As the 2010 legislative session opened, Georgia faced a dilemma: With a sluggish economy and unemployment hovering over 10 percent, there is a spike in the need for safety net services at the very time that state revenues are sagging.
Severe budget deficits threaten essential services such as Medicaid and PeachCare for Kids, which serve as lifelines to low-income families who might otherwise be uninsured in this difficult economic climate.
One potential solution is an increase in the state’s tobacco tax, currently one of the lowest in the nation, which could have the dual effect of reducing smoking rates and generating revenue to preserve necessary health services.
A reduction in smoking rates has considerable public health benefits and reduces overall health care costs — nationally, tobacco use costs our health care system about $96 billion each year. An excise tax on tobacco has been demonstrated to curb usage, particularly among younger smokers.
According to the Campaign for Tobacco Free Kids, a 10 percent increase in the price of cigarettes reduces smoking by 3 percent to 5 percent and reduces the number of children who smoke cigarettes by at least 6 percent.
A strong health care safety net is particularly critical in times of relatively high unemployment because most Georgians normally obtain health insurance as a job-related benefit.
Losing a job usually means losing the health insurance that came with it. Enrollment in the Medicaid program, which provides health insurance to low-income individuals and families, increases when the economy sours and people lose that employment-based coverage.
Because of this effect, Medicaid is known as a countercyclical program. As more Georgians enroll in Medicaid and PeachCare against the backdrop of a stretched state budget, however, thousands of Georgians are at risk of losing access to these public health resources at the time they are most needed.
Eligibility for Medicaid in Georgia is more restrictive than in many states. Childless adults are generally ineligible for the program, even if they fall on hard economic times, and parents must have income below about half of the federal poverty line to qualify.
Combined with a lack of affordable health insurance options for those who don’t have access to a job-based plan, many Georgians end up uninsured. Georgia ranks 13th among the states in the percent of people living below the poverty level, and an alarmingly large share of our state’s low-income residents — about 40 percent — are uninsured.
Federal legislation passed in early 2009 provided some short-term relief.
First, a hefty subsidy was made available to workers who lost their jobs and wanted to maintain their previous employment-based health insurance plan through COBRA.
Second, the federal share of the cost of the Medicaid program was temporarily increased, providing fiscal relief to the states. Through 2010, Georgia’s share will be one-quarter, rather than one-third, of the cost of our state’s Medicaid program.
This injection of funds has allowed our state to continue providing vital services. When these federal funds go away, however, Georgia will face renewed fiscal challenges. We need a more balanced and sustainable approach to ensure these critical services remain available when the need for them is greatest.
While there are a number of ways to address our state’s health care and budgetary challenges, the tobacco tax would improve not only our state’s fiscal health but also the health of our citizens. It should be on the table in 2010.
Cindy Zeldin is executive director of Georgians for a Healthy Future.