Debating the Cigarette Tax
I'm not completely sure where I stand on Governor Doyle's proposal to increase the cigarette tax by $1.25 per pack. While I'm inclined to support it, how I ultimately feel is dependent upon the arguments that can be made for and against it.
And the argument that carries virtually no sway with me is the one that says, "It's someone's personal choice to smoke, so why should there be a tax that targets them?"
Crack addicts could, and probably do, argue the same thing about drug laws -- they're just doing it to themselves, so why should the state hassle them?
But, the fact is, we make decisions as a society based on what makes the most sense for the public as a whole. It's been determined -- and rightfully so -- that crack is detrimental enough to society to warrant outlawing it. And smoking, it's been pretty well documented, is an endeavor that has significant public costs (even for those who don't choose to smoke themselves) that don't necessarily warrant outlawing it, but do open the door for regulation.
So the real arguments that hold sway with me -- and should, in my view, with our lawmakers -- are the ones that focus on the actual documented cost of smoking to the state.
How much is being spent each year to treat smoke-related illnesses and complications? Does the current tax on tobacco adequately cover all of those costs? Would an additional tax significantly improve the health of the state and, subsequently, lower health care costs?
If you look at the numbers by the Campaign for Tobacco-Free Kids, a $1.25 per pack increase in the cigarette tax makes a whole lot of fiscal sense.
According to the group, smoking directly adds $2.02 billion to the state health care tab each year, and that doesn't even include costs associated with exposure to secondhand smoke, smoke-related fires, or the costs of other forms of tobacco (chew, cigars, pipes, etc.).
But perhaps even more directly related to the discussion of a cigarette tax increase -- because I'm sure the tobacco lobby would gladly contest those cost numbers -- is how much the state itself actually spends on explicitly tobacco-related afflictions each year. And that number, for the Medicaid program alone, was $422 million in 2003, while more recent estimates put the figure at $480 million.
So let's do the math. The state is directly spending $450 million (splitting the difference of the two estimates) of its already shorthanded Medicaid dollars to treat tobacco-related complications. A $1.25 cigarette tax increase would bring in an estimated $250 million per year, which would free up over half of the Medicaid money now spent on tobacco-related treatments, money that could be used for other health care needs (such as reducing the "hidden health care tax" hospitals are forced to pass on to the rest of us because of low Medicaid reimbursement rates).
On the other hand, there are legitimate concerns about the cigarette tax. For instance, I share a concern with some on the right about whether the revenue from a cigarette tax would be truly used to off-set the state expenditures for tobacco-related ailments, particularly in the long run. In other words, is the segregated fund that's supposed to be created going to remain truly segregated? Is there a way to legally ensure that the increased revenue is used for its orginally intended purpose now and in the future?
In the end, it's these types of arguments that should carry the day at the Capital this spring on the question of the cigarette tax, not merely rhetoric about personal freedom and choice, because what smoking means for the state as a whole doesn't stop at the personal decision to reach for a light.
UPDATE: It appears an identical cigarette tax debate is brewing in Maryland.
And the argument that carries virtually no sway with me is the one that says, "It's someone's personal choice to smoke, so why should there be a tax that targets them?"
Crack addicts could, and probably do, argue the same thing about drug laws -- they're just doing it to themselves, so why should the state hassle them?
But, the fact is, we make decisions as a society based on what makes the most sense for the public as a whole. It's been determined -- and rightfully so -- that crack is detrimental enough to society to warrant outlawing it. And smoking, it's been pretty well documented, is an endeavor that has significant public costs (even for those who don't choose to smoke themselves) that don't necessarily warrant outlawing it, but do open the door for regulation.
So the real arguments that hold sway with me -- and should, in my view, with our lawmakers -- are the ones that focus on the actual documented cost of smoking to the state.
How much is being spent each year to treat smoke-related illnesses and complications? Does the current tax on tobacco adequately cover all of those costs? Would an additional tax significantly improve the health of the state and, subsequently, lower health care costs?
