Senate approves tobacco tax increase

By Ashley Griffin

The Senate approved some of the final components of a Medicaid reform package today, and now two key pieces of legislation are on their way to the governor.

The process was kicked off when the General Assembly approved Senate Bill 2840, which would make cuts to Medicaid services as well as the rates Medicaid providers are paid in an effort to cut $2.7 billion from the state’s Medicaid liability. That measure passed in both chambers last week. 

But on Tuesday, SB 2194, which includes an increase in taxes on tobacco products,  passed on the Senate floor, 31-27. Last week the measure passed the House, 60-52. The proposed legislation features a $1-a-pack cigarette tax and would increase taxes on other tobacco products, such as cigars and loose tobacco, to bring them in line with the taxes on cigarettes. According to the Senate sponsor of the bill, Sen. Jeffery Schoenberg, a Democrat from Evanston, the measure would bring in about $700 million, including federal Medicaid matching funds. The proposal would also make changes to the hospitals assessment program to bring in more federal matching funds, which could produce almost $100 million revenue for the state. The proposal would also set requirements for hospitals to gain charity care status, which allows them to receive a local property tax exemption.

“I would vote for [the cigarette tax] if it didn’t bring in a penny,” Senate President John Cullerton said in the floor debate. “I would vote for this tax if it didn’t bring in a penny because the idea that we will have 77,600 kids who won't start smoking just because you pushed the green button, or 59,000 adults who quit, or how about the 59,000 people will be saved from premature death because you pushed the green button.”

But not all lawmakers agree a tax should be implemented to help fix the state’s Medicaid crisis. “The problem I personally have is the continued approach of more revenue, more revenue,” Senate Minority Leader Christine Radogno said in a committee hearing. “I mean, I have to ask if $7 billion in new income tax wasn’t enough to solve the problem, what’s another $300 million?” “It's really more of a difference in philosophy and approach, just of continuing of trying to look for revenue in every way we possibly can, rather than looking for other ways to contract the budget or in this case, maybe reallocate from other places in the budget to get some money to get Medicaid matched.”

 Gov. Pat Quinn has  advocated for the cigarette tax increase since he rolled out his own framework for Medicaid reform in April. “Increasing the price of cigarettes will decrease smoking-related costs to Medicaid, which came to $1.5 billion last year. This legislation will help 60,000 people quit smoking, prevent 60,000 deaths from smoking-related conditions and keep 80,000 kids from taking up smoking in the first place,” Quinn said in a prepared statement. “By working together to pass these bills, strong progress has been made in our mission to restructure Medicaid, so that it serves as a health and wellness system instead of a provider-payment system. As a result, our Medicaid system will continue to serve the millions of Illinois residents who rely on it.”

The Senate also passed SB 3261 on Tuesday, which would require hospitals to provide free care to low-income people if the treatment is medically necessary. Hospitals in urban areas would have to provide such care for people with incomes up to 200 percent of the federal poverty level, and rural hospitals would have to provide such care for those with incomes of 125 percent of the federal poverty level. So far, eight states have similar laws.

While the Illinois Hospital Association supports the bill as part of an overall Medicaid plan, Republicans voiced opposition on the Senate floor. They argued that the bill could a lead to more people dropping their health insurance and using an emergency room as their primary source of health care. “Once you tell someone they have access to this hospital, that emergency room without limits, it's been our experience that the emergency room becomes their doctor's office,” Sen. Dale Righter, a Republican from Mattoon, said  during a committee hearing. “Doesn't this take us a step backwards?”

There is still one more piece of the Medicaid reform plan yet to be approved, SB3397, which would prevent the state from rolling over Medicaid bills from one fiscal year into the next fiscal year.