June 17, 2008

SIX REASONS Why Medicaid funding should not be linked to tobacco taxes

While an increase in tobacco taxes to fund Medicaid is being talked about, no such proposal has passed either house of the Legislature during the current Special Session. In fact, most recently, the effort failed in the House.

And, while some like to talk about finding a compromise to Medicaid’s revenue problems, the fact is SB 2013 – which passed the Senate on an overwhelming 41-to-7 vote – is the only compromise on the table, having been agreed to after extraordinary negotiations by the Mississippi Hospital Association, the Division of Medicaid, and the Governor’s Office, and then passed by the state Senate.

The House’s answer? Taking one-time money from the state’s savings account, meaning taxpayers would subsidize a huge tax break for hospitals.

SB 2013 simply adjusts the tax hospitals have historically paid. For 15 years, some Mississippi hospitals paid part of the state Medicaid match and received federal Medicaid reimbursements. Under SB 2013 all hospitals in Fiscal Year 2009 would, collectively, pay in $200 million and get back $1.25 billion in reimbursements and distributions.

So, is an increase in tobacco taxes necessary to fund Medicaid?

NO! Hospitals reap the benefits so hospitals should pay the tax, and have volunteered to do so because it’s a good, fair deal.

NO! As passed by the Senate, SB 2013 allows hospitals to pay their fair share of Medicaid-related taxes, which they have agreed to do.

NO! Tying tobacco taxes to Medicaid takes the taxes off the table for at least 19 other uses proposed by the Legislature since 2004.

NO! It’s illogical to tie tobacco taxes, a declining stream of revenue, to Medicaid, a growing need.

NO! Increasing tobacco taxes was not in the Governor’s call for the current Special Session.

NO! SB 2013 is a fair method of sustaining Medicaid over the long-term, keeping the program solvent for some of Mississippi’s most vulnerable people.

Governor Haley Barbour
6/17/8