If you look at the numbers by the Campaign for Tobacco-Free Kids, a $1.25 per pack increase in the cigarette tax makes a whole lot of fiscal sense.
According to the group, smoking directly adds $2.02 billion to the state health care tab each year, and that doesn't even include costs associated with exposure to secondhand smoke, smoke-related fires, or the costs of other forms of tobacco (chew, cigars, pipes, etc.).
But perhaps even more directly related to the discussion of a cigarette tax increase -- because I'm sure the tobacco lobby would gladly contest those cost numbers -- is how much the state itself actually spends on explicitly tobacco-related afflictions each year. And that number, for the Medicaid program alone, was $422 million in 2003, while more recent estimates put the figure at $480 million.
So let's do the math. The state is directly spending $450 million (splitting the difference of the two estimates) of its already shorthanded Medicaid dollars to treat tobacco-related complications. A $1.25 cigarette tax increase would bring in an estimated $250 million per year, which would free up over half of the Medicaid money now spent on tobacco-related treatments, money that could be used for other health care needs (such as reducing the "hidden health care tax" hospitals are forced to pass on to the rest of us because of low Medicaid reimbursement rates).
On the other hand, there are legitimate concerns about the cigarette tax. For instance, I share a concern with some on the right about whether the revenue from a cigarette tax would be truly used to off-set the state expenditures for tobacco-related ailments, particularly in the long run. In other words, is the segregated fund that's supposed to be created going to remain truly segregated? Is there a way to legally ensure that the increased revenue is used for its orginally intended purpose now and in the future?
In the end, it's these types of arguments that should carry the day at the Capital this spring on the question of the cigarette tax, not merely rhetoric about personal freedom and choice, because what smoking means for the state as a whole doesn't stop at the personal decision to reach for a light.
UPDATE: It appears an identical cigarette tax debate is brewing in Maryland.
posted by Seth Zlotocha at Thursday, January 25, 2007
14 Comments:
I realize this isn't the most persuasive argument, but I don't want the tax raised because I smoke. I happen to enjoy smoking. I'm willing to smoke outdoors. I don't smoke in my own home even.
If we are going to talk about the healthcare side of the equation, we need to first strip out the cost of treatment of smokers who live past the life expectancy. From a public policy standpoint, the fact that a 85-year-old man died of lung cancer is insignifant. And if we are going to be true numbers folks looking at the public benefit, we should really deal with exceptional costs after age 60, e.g. retirement years. The last two years of life are generally going to consume half a man's healthcare dollars regardless of causation. The woman who dies at 64 of breast cancer is just as costly as the man who dies at 64 of lung cancer.
There are no pictures on TV of grandchilren weaping at the bedside of their 90-year-old grandfather because he is going to die from smoking. The TV ads always target the sub-60 fathers.
I think you're conflating the working class and the pro-smoking contingents too much. Although there is evidence that lower income people are more likely to be smokers, "the working class" is just a subset of lower income people; and, in fact, some working class people, particularly in the trades, wouldn't even necessarily be considered lower income, so I'd question the assumption that the working class people smoke on a signficantly higher basis than people in white collar jobs.
And on your point of a regressive tax, that is a concern of mine, but studies do show tobacco taxes are more likely to stop lower income smokers from smoking than higher income smokers (and, ultimately, it's in the best financial interest of lower income people to stop smoking). At the same time, mere information on the detrimental health effects of smoking has been shown to be less likely to stop a low income smoker from smoking than a high income smoker. In other words, the research shows that a low income smoker reponds to cash incentives to stop smoking, while a high income smoker is more likely to respond to health incentives.
Plus, as long as the revenue from the tax increase is used to assist lower income people -- that is, those in programs such as Medicaid -- then I don't have a big problem with the potentially regressive nature of it.
