Tobacco Tax Ballot Measure Would Fund Health Care For California’s Poor – But How?

At first blush, the tobacco tax measure on California’s November ballot looks pretty straightforward.

Proposition 56 would raise the price of a pack of cigarettes by $2 and tax e-cigarettes for the first time. Proponents say the higher price would prevent kids from smoking and lower health care spending because people won’t suffer as much from tobacco-related illness.

What’s not spelled out is how exactly money raised through the measure would be spent.

It is estimated that up to $1 billion each year would go to “improved payments” for Medi-Cal health care services — which proponents say will be parsed out democratically. But opponents say the health care funding is part of a “special interest tax grab.”

The ballot measure doesn’t earmark exactly how much of that money should go to doctors or other health providers.

Instead, the new Medi-Cal funding would be doled out through negotiations during California’s yearly budget process. Presumably, the bulk of it would go to groups that provide and oversee care in Medi-Cal; doctors, health plans, clinics and hospitals, many of them powerful groups who could influence Capitol discussions about how to use the money.

California’s payments to doctors treating Medi-Cal patients are among the lowest in the nation. After Rhode Island and New Jersey, California’s average payments in Medi-Cal, its version of Medicaid, are the lowest, according to a Kaiser Family Foundation analysis. The analysis looked at the portion of Medi-Cal where the state reimburses providers directly for care, not the majority of the program involving insurance companies. (Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.)

One consumer advocate says uncertainty about how the Medi-Cal money would be used actually is one of the strengths of Proposition 56.

“It allows us to have the public process and have it be policy-driven rather than by some formula that’s locked in the constitution,” said Anthony Wright of the consumer advocacy coalition Health Access California. He added that he was “at the table” when the initiative was crafted.

Wright said the lack of a funding formula makes it more likely that voters will approve this year’s tobacco tax proposal.

The last tobacco tax proposition, defeated by voters in 2012, would have funded cancer research with the revenue from the dollar-per-pack tax. In 2006, Californians voted down another tax that would have added $2.60 to the then-$4 pack of cigarettes. That initiative specified how tax revenues would fund health programs down to the fraction of a percent.

Indeed, public opinion of Prop 56 measure was favorable in a recent survey from the Public Policy Institute of California, which suggests 59 percent of likely voters support the measure.

The tobacco industry-funded opposition, a coalition of taxpayer groups, retailers, law enforcement and manufacturer associations, is using video commercials to attack how the new money would, in their view, be spent.

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