Proposition 86 will appear on this November’s statewide ballot as a proposal to raise the tax on cigarettes by $2.60 per pack from the current tax of $.87 per pack. The hike would result in about $2.1 billion in new revenue for the state of California. More than 52 percent of the money would go to health treatment and services, with the majority - $750 million - going straight to hospital emergency and trauma care.
Hospitals are the leading supporters of the measure. A recent nationwide study by the Institutes of Medicine found that emergency rooms around the country are overwhelmed. A significant cause of the problem is that hospitals are shutting down at an alarming rate. In the last 10 years, 70 hospitals have closed in California. Part of the cause is the fact that more and more Americans lack health insurance and turn to emergency rooms for care, for which the hospitals are not compensated.
“Hospitals and emergency rooms in California are struggling,” said Don Stanziano of Scripps Health. “There are major funding issues, and hospitals by law are required to care for anyone who comes to the emergency department.”
La Jolla’s Scripps Memorial Hospital, which serves patients from Orange County to Mission Bay, provided more than $47 million in uncompensated care for uninsured or under-insured people in 2005. The county has seen an increase in the number of uninsured patients, from 12.2 percent in 2001 to 18.7 percent in 2003.
The California Hospital Association, of which Scripps Health is a member, is one of the main supporters of Proposition 86, along with the American Cancer Society, Heart Association and Lung Association. Stanziano said the revenue from the tax hike would provide between $55 million and $60 million in reimbursements for hospitals in San Diego County per year.
Stanziano said 25 percent of emergency room visits are linked to smoking. He said that hospitals are also backing the tax hike because of their history as an effective deterrent to smoking.
“Tax raises (on cigarettes) have always resulted in a decrease in smoking,” Stanziano said. “It is a deterrent, particularly among young people.”
Supporters of the proposition are predicting that the tax hike would prevent 700,000 kids from becoming smokers and save Californians $16 billion in healthcare costs. The proposition would also provide for more than $50 million in tobacco education and prevention programs.
But support for the proposition is not unanimous, even in the health care industry. The Los Angeles County Medical Association is officially opposing the proposition because it exempts hospitals from certain anti-trust laws.
“Despite our support for reducing tobacco use, we cannot support a measure that would endanger the availability of emergency and specialty medical services for patients in California,” said Dr. Ralph Di Libero, president of the association.
The anti-trust exemption in the proposition would allow hospitals to coordinate on-call emergency specialist care and allow emergency departments to develop regional plans that would reduce duplicative costs. Opponents worry that by allowing hospitals to share business information, they would open the door for hospitals to share wage and rate information and possibly fix prices or lower salaries. Proponents argue that state and federal laws prohibiting such practices would not be affected by the proposition, and that the cooperation between hospitals would serve the public trust and help save lives.
Stanziano said that any negativity about the proposition can be traced back to tobacco companies who fear the impact the tax hike would have on their bottom line. It would push the price of a pack of cigarettes to between $6 and $7 for most brands.
“The hospitals are getting beat up in advertising, but the public needs to understand those ads are all paid for by tobacco companies,” he said. “There are special interests trying to defeat this bill because they don’t want to lose money on people quitting smoking.”
RJ Reynolds Tobacco Company has committed $40 million to fighting the measure. But opponents of the bill also include several taxpayers’ organizations, who say that the relatively small amount of money the proposition will generate for anti-tobacco education shows that the true driving force behind it is the hospitals’ bottom line. California hospitals have spent more than $7 million in support of the proposition.
“It’s not surprising that the hospitals are bankrolling this campaign, as they would be the single greatest beneficiary if this initiative were to pass,” said Carla Hass of Californians Against Unaccountable Taxes.
The San Diego County Taxpayers Association did not take a position on the bill, as the group’s board could not reach the 60 percent majority it requires to take an official position.