Raise cigarette tax to fund health care and save lives

At long last, the South Carolina General Assembly seems poised to increase our lowest-in-the-nation cigarette tax. The current tax in South Carolina is seven cents per pack, and it has been at that rate for over 30 years. The average state cigarette tax is $1.19 per pack. We have a unique opportunity during this time of economic crisis to make a difference — and increasing the state's cigarette tax will provide much needed funds for health care and our economy.

Medicaid provides health-care insurance for many low-income families and children. It also funds the majority of the state's nursing home beds and healthcare services for disabled individuals. A safety net program with an enormous economic impact, its total budget in 2007 was $4.5 billion. The state supplied approximately $ 1.4 billion and the federal government matched the state's investment with another $3.1 billion that year.

Because of budget shortfalls this year, the S.C. Department of Health & Human Services, the agency administering Medicaid, has lost a total of $138 million in state funding. Also lost is the federal matching funds — another $321 million. South Carolina, then, has lost nearly $459 million this year from its health-care economy. And that doesn't speak to the losses incurred at the human level.

Health-care dollars from Medicaid are, for the most part, spent in South Carolina hospitals, clinics, nursing homes, and health-care provider salaries. These dollars flow quickly back into South Carolina's economy in the form of state income taxes, sales taxes, and many other purchases. It doesn't take very long for the state to recapture much of its investment in health-care funding for Medicaid.

South Carolina's citizens have an opportunity to increase the state's cigarette tax this year. We should do this at a rate of no less than the average state tax of $ 1.19 per pack. A portion of the income received from the increased cigarette tax should be set aside in an appropriate fund that would serve as a financial buffer against future health-care budget cuts. Cigarette tax increases in other states have not been linked to any drop in sales — except sales to more price-sensitive youth.

Health-care costs don't go away when the economy worsens. Enrollment in Medicaid tends to rise during economic downturns — evidence again of its safety-net function. Health-care providers will continue to deliver babies, care for the sick, and treat the injured. The $459 million in losses this year is going to be shifted to the private sector in the form of higher premiums and higher deductibles. This in turn will force some employers to reduce or eliminate coverage. And this will create more uninsured and a higher demand for — you guessed it — Medicaid. It is a vicious cycle — but one that can be stopped if Medicaid is properly funded.

Please contact your legislators to let them know how important it is to raise the state's cigarette tax. Ask them to increase it to the average state cigarette tax of $1.19 per pack and to establish a health-care reserve fund with a portion of the tax revenue.

We can, however, only take advantage of this "investment opportunity" if we have the state funds needed for the match. Increasing the state's cigarette tax will generate the needed state funds, and it is, in a sense, a "revenue neutral tax" given its ability to generate federal matching funds. And it will put dollars back into health care, back into South Carolina's economy, and most importantly, back into people's lives.

CHARLES P. DARBY Jr., M.D.

MUSC Center for Child Advocacy

Broad Street

Charleston