I'm also doubtful of a voter backlash on the issue of a tobacco tax increase. In fact, a 2005 study (link in PowerPoint) by the American Cancer Society and the Wisconsin Hospital Association showed that while there is tax anger in Wisconsin, it's mostly aimed at property taxes. For instance, when asked whether raising property taxes was acceptable, 84 percent of respondents said "no," but when those same people were asked if raising the tobacco tax was acceptable, 78 percent said "yes."
But, like I said in the post, while I lean toward supporting the proposed tobacco tax -- or at least some tobacco tax -- I'm not fully conviced either way.
Wisconsin, with North Dakota, leads the country in alcohol consumption -- as you no doubt know, Seth, working at one of our campuses with serious alcohol problems. Yet like hypocritical campus administrators, hypocritical politicians have refused to raise liquor taxes in the same recent timespan in which they already have raised cigarette taxes seven times. Now they claim that they are motivated by concern for the health and health care costs of Wisconsinites.
Keeping in mind that, again, Wisconsin has higher alcohol consumption levels than almost any state, look at the costs -- and ask what the motivations of hypocritical politicians (and campus administrators) truly are:
Health Care Costs of Alcohol
* Twenty-five to forty percent of all patients in U.S. general hospital beds (not in maternity or intensive care) are being treated for complications of alcohol-related problems.
* Annual health care expenditures for alcohol-related problems amount to $22.5 billion. The total cost of alcohol problems is $175.9 billion a year (compared to $114.2 billion for other drug problems and $137 billion for smoking).
* In comparison to moderate and non-drinkers, individuals with a history of heavy drinking have higher health care costs.
* Untreated alcohol problems waste an estimated $184.6 billion dollars per year in health care, business and criminal justice costs, and cause more than 100,000 deaths.
* Health care costs related to alcohol abuse are not limited to the user. Children of alcoholics who are admitted to the hospital average 62 percent more hospital days and 29 percent longer stays.
* Alcohol use by underage drinkers results in $3.7 billion a year in medical care costs due to traffic crashes, violent crime, suicide attempts and other related consequences. The total annual cost of alcohol use by underage youth is $52.8 billion.
* Alcohol-related car crashes are the number one killer of teens. Alcohol use is also associated with homicides, suicides, and drownings-the next three leading causes of death among youth.
* Alcohol is the drug most frequently used by 12 to 17 year-olds-and the one that causes the most negative health consequences. More than 4 million adolescents under the legal drinking age consume alcohol in any given month.
* For an estimate of the costs that alcohol problems may be causing your workplace, and suggestions on what a company can do to identify and treat costly alcohol problems, go to the Alcohol Cost Calculator: http://www.alcoholcostcalculator.org
Without suggesting that someone do the research (it would be godawful work,) it should be remembered that it is common to state that a disease or condition is "tobacco-related" when it's not necessarily so...
EG while it's true that tobacco smoke is an irritant, people who have hay-fever-type allergies are suffering from hay-fever-type allergies. To then postulate that nearby smoke makes the allergy "tobacco-related" is a stretch, no?
I suggest that there are a lot more allergy-sufferers out there than the tobacco critics want to discuss.
There was a documented case: someone died in an auto accident, but because there was a pack of cigarettes in the car, the anti-tobacco folks incorporated the stat into "tobacco-related" deaths. That's just ridiculous.
We could go on...
m.z.,
I can understand that the fact you smoke impacts your feelings about a tobacco tax increase. While I think people should do their best to think beyond themselves when considering public policy, that doesn't mean you should need to toss away entirely your own feelings about how the policy would impact your life personally.
I also see your point about finding out exactly what "health care costs due to smoking" means, which is why I noted that how much the state actually spends on tobacco-related ailments is a much more potent figure. And the social cost of a person dying at 85 really isn't the point (if that's what you were getting at with your example) -- it's how much state money was spent on that person up until that point because he/she chose to smoke. And no matter how the numbers are broken out, I think it's clear the state Medicaid program alone spends more on combatting tobacco-related ailments than the $1.25 per pack tax would generate.
