Cigarette, alcohol taxes could be part of Medicaid talks

Published 11:14 pm Saturday, April 5, 2008

Cigarette and alcohol taxes could become part of the discussion as Mississippi legislators look for a way to pump life into the anemic Medicaid budget.

“We are in a pickle. We are in a mess,” Rep. Omeria Scott, D-Laurel, told her colleagues Friday during a two-hour debate.

Medicaid has a budget shortfall of up to $100 million for the fiscal year that ends June 30.

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The House voted 71-49 Friday to add the so-called “sin taxes” to the list of possible ways to create revenue. But the Senate is not likely to consider new taxes on cigarettes or alcohol.

Legislators are also working on an overall state budget for the year that starts July 1. Medicaid needs an additional $250 million then.

Medicaid is paid by a combination of state and federal tax dollars. It provides health care coverage for the needy, aged, blind and disabled and for low-income families with children. About one in every four Mississippians is on the program.

Because this is a poor state, Mississippi receives about $3 from the federal government for every $1 the state puts into Medicaid.

The Senate is backing a Mississippi Hospital Association proposal that would allow hospitals to set a $100 assessment on every bed not occupied by a Medicare patient. Medicare is a federal program for people 65 and older and for the disabled.

Senate leaders say the hospital assessment would generate about $90 million.

Rep. Robert Johnson III, D-Natchez, said Friday that patients would pay the $100 fee because hospitals would pass the cost onto them.

Friday’s debate marked the first serious discussion in years about increasing the alcohol tax to pay for health care. Under the proposal by Scott, the sales tax on hard liquor would increase from 7 cents to 8 cents on the dollar. Beer and light wine would not be affected.

Scott’s proposal did not specify how much the tobacco tax would increase. Mississippi currently has an 18-cents-a-pack excise tax on cigarettes — one of the lowest rates in the nation.

In 2006 and 2007, legislators tried increase the cigarette tax and decrease the sales tax on groceries. Gov. Haley Barbour, who’s a former tobacco lobbyist, vetoed a cigarette-grocery tax bill in 2006, and he got one of his Senate allies to block one in 2007.

Barbour has said this year that he is against increasing any taxes. He appointed a committee to study the state’s tax structure.

Overriding a governor’s veto would take two-thirds of the House and Senate. Because getting that margin would be nearly impossible in the Senate, some House members argued Friday that there’s no point in considering cigarette and alcohol tax increases now.

Johnson said the House should not give up its power.

“I have never gone into a negotiation as a lawyer where I acquiesced before I walked in the door,” he said. “I can’t understand a process where we say we are going to relent because the Senate won’t accept our plan.”

Rep. Greg Snowden, R-Meridian, said the entire House debate Friday was pointless. He said Medicaid budget negotiations are being conducted by the Division of Medicaid and the Mississippi Hospital Association — not by the House and Senate.

Rims Barber of Jackson, an advocate for the poor, watched the debate from a House balcony. Afterward, he said it’s critical for lawmakers to fix the Medicaid budget because with coverage, many patients will suffer “and some may die.”

He said even people with private insurance will be hurt if small hospitals have to close because of a loss in Medicaid payments.

“When you don’t have a hospital in your community and you get sick, I don’t care how much damn money you have, there ain’t no where to go,” Barber said.


The resolution is Senate Concurrent Resolution 655.