Sacramento Bee

Brown administration opens door to cigarette tax, with a caveat

August 26, 2015

By Jeremy B. White

Responding to the Legislature’s renewed attempt to fund healthcare through a cigarette tax, a Brown administration official signaled support if the revenue is properly targeted.

“Everything’s on the table from the standpoint that Medi-Cal consumes $93 to $94 billion in funds a year, both state and federal,” said Jennifer Kent, director of the Department of Health Care Services, so “if people are legitimately willing to take a hard look at doing an additional tobacco tax to support those services then we are willing to talk about ways that we would target it to better provide access.”

In convening a special healthcare funding session, Gov. Jerry Brown emphasized replacing an expiring tax to avoid a deep fiscal hole. But a potent coalition that includes the California Medical Association, the Service Employees International Union and the California Hospital Association has turned to the special session as a way to accomplish a long-sought goal of boosting Medi-Cal provider reimbursement rates via a proposed cigarette tax bump. If legislators do not pass a tobacco tax, groups seeking higher rates stand ready to qualify a tax for the ballot.

“This bill really is about not just funding the Medi-Cal program but also to try and reduce smoking overall, which costs us more money than we’re ever going to raise with this bill,” said Sen. Richard Pan, D-Sacramento, who is carrying a $2-a-pack cigarette tax bill announced on Wednesday.

Speaking before a rally announcing the tobacco tax bill, Kent said any new revenue would need to be designed so it either encourages more doctors to accept patients on Medi-Cal or prompts doctors currently serving Medi-Cal patients to accept more. During budget talks the Brown administration resisted raising Medi-Cal reimbursement rates, saying higher rates would not guarantee better service.

“When you have limited resources, you have to be smart,” Kent said. “If you just raise rates and then providers’ groups don’t change and they don’t change their access model for patients then it means nothing to us.”