And you may be right that breast cancer is just as expensive to treat as lung cancer; but I think the real important point there is that the chances of contracting lung cancer can be reduced significantly by not smoking (or not inhaling secondhand smoke), while the same can't be said for any specific consumer item when it comes to breast cancer.
Anon,
I considered the issue of alcohol taxes when I wrote this post. I could see how raising the tobacco tax because of the cost smoking inflicts on the state sends us down a tricky road of weighting taxes on other consumer items based upon their overall cost to the state.
And I also saw the numbers you cite from the Marin Institute. I'd be interested to see some numbers from the DHFS that are specfic to Wisconsin (I couldn't find any in a brief search of its website), and then some comparison between those figures and how much revenue the state tax on alcohol currently generates.
dad29,
Finding out how the DHFS figures it spends $400 million-plus per year on tobacco-related conditions wouldn't be too hard to do. You could either search for the answer here or contact the DHFS directly for the info here.
But considering how costly it is to care for someone with lung cancer, heart or respiratory diseases, strokes, and the many other illnesses associated with smoking -- especially, as m.z.forrest points out, as people get older -- I imagine the $400 million figure is pretty close to reality. Plus, I don't think anyone would argue with the fact that health care costs would decrease if people smoked less in this state.
Nate,
According to a recent COWS report, plenty of working class people in Wisconsin benefit from Medicaid -- to the tune of $315 million between 2001 and 2004. But I suppose thinking that's important is just the ivory tower in me.
In all seriousness, I do see your point about differentiating the policy argument from the political argument. But based on what I can see, I don't think raising the tobacco tax is going to have the negative political reprecussions you see...although maybe I'm just not as connected to "the people" as you.
Thankfully, in the end, it won't be my decision to make, but instead the people representing "the people" -- all I ask in this post is that the debate emphasize legitimate arguments and not slippery slope rhetoric.
What I a more getting at is the implicit assumption that non-smoking deaths and treatments don't cost money. The only folks who have a relativley cheap death are those run over by buses and trains. This is not to say that there are no additional costs. Suppose that the typical end of life treatment is $250,000 for an individual regardless of smoking history. We are going to prevent that cost if we convince the man to stop smoking. Now if the typical end of life treatment for a smoker is $300,000, we can say the cost of smoking is $50,000. I would have to do some research, but I believe the costs are pretty close. I should also mention that 50% of smokers do not die of smoking related diseases. (Car accidents, falls, etc. account for a significant portion.)
Where is the trash can to throw out a comment when you need it.
We are not going to prevent end of life treatment costs if we convince a man to quit smoking.
I see your point. But it's not like smoking-related conditions are going to come in the place of other ailments a person would develop without smoking -- those conditions are going to come in addition to the other ailments.
When people develop lung cancer in their 50s because of smoking, they're going to receive care that could keep them alive for many more years. In that time, they'll still be at risk for contracting other ailments not attributed to smoking, which will similarly cost money to treat.
The point in the stop smoking campaigns, of course, is to eliminate those ailments that are preventable if a person just didn't smoke (or inhale secondhand smoke). It's those costs that the state would be saving on if more people could be convinced to kick the habit.
To put it more clearly, I'll lay out 5 cases. We are perfectly omniscent and know how a person is going to die.
a) Blood loss from a fall. 2 weeks of Intesive Care treatment. Final bill $100,000.
b) Breast Cancer. 5 years of chemo treatment. One month final hospital stay. $125,000
c) Prostate Cancer. $100,000
d) Insulin shock. 6 months in and out of hospital. 1 transplant. $500,000
e) Car accident. Transport to hospital. ER treatment. $10,000
Now lets introduce smoking into the equation. Person c no longer gets prostate cancer, but dies of lung cancer. Call the cost $100K. Person (a) is being treated for emphezima prior to the fall.
