Expanding the Basic Health Plan Through Increasing Cigarette Taxes: A Public Policy Partnership for Good Health

Report | November 1, 2000 | By John Burbank, Michael Sullivan

Executive Summary

Health care insurance is fundamental to Americans’ quality of life and peace of mind. Unfortunately, our  health care system, which relies on a patchwork of voluntary employer and government sponsored health  insurance, has failed to insure health care for millions of low and moderate income working families. In our  own state, half a million individuals are without health insurance. But the foundation is already in place for a  solution to this growing gap in economic security for working people in Washington State.

The Basic Health Plan is this foundation. The Basic Health Plan provides no frills health insurance to  Washington state residents who can’t get health insurance from their work and whose family incomes are  below 55% of the median income. All participants pay into the Basic Health Plan, pro-rated by income, and  the state provides a sliding scale match. Unfortunately, the Basic Health Plan has been chronically  underfunded, so that thousands of people who qualify for and need this health insurance are unable to get it.  What we need is a new funding source to expand coverage for this program.

This funding source is readily available and builds on sound public health policy – a straightforward increase  of the tax on cigarettes, with the additional revenue dedicated to expanding health care coverage funded by  the Basic Health Plan. Such a policy would benefit Washington families in several ways. Increasing  cigarette taxes results in decreased purchase and consumption of cigarettes. This effect is immediate. It also  has long-term consequences in that youth and young people are particularly sensitive to price changes for  cigarettes. People are most apt to become addicted to smoking in their youth, so that any disincentives to  smoking also decrease long term addiction to tobacco. A cigarette tax increase serves the important public  health, public policy, and health policy functions of reducing smoking, reducing smoking’s significant and  negative health effects and associated costs of care, and in creating the revenues for expanding health care  coverage.

A 50-cent increase in cigarette taxes would yield $125 million a year in new revenues. This funding would  cover about 70,000 new participants in the Basic Health Plan, reducing the percent of uninsured in our state  to below 10%. Most importantly, it would provide health care coverage to hard working Washington citizens  who do not get coverage from their employers, and it would significantly increase public and individual  health by decreasing cigarette smoking and long-term addiction to tobacco.


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