Health care groups want tobacco tax, but differ on spending it

Hospital leaders, health care advocates, doctors and cancer researchers all agree-cigarettes are under-taxed in California, and voters should be asked to approve a new, $1.50-per-pack levy on smokes next year. That could push the cost of a pack of cigarettes to $6 or more.

But that is where the agreement ends. Two separate proposals have been filed with the attorney general’s office-one by hospitals, the other by cancer researchers-that have very different ideas about how the estimated $1.4 billion in annual revenue the tax will generate should be spent. The bad blood is coming to a boil.

Hospitals want to direct the bulk of the money to emergency room care. Cancer researchers want the money to go to cancer research and education. Meanwhile, efforts to craft a compromise have, for now, broken down, and both sides are going ahead with their separate plans.

Under the hospitals’ proposal, 65 percent of the money–about $900 million annually– would go to fund hospital emergency care services. The rest would be divided between money for nurses, non-smoking education programs and other administrative costs. The current version of the alternative proposal requires about 65 percent of those funds to go to disease prevention and research programs, with the other 35 percent going to tobacco-use prevention and education.

Last year, a coalition that included the California Hospitals Association and the California Medical Association were prepared to back-and fund-a measure to tax cellular phone usage to pay for emergency room care. After the initiative had qualified for the ballot, the hospitals backed off, leaving the initiative to flounder without one of its major backers.

The measure, Proposition 67 went down to defeat, 72 to 28 percent.

The CMA has not taken a formal position on either of the two tobacco tax measures. But its board is expected to back the cancer research initiative in a vote today. Similarly, Health Access, a coalition of labor and health advocate groups which is now locked in a fight with drug makers over Propositions 78 and 79, is leaning toward opposing the hospitals’ measure, and backing the researchers’ initiative.

Proponents of both measures realize that their in-fighting is playing right into the hands of the tobacco lobby, which has threatened to spend $50 million to defeat any new tobacco tax initiative on the ballot. But Kristine Deutschman, spokeswoman for the hospitals’ initiative, says they are convinced their approach is the correct one.
“Ours is a much more comprehensive approach,” she says. “We agree that research and prevention has to be part of the long-term solution, but we can’t ignore the current crisis in our emergency rooms.” Deutschman says Californians’ tobacco-related health problems have contributed to the current crisis California hospitals face. She estimates Californians pay $8.6 billion in tobacco-related health-care costs.

Health Access has tangled with the hospitals in the past. The association sponsored a measure in the Legislature, AB 774, aimed at preventing hospitals from “overcharging” people without health insurance. The group believes the hospitals are using the sexiness of a tobacco tax to pass a more industry-friendly version of that bill.
“It’s a completely watered down version of the Chan bill in the initiative,” says Health Access Executive Director Anthony Wright.

Hospitals have been searching for a way to fund emergency room care. They say that close to 70 hospitals have been closed in the last eight years, nine of those closing in 2004 alone. Last year, two trauma centers closed, and two more have scaled back their services this year.

Efforts to provide additional funding through the Legislature have been unsuccessful. And last year, hospitals realized that voters had a hard time making the connection between a cell phone tax and emergency room care. So, they have turned to the ever-popular sin tax, looking to cigarette smokers to provide their funding.

That has led to jockeying with the researchers-known as the heart, lung and cancer crowd-who see any potential new tobacco tax as a way to pay for their programs. When they filed their initiative, scheduled for the November ballot, hospitals threatened to preempt it by placing their measure on the June 2006 ballot. And while the hospitals have called for a $1.50 tax per pack of cigarettes, the current version of the researchers’ proposal has only a $1 per pack tax.

That is expected to change when an updated version of the researchers proposal is filed later this year. Sources say the new version will mirror the $1.50 tax in the hospitals’ proposal.

As the internal feud continues, Wright held out hope that some kind of compromise could be reached.
“I would just say from my prior experience, you always have a choice until you file the final paperwork,” he said. “Both measures are waiting for title and summary. No signatures have been collected yet. So we’re still at the $200 stage instead of the $1 million stage.”