Person c was a wash. Person (a) had the increased cost of oxygen for 5 years. What wouldn't be proper to say given the scenario where we have perfect omniscience is that person (a)'s smoking cost the State $100,000. We could attribute a cost to person (c)'s smoking however.
Re Wisconsin stats on costs of alcohol, I couldn't find even fairly current ones, either -- or I would have cited them, believe me. Thus, I did note that Wisconsin is one of the leading states in alcohol consumption, so I would suspect that our costs from alcohol are quite a bit higher than the norm to be extrapolated from those national stats.
I would bet that some state agency has up-to-date data on health care costs, opportunity/productivity costs, social costs, etc., from alcohol consumption in Wisconsin.
But I also would bet that such stats are not and won't be easily available to us, because such stats potentially could complicate this debate, under this group of hypocritical politicians who will do only what is politically wise, if under the guise of caring so much about us, about reducing crime, about reducing our health care costs, etc.
Here's my Take:
http://crawfordstake.blogspot.com/2007/01/just-outlaw-them-altogether.html
m.z.,
Seems to me you're arguing that cost estimates on smoking-related conditions should be reduced because some people who died from ailments related to smoking could have died later from other ailments not related to smoking (which they subsequently avoided because they died earlier from smoking). That's fair. But, of course, pinpointing a reasonably objective figure for that is a crapshoot. And, in the end, I don't imagine it would be all that significant of a cost reduction.
Anon,
I don't think there's quite the alcohol-protection conspiracy at the Capital that you make out. I think alcohol is more protected on the whole in this nation because more people consume it, and a quick read of the nation's history demonstrates that this nation was founded by many people who in today's eyes would be alcoholics.
And, interesting side note, those who push for the legalization of marijuana use the exact argument you do -- they claim that booze has always been given a free pass because it was a favorite of the aristocrats, while weed was demonized (and, subsequently, outlawed) because it was a favorite of the natives.
But I think alcohol has some important attributes working in its favor over tobacco. One is the fact that moderate alcohol consumption has no known negative health effects, and, in fact, has been shown to improve health, while even moderate tobacco use, to quote a Yale Medical School cardiovascular report, "can triple a person’s risk of heart disease." And, of course, there's no way to just tax the abuser of alcohol and not the moderate user. Another point is the addictive quality of tobacco, cigarettes in particular, which is much more profound than alcohol.
Now all this may sound like nothing more than the quibblings of a moderate drinker -- much like m.z.'s complaints could sound a bit like merely the rationalizations of a smoker -- but I don't think you'd be too hard pressed to find a legislator who would push the issue of increasing the alcohol tax alongside an increase in the tobacco tax (especially a legislator who, as you noted, wants to complicate the debate and/or work toward tanking the proposal, which some do). And I encourage you to do just that. You could start by asking the DHFS for any data they have on the cost of alcohol-related conditions to the state, and then you can find out from the DOR how much revenue is currently generated from the taxes on alcohol.
Nate,
I didn't argue that "working folks respond better to punishment than information," I merely cited a study that shows lower income people are more likely to respond to financial incentives to stop smoking than higher income people.
And I never said the revenue from the tax should be used to benefit the middle class -- in fact, I said it should be used to offset the cost of Medicaid, which goes to help lower income people. And in case you don't think lower income people benefit from Medicaid, just go visit the ER of any major hospital and they'll tell you how much lower income people use the benefit (many on Medicaid prefer the ER visits because they don't require a co-pay under BadgerCare, which is a federal restriction, like a regular visit to a clinic does).
And what's with this: "I handed you a hope to pull yourself out of a hole, but be my guest make a noose and hang yourself with it." Are you kidding me with that crap?
Well, you disappoint me, Seth -- your reply re the hypocrisy re the liquor tax vs. the cigarette tax shows that you didn't even do a modicum of research nor follow recent events.
Rep. Berceau attempted to raise this issue recently and received no, nada, zilch support from any legislator, so why would I be able to do so now?
