From the Arkansas Statehouse...

Beebe’s healthcare initiative richer than expected; some skeptical.

In Cigarette Tax, Mike Beebe on 14 January 2009 at 3:17 pm

In a meeting of the Senate Committee on Public Health, Welfare and Labor this morning, Arkansas Surgeon General Joe Thompson presented the specifics of Governor Beebe’s health care plan, including details on how he wants to spend proceeds from his proposed 56-cent cigarette tax hike.

Bottom line: Beebe’s estimated tax revenue is higher than the $71 million figure he provided reporters at a press conference last week. If legislators give Beebe the cigarette tax and a reformed tax on smokeless tobacco, the state would reap $85.4 million in fiscal year 2010 and $85.8 million in FY 2011. $10 million of that money each year would come from the chaw tax, though details of how the levy would work remain fuzzy. Including matched funding, the state would have  $177.9 million available in 2010 and $175.3 in 2011 for healthcare.

But the if is a big one. Questions at today’s meeting indicated that some legislators are skeptical about the tax and how the revenues are to be spent. Along with reports that lawmakers are looking to fund a proposed trauma center through means other than the cigarette tax, reactions to Thompson’s presentation suggest that Beebe may have a fight ahead of him on the issue.

(Read on for details on proposed spending and committee members’ reactions to the cigarette-tax package.)

The largest chunk of money, about a quarter of the new funds,  is to be spent on a statewide trauma system. Other major expenditures would go to support Community Health Centers and expand the ARKids program. The governor also wants money budgeted for increased medicaid expenditures, technology improvement, autism treatment, and the Step-Up Coalition, a group that focuses on smoking cessation.

One general criticism of the governor’s plan is that it depends on a shrinking resource: if smokers continue to quit, then funds for the proposed trauma center will disappear. However, the governor has positioned the tax as a health remedy as well as a revenue source: decreased tobacco intake will ease the $620 million burden Beebe says the state spends on smoking-related illnesses every year.

More specific criticisms of the plan arose in the committee hearing today. A general worry, unsurprisingly, was that expansions to public healthcare will unfairly increase competition with private healthcare employers. Committee Chair Percy Malone expressed concern that some aspects of the plan might reduce the quality of care in Arkansas and discourage new businesses from locating here.  The Medicaid portion of the proposed expenditures were also scrutinized for the possibility that they would provide state funds to those who don’t really need them.

Thompson emphasized that the Medicaid expenditures would be used only for impoverished adults. The proposal would increase Medicaid support for dental care, cervical cancer, breast cancer, and substance abuse treatment for children and pregnant women. Thompson also tried to smooth over the general worries about the impact of the plan on private providers.

Yet the overall mood remained one of skepticism. As one committee member remarked toward the end of the two-hour session: “There’s extremely strong support for a trauma system, but it doesn’t take 56 cents a pack to do it.”

Still, with this proposal Beebe has cleverly framed the issue in order to get the money he wants. A no to a higher tax on a harmful product will mean a no to the health of Arkansans. Is that an answer lawmakers are willing to give? Time will tell.

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