s SMOKE, people. If someone down the hall was burning paper or wood or whatever in their living room without a chimney, you’d call the fire department and they’d give you oxygen. SMOKE.

      • G

        “If a condo association wants to create a smoke free building and make that a by-law/requirement when buying into it then fine.”

        The whole point to my comment was that condos do not have the power to do this. I am simply asking for the state of Virginia to give condo associations the power to make this a bylaw.

      • G

        Also, you tell me not to buy a condo? I work in Arlington and wanted to live here, but I can’t afford a $400-$500k single family home. A cheap condo was pretty much my only option if I wanted to own a home in Arlington. Not everyone can afford a single family home. These people shouldn’t be forced to inhale smoke in their own home.

    • mehoo

      Yeah, that brings back bad memories. I lived next to a smoking couple. He finally started going out in the hallway to smoke (which made it leak into our unit even more) when his wife had a heart attack – and had to quit smoking. You’d think he would figure it out too.

  • dss

    How bout legislating the amount of nicotine in cigarettes and reducing the amount over 3 years to the point that they are not addictive? That would help the poor quit, save money and lower health care costs Naw, that’s a stupid idea……

  • CrystalMikey

    I don’t smoke, and would love my friends to quit…so bring it on!

  • Arlwhenever

    The premise that there is a meaningful relationship between state excise taxes on cigarettes and smoking is false.

    Virginia’s adult smoking rate (16.4%) is virtually the same as very high tax jurisdictions like DC (16.2% at $2.50 a pack) and New York state (16.7% at $4.35 a pack). See…



    New York and DC have, we know, ultra fiscally responsible governments that most assuredly use revenues from cigarette taxes, in the words of one poster, soley to counteract the effects of smoking. Sure. Right.

    As a former long-time smoker I can attest that a dollar a pack difference won’t overcome a nicotine addiction, the only thing that spurs smoking cessation ultimately is fear — fear of cancer and fear of death.

  • Dan

    I quit smoking over ten years ago and just reading this has me pining for a smoke.
    Amazing just how addictive those little rascals are…..

  • V Dizzle

    Smoking gave me herpes. They should only sell tobacco in ABC stores.

  • OddNumber

    I’m not a smoker and am not a fan of being in areas where people are smoking. However, it does irk me to hear proposals to increase taxes on a small group of people to provide a benefit to a larger set when the only reason is because there exists a budgetary gap. We should all share the burden of these programs (or get rid of them).

    Although I have to admit I would be less likely to object to an additional cigarette tax if it were pitched as a way to discourage an unhealthy habit. I feel better about helping out my neighbor as opposed to swiping his cash to make up for a budget crisis I can’t figure out, but I guess it is the same thing.

    • G

      Smokers, especially smokers who are on medicaid makes costs (i.e. insurance premiums and taxes) go up for everyone. Taxing smokers and putting it towards medicaid and medicare makes sense. It’s a known fact that old people who smoke are draining resources from medicare, then again, they also die earlier so the cost isn’t as bad as it could potentially be.

      • mehoo


  • OX4

    It’s not a tax against the poor, or a tax against lower classes. All classes smoke. It’s called a “sin tax” for a reason. Prices of vice goods like tobacco are inelastic because the change in price doesn’t usually cause a change in demand. People will most likely keep buying the same amount at a higher price, thus ensuring a nice stream of tax revenue.

    • Jim

      It will hurt the poor’s discretionary income disproportionately. I guess that’s one way to have people pay for their own healthcare. However, it’s an inefficient tax that is horribly regressive. It will encourage people to buy them elsewhere.

      Study history.

  • Arlington, Northside

    50% tax on CIGARS!!?!?!?!?!?!?!

    Mr. hope should go study what happened to revenue and the boating industry when the federal luxury tax was instituted in 1991. Distroyed the industry and it was only a 10% taxH

  • givemeabreak

    They should tax McDonald’s and Coca-Cola and Little Debbie if they want to go after taxes based on “unhealthy living”! The obesity rate in this country is horrendous and the health insurance needed to cover everything from diabetes to heart disease because of it should not be overlooked just because there’s no smoke associated with that unhealthy living!

    • V Dizzle

      ..only the hidden smoke of flatulence.

  • CMG

    Part of the point that people are forgetting is that smokers are less healthy and therefore cost more to the system. As taxpayers, we pay for their health care no matter what- if it’s their choice, they might as well take on more of the share.

  • GR

    To all the naysayers, I would just point out Del. Hope’s factually correct statement: “Cuts to Medicaid only result in higher costs down the road. The sick end up in the hospital and ERs for costly medical procedures and avoidable hospitalizations; and individuals with disabilities wind up in institutions rather than being served in their communities for a fraction of the cost.”

    The Governor’s budget proposes deep cuts to core services for the disabled. People with developmental or intellectual disabilities can live in their own homes with Medicaid supports for a fraction of the cost of what it costs to live in a group home or foster care ($60,000 a year and up) or what it costs to live in an institution ($100,000 a year and up). I have a family member who receives these services at home, and it costs nowhere near $60,000 a year.

    As Del. Hope said in a moving speech before the General Assembly last year, we don’t let people with disabilities roam the streets – they have to live somewhere. Do we as taxpayers prefer cost-effective (and more humane) care in their own homes or more costly care elsewhere?