As she says, this state has the third-lowest liquor tax in the country, every other state has raised liquor taxes repeatedly while ours have not been hiked since 1969 when "Amstrong walked on the moon," etc.
You could look it up, as well as her stats on consumption, costs, etc., with the flick of a Google switch. Or I could send you more info, but your reply suggests this is not the blog to look seriously at the larger picture of what isn't being raised by these pols you think are so open to discussion.
By the way, that cute kid of yours in the paper could be drinking within a decade and have one of the thousands of fake IDs in this city in a dozen years, and you could be dealing with the problems of teenage drinking -- but not realize that is the problem -- in no time at all, the way this town and state are for our kids because of such dismissive attitudes about the serious problems being ignored by our trusty pols . . . and by you.
Because that cute li'l other kid down the street could be the drunken driver behind the wheel of the car that could have your kid in it -- or the car that hits the car with your kid in it. And it won't be because they snagged a cig.
Save me the melodramatic attitude, Anon.
I did look into the alcohol tax issue, which is how I came across the same Marin Institute numbers you found. I also noted that I did a search on the DHFS website and couldn't find anything else on the topic. And, at the time, I expressed agreement with your point that passing the tobacco tax could lead to looking into passing an alcohol tax, and I noted how I wished I could see Wisconsin-specific data on the topic.
You then replied that you couldn't find any Wisconsin-specific data either, and you added that you bet the data wouldn't be easy to come by because "such stats potentially could complicate this debate, under this group of hypocritical politicians who will do only what is politically wise, if under the guise of caring so much about us, about reducing crime, about reducing our health care costs, etc."
It was at that time that I noted a couple of differences between taxing cigarettes to pay for state health expenses and doing the same for alcohol, and I cited studies defending my points. I also suggested that some of the politicians at the Capital may not be as unwilling as you made out to pursue the alcohol tax issue, especially in light of the way it would complicate the proposed tabacco tax, something a number of politicians would like to do.
And now you fall ass-backwards into this Rep. Burceau bill through some Google search, and then turn around and accuse me of not doing enough research on a topic you brought up in the first place and of not following recent news when you yourself didn't know a thing about the bill until you Googled into it.
And, by the way, do you know how many bills are proposed each year? If it didn't make the news or I didn't happen to check the Wheeler Report that day, I probably missed it...and since Berceau announced this particular bill in April 2005 -- eight months before I started this blog -- it's not surprising that I did miss it. But if anyone can read this blog on a regular basis and honestly make a comment that I'm not doing enough to follow the news (let alone research the topics I write about...again, the alcohol tax was an issue you brought up, not me), then I'd hate to hear what they think about the average voter in this state or any other one.
And, just a tip. If you ever think it's a good idea to bring someone's two-year-old daughter into an anonymous online conversation, particularly when it involves their death, think again. If you have kids of your own, you should know what I mean. If you don't, then just ask someone who does if you want the details on why.
And, lastly, thinking that a 2 penny increase in the beer tax -- which was Berceau's proposal -- is going to prevent teenage drinking, fake IDs, and drunk driving is a joke -- and that's what we're talking about here, an alcohol tax. How you read into that discussion that I'm unconcerned about teenage drinking, fake IDs, and drunk driving is beyond me. We should always be doing more to combat those issues, but a two cent per barrel of beer tax increase -- or just about any other conceivable tax increase -- isn't the most efficient way to do it, which is why Berceau's intent with the bill was to generate revenue for treatment, not to dissuade people from drinking (a more appropriate proposal, at least for dissuading drunk driving, is the plan announced by Paul Bucher during the AG race and backed by Governor Doyle...but I'm sure you already know about that one).
But, it just so happens, I do support Berceau's bill. And if she proposes it again -- along with Rep. Fields, Rep. Boyle, Sen. Risser, and Sen Roessler, who all co-sponsored it in 2005 (so much for your research on Berceau not being able to find anyone else to back the bill) -- I'll be sure to write up a positive post on it.
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