BuckeyeBlog

The folks at the American Lung Association’s Ohio chapter are calling for an increase in taxes on tobacco products such as smokeless tobacco and cigars in order to fund their anti-tobacco efforts. This comes on the heels of the Governor and General Assembly de-funding the Ohio Tobacco Prevention Fund and using its money for “economic stimulus.”

But can increased taxes on these products be justified as anything other than anti-smoking activists looking for ways to keep their jobs? I discuss this issue in some detail in my study on Ohio’s Dumb Taxes. I also sum up the issue in this Viewpoint:

It is certainly fair that people should pay for the costs they impose on society. Tobacco users are already doing that, however. Studies indicate the burden smokers place on taxpayers could be oft-set by adding about 32 cents to a pack of cigarettes. Since Ohio taxes cigarettes at $1.25 a pack, the smokers of Ohio are paying for more than their fair share.

Cigars and smokeless tobacco products are also taxed heavily compared to the cost they impose on society. Illnesses from cigars and smokeless tobacco such as chewing tobacco cost taxpayers almost nothing. These products are just not as dangerous as cigarettes. Because of this, they should have no special taxes levied on them. Instead, they have an onerous ad valorem tax imposed by the state that taxes these products based on their price. This distorts the market and unfairly penalizes high-end products.

In short, tobacco users already reimburse the government for any costs imposed on state health systems. If activists were really interested in fairness, they would be pushing for a reduction in tobacco taxes.

Of course, fiscal fairness is probably only one part of the rationale to increase tobacco taxes. Many interest groups want to see taxes raised in order to discourage tobacco usage. It is an improper use of the tax code to try and affect social policy, though. Taxes should be levied to raise revenue for government obligations, not as a way to force people to act certain ways.

Besides being an improper use of the tax code, raising taxes on products to discourage their usage also has unintended consequences. Activists do not seem to realize that not all tobacco products are equally unhealthy. While all tobacco products pose some health risk, smoking cigars or using chewing tobacco causes far fewer health problems than smoking cigarettes. By raising the cost of these less dangerous products the anti-tobacco activists may well cause some people who used these products to satisfy their tobacco habit with cigarettes.

It must be nice to be liberal advocacy group Families USA. Whenever they put out a report light on facts and heavy on rhetoric blasting the free market they get friendly media play from coast to coast. Their latest report, attacking the fact that some insurance policies aren’t as heavily regulated as Families USA would like, got the usual uncritical coverage from Ohio newspapers.

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One of the trendy ideas in health care reform is a “slacker mandate” — requiring insurance companies to cover “children” on their parents insurance up to the age of 25 or 30. The idea is meant to address the fact that young adults make up a large portion of the uninsured. This idea has hit Ohio in the form of SB 115, which is ostensibly aimed at covering “dependent children” up to the age of 30.

One, there is no requirement in the bill that those covered be dependent. It merely states that they can’t be working at a job that offers health care benefits.

Two, since when are adults up to the age of 30 still considered “children”?

New Jersey was the first state to adopt such a mandate. It didn’t really go too well.

On the subject of former Republican presidential candidates and the Wall Street Journal, the WSJ had a great editorial a couple days ago that exposes the flaws in former governor Mitt Romney’s health care plan. Unfortunately, there are some who think this Massachusetts Plan is a good idea. A commission looking at health care reform for Ohio is considering a similar plan for Ohio. The WSJ editorial should be required reading for every person on that commission:

First, the plan isn’t “universal” at all: About 350,000 more people are now insured in Massachusetts since the reform passed. Federal estimates put the prior number of uninsured at more than 657,000, so there was a reduction. But it was not secured through the market reforms that Governor Romney promised. Instead, Massachusetts also created a new state entitlement that is already trembling on the verge of bankruptcy inside of a year.

Some two-thirds of the growth in coverage owes to a low- or no-cost public insurance option. Called Commonwealth Care, it uses a sliding income scale to subsidize coverage for everyone under 300% of the federal poverty level, or about $63,000 for a family of four. Commonwealth Care also accounts for 60% of statewide growth in individual insurance over the last year, and the trend is expected to accelerate, perhaps double.

One lesson here is that while pledging “universal” coverage is easy, the harder problem is paying for it. This year’s appropriation for Commonwealth Care was $472 million, but officials have asked for an add-on that will bring it to $625 million. For 2009, Governor Deval Patrick requested $869 million but has already conceded that even that huge figure is too low. Over the coming decade, the expected overruns float in as much as $4 billion over budget. It’s too early to tell how much is new coverage or if state programs are displacing private insurance.