    • mehoo

      Thanks for a great comment GR. It’s sad that Virginia has thousands of people with disabilities on waiting lists for services. And on the other hand, it still clings to the discredited and costly state institutions it pledged to close long ago in favor of better, and cheaper, community care.

  • G::NativeArlingtonian

    Its pretty simple really: you make a choice to smoke, you must deal with the consequences of your actions. In this day and age (unlike for many of our parents) the health ramification of smoking are well known, and not debated. Smoking causes cancer, heart disease, etc. Smoking is very addictive compared to alcohol (for the general public [those predisposed don’t count in this discussion]). It appears to have no socially redeeming quality and causes the cost of medical care and insurance to go up as non-smokers have to pay for the care of those that do. If raising the cost of tobacco raises some extra funds for medicare, discourages some people from taking up smoking in the first place due to the cost, and potentially pushes others into quitting, then I am all for it. Let us also not forget that smoking is a luxury. Again, you make a choice to spend your money where you do.

  • Pikester

    Why institute a tax that depends on someone’s addiction to sustain itself? Where is the morality in that? If it is successful in forcing people to quit smoking, then what?

    • mehoo

      Good point, but in this case, if it’s successful in making people quit smoking, it will eliminate lots of Medicaid expenses caused by smoking in the first place.

    • Darwin

      Good insight. I had to laugh, DC for example instituted the $.05 a bag tax about a year ago to force people to be green but they of course could care less about the environment and were instead hoping people would keep using plastic bags and they would rake in the cash. Well people did change and they did a news story with politicians crying about how their projected juicy tax funds came up short! Darn those tax payers for actually changing to help the environment!

      • mehoo

        Can you find that article and post a link? Thanks.

  • Darwin

    I am okay with this bill in part but a 500% increase (10% to 50%) on cigars is outrageous! I’m glad to see a representative acknowledge health care is unsustainable and with the federal government forcing coverage of more people it will be getting worse. Democrats have to realize if they want to be like socialist Europe with hand outs to everyone then they must in turn have European tax rates of around 50%.

  • Jim

    I had always thought Missouri’s tax rate was lower.

  • Arl_Bill

    How truth in taxation, as in a sticker on the gas pump telling folks they’re paying $0.37/gal in federal($0.184/gal) and Virginia taxes. A 50% tax on cigars is insane, people will just go out of state or have them shipped in. Similar to the >20% premium people pay for alcohol at the Virginia ABC stores vice Maryland. If people have an alternative, they adapt, but so do the weasels in Richmond. Rmember when they were going to phase out the car tax? Well it’s still around, but after people discovered that only cars under $20k got a tax break and if you had a car worth under $3000 you paid no tax, people started hanging on to their cars. So our so-called friends in Richmond decided on a 10% car repair tax to recoup their losses. How about getting off our backs Richmond?

    • mehoo

      The reason they keep coming up with new taxes is they keep using repeal of old ones for political gain. They need revenue. The car tax cut was a ridiculous gimmick that got a governor elected. And then the state agreed to reimburse localities for the lost revenue from the cut in the car tax! No decrease in overall tax burden, just rearranging the cups. And that’s the voters’ fault for constantly whining about the taxes (the ones that they see the most at least), but still wanting the same level of service from government.

  • Ryan

    Here’s the problem: VA has the second lowest tax rate in the country on cigarettes and is the lowest on the east coast. This makes VA the source state to every cigarette trafficker this side of the Mississippi River. And don’t think it’s just a couple of shaddy out-of-state retailers that are coming to our state for cheap smokes. Gangs and organized crime are in our neighborhoods daily to capitalize on our cheap smokes. So if you up the tax, the crooks go away, right? Perhaps, but it’s worth a shot. To the point of raising revenue for Medicad, well, Google the Master Settlement Agreement (MSA) and you’ll discover that VA, along with 45 other states, are collecting millions of dollars annually from dozens of cigarette manufacturers specifically for this purpose (funding Medicad). In fact, that money is supposed to go to other anti-tobacco programs as well, such as youth anti-smoking education, enforcement of tobacco laws, etc. When the states sued “Big Tobacco” back in the 1990s, tobacco-related illnesses draining state Medicad funds was part of the moral and legal foundation of the argument. “Big Tobacco” settled and began making payments to the settling states starting in 1999. Now, here we are some 11 years and ~$1.5 billion in MSA money later and VA is saying, apparently, that those millions of dollars from “Big Tobacco” isn’t enough. Is that really true? Or is VA inappropriately using that settlement money to fund other projects? Look, tax the smokers to pay for the smokers; I’m okay with that. Keep the kids out of the stores and crooks out of the state. But this idea that you need more money for Medicad is hard to swallow in light of what VA gets paid every year as a result of the MSA. This speaks volumes to the notion that VA is mismanaging MSA funds and raises the question for me: If I can’t trust you to use MSA money for it’s intended purpose, why am I to believe the revenue generated from these new taxes will go toward the SAME intended purpose? Furthermore, what confidence do I have that you will use other tax revenue for it’s intended purpose?

  • Dave

    Totally support this bill when it goes to fund an area in which va is sorely lagging. People with such disabilities are humans and need supports. Institutions are more expensive than community supports and va is 47th out of 50 in providing such supports. Arlington is lucky to have patrick hope as a delegate. A man who truly cares about ALL citizens.


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