GOP senator pre-files bill to raise cigarette tax by $1, use money to pay for Medicaid treatment of tobacco-related illnesses

Sen. Stephen Meredith

Raising Kentucky's cigarette tax by $1 is one small step closer to reality, as Sen. Stephen Meredith pre-filed a bill Dec. 6 to do so. However, Meredith says it shouldn't be called a tax, but a "health care reimbursement assessment."

Meredith, a Republican from Leitchfield, told Spectrum News that the proposal would generate $300 million each year and that most of it would benefit the state's Medicaid program, freeing up dollars for other needs like pensions, education and workforce development.

The bill would create a $1 "health care reimbursement assessment" on every pack of cigarettes sold in Kentucky, raising the total tax to $1.60 per pack. The average state cigarette tax is $1.71. The tax would make parallel increases in other tobacco taxes.

The bill calls for 90 percent of the money to go to a reimbursement fund for Medicaid treatment of tobacco-related illnesses. The remaining 10 percent would fund tobacco-cessation programs in counties that have comprehensive smoke-free ordinances.

The bill says, "Amounts deposited in the fund shall not be used for expansion of the Medicaid program . . . and shall not be appropriated or transferred by the General Assembly for any other purposes."

Meredith told Spectrum News, “What I’m trying to do through this bill is recognize that people have the right to smoke. I don’t begrudge them that, but don’t ask me to pay for your health-care costs whenever you incur those illnesses that you know you’re going to have. It’s created a tremendous financial burden, I think, for our state.”

He said the $1 raise would create an economic incentive for tobacco users to quit, which would result in a multitude of benefits including a healthier population, decreased health costs to the state, increased productivity, healthier children and fewer kids smoking.

Kentucky has the nation's second highest adult and youth smoking rates, 24.5 and 17 percent. It also has the highest cancer death rate, and 34 percent of those deaths are related to smoking. Smoking-related health costs in Kentucky have been estimated at $1.92 billion a year.

Meredith, who was a longtime hospital administrator in Leitchfield, said he's optimistic the measure will pass the 2018 General Assembly, but recognizes the challenges.

“Everybody’s got an aversion to taxes,” he said. “That’s why we’ve had difficulty getting this done in the past. All I’m doing is asking people to be responsible, be accountable for your own health and don’t ask non-smokers to pay for your health care in the future if you’re going to choose to do this.”

Meredith's bill drew favorable comments from key legislators on the Dec. 18 "Kentucky Tonight" on KET.  "I see it not so much as an increase in taxes but an increase in the user fee," said Rep. Addia Wuchner, chair of the House Health and Human Services Committee. Her Senate counterpart, fellow Republican Julie Raque Adams, said she was interested in targeting Medicaid, partly because "We have very very high rates of smoking in the expansion population."

Raising the cigarette tax by at least $1 is a main objective of a newly formed coalition of more than 100 health-care, business, education and health-advocacy groups called Coalition for a Smoke-Free Tomorrow, staffed by the Foundation for a Healthy Kentucky. The groups have touted the tax as a public-health tool and a partial answer to the state's budget problems, without making any recommendations on how the money should be spent.

"It’s time to enact the proven measures that will reduce smoking and its related illnesses, reduced quality of life and massive health care expenditures in Kentucky," foundation President and CEO Ben Chandler wrote in an op-ed for Kentucky news outlets. "We can honor our tobacco heritage without allowing it to continue plaguing both our health and our economy. We urge you to contact your legislators and tell them you support a $1 tobacco tax increase because it’s a win-win-win for Kentucky."