In a news report yesterday on the state pork capital budget, there was this interesting tidbit:

State Budget Director J. Pari Sabety told legislators yesterday that the budget needs another $344 million ($122 million in state funds) to cover increased Medicaid costs because 66,000 more people than expected are using the state-federal health-insurance program for the poor and elderly.

I hate to say “I told you so,” but:

Expanding Medicaid can lead to large increases in Medicaid spending when states can least afford it — during recessions. Ohio saw this earlier this decade when Medicaid spending increased dramatically during the recent recession. Spending grew at 11 percent annually during 2001 and 2004, squeezing other budget priorities at a time when the state was seeing reduced revenue. Expanding Medicaid now will only repeat this cycle during the next recession.

Just as Ohio can learn something from Florida regarding education choice and taxes, it can also learn something from the Sunshine State about health care reform. The Florida legislature just passed a bill that would allow a “no-frills” health insurance policy to be sold in the state. These policies would be much cheaper than other policies because they would not include a variety of politically-motivated mandates, such as the kind Ohio is adding.

Unfortunately, Ohio is pursuing health care “reform” that is going to have the opposite effect of Florida’s. Governor Strickland’s health care task force, according to Gongwer News Service ($):

A group of health care stakeholders appointed by Gov. Ted Strickland has generally agreed that the state should require Ohioans purchase health insurance and subsidize low-income individuals who can’t afford it….

However, for an individual mandate to be feasible, members generally believe there should also be a guaranteed issuance of coverage…

This type of plan to increase government control will only result in higher prices for health insurance in the state. Florida is looking better all the time.

It’s a line you see regularly in news stories – two people in Ohio die every day because they lack health insurance. It’s based on a “study” by left-wing Families USA that has some severe flaws, as John Goodman points out:

How is Families USA able to tally up all this carnage with such pinpoint precision? As it turns out, these claims are based on a 15-year cascade of studies - each repeating the errors and misinterpreting or mischaracterizing the findings of the previous one and ultimately relying on data that is 37 years old…

there is no point at which anyone from Families USA actually examines a medical record. There is no interview with any doctor, any patient or any family of a deceased patient. There is only algebraic mumbo jumbo in support of an unsupportable claim.

Read the whole analysis here.

According to the Columbus Dispatch, the state is handing out free health insurance to kids. Free, huh? Well, I guess it’s free unless you are a taxpayer. Someone has to fund it, after all. And according to state officials, it’s costing taxpayer a bundle. A little less than 40% of Ohio’s budget goes to pay for this “free” care. That was over $13 billion in 2006. I don’t think “free” is the word I’d use for a program that costs taxpayers that much money.

In an indication that Republican legislators’ disdain for the free market extends not only to lending but also to health care, the Ohio House unanimously passed another health insurance mandate yesterday. This mandate forces insurance companies to cover costs associated with cancer clinical health trials.

I’m not questioning the merits of clinical trials and I do not necessarily think that insurance companies should exclude coverage of them. However, I do not think it is proper for government to force insurance companies to cover them. Mandates of this sort drive up the cost of insurance and play a large role in making health insurance unaffordable for some Ohioans.

If people want to purchase a policy that in return for costing less does not cover clinical cancer trial coverage, they should have the freedom to do so. Your legislators, however, want to force you to pay more for insurance even if you do not want this particular service covered. When looking for an answer as to why some people cannot afford insurance, look no further than your local legislator.

In a hearing on the state Medicaid program yesterday this bad news about Medicaid spending was reported by Gongwer News Service ($):

Underspending on the managed care side of Ohio’s $12 billion-plus annual Medicaid program has offset some fiscal pressures caused by high caseload, but officials still project the entitlement to be $400 million over budget by the end of the biennium, lawmakers were told Thursday.

But then:

Since the federal government rejected Ohio’s plans to cover children at 200-300% poverty through the Medicaid/State Children’s Health Insurance Program, the state has submitted two additional proposals to cover children in families up to 250% and expects to hear back by May 15, Mr. Corlett said.

At a time when Ohio is facing fiscal troubles, does it really make sense to expand a program that in its current form is already over budget? And these folks want to lecture you about your personal financial choices?