By Lisa Suennen
First Posted at Venture Valkyrie on 3/3/2013
No one argues about whether smoking is bad for you anymore; even the cigarette companies have kind of thrown in that towel. And yet, despite this rare unanimity on this one particular healthcare issue, smoking continues to be controversial at all levels of state and federal government healthcare policy. No where is this more obvious than in my own fair state of California, considered to be the 2nd lowest smoking state in the nation, but still spending over $17.7 billion/year on direct medical costs and lost productivity due to smoking.
Back in 1998 California passed Proposition 10, which led to the establishment of the First 5 California Program administered by the California Children and Families Commission. According to its website, First 5 “supports programs for children from prenatal to age 5 by creating a comprehensive and integrated system of information and services to promote early childhood development and school readiness.” The funding for this program came from a share of a $.50 per pack tax on cigarettes and similar tobacco products levied in 1998. When the tax was first passed, there were nearly 50 million smokers in California and thus the tax established by the passage of Prop. 10 generated approximately $590 million annually at that time, $140 million of which became the source of funds for the state-level First 5 program in 1999, its first full year of operation (the remaining revenues went to the individual counties for their locally administered programs and into a trust for future program funding).
The First 5 program had and continues to have a particular focus on
- Providing funding for community health care, quality child care and education programs for young children and families, customized to meet local needs;
- Educating Californians via a statewide public education campaign on the importance of early childhood development;
- Providing assistance to pregnant women and parents of young children who want to quit smoking.
First 5 is still considered a critical social program for California since studies have shown that a child’s experiences in the first years of life have a profound impact on educational, social and economic outcomes. Thus, the programs enabled by First 5 have long-term positive economic consequences for the state overall and provide a significant benefit for low-income families. If you are a fan of wellness and prevention and lower overall healthcare costs, First 5 is for you. This is particularly true since it is well-documented that the higher one’s socioeconomic status, the less likely one is to smoke, and that one’s best chance to influence a child’s socio-economic trajectory typically occurs in the first 5 years of their life.
For instance, 2008 data show that 7.8% of people who make $150K or more in income smoke while 16.7% of those whose income is $20K-$30K smoke. So lifting people out of a lifetime of lower income brackets through programs like those of First 5 help us ensure that fewer people smoke. And as we all know, reducing smoking directly leads to reduced healthcare system costs, a significant potential byproduct of the program.
However, in a cruel twist of irony, and operating in lockstep with the law of unintended consequences, the anti-smoking programs that are funded by other taxes on cigarettes in the state of California—taxes that are used to pay for anti-smoking ads and other activities to educate the masses about the importance of quitting smoking or never starting—have been so successful that the First 5 program is under tremendous financial pressure. In other words, as fewer adults smoke, less of Fast 5’s programs can be funded which teach children not to smoke (and to have overall better quality of life). Ouch my head hurts.
The State of California has seen an incredible decline in the number of smokers as a result of the efforts funded by anti-cigarette programs. Can I get a Hallelujah? According to the California Budget Project, “the share of Californians who smoke has been dropping for several decades. In 2010, fewer than one out of eight California adults smoked (11.9 percent), down from more than one-quarter (25.9 percent) of adults in 1984. As a result, the number of cigarettes sold in the state has plunged. In 1969-70, California smokers consumed 2.6 billion packs of cigarettes, equal to 130.2 packs for every California resident. By 2009-10, cigarette sales had fallen to just over 1 billion packs in California, equal to 25.9 packs for every state resident.” Californians rejoice! But on the other hand….
In 2011/2012 First 5 received $93.4 million in state funding (additional funding went to counties) as a result of the Prop 10 cigarette tax, down nearly $50 million from its original funding level, primarily as a result of fewer packs of cigarettes sold. In other words, the less Californians smoke, the less Fast 5 gets, the less we can invest in early childhood development that will….help improve kids’ socioeconomic status so they are less likely to smoke. Is your head spinning yet, because mine is. I believe this is what Captain Kirk would call a Kobayashi Maru. Furthermore, efforts to ameliorate this funding gap through more state cigarette taxes have caused a serious negative response.
And it gets weirder. The Affordable Care Act came with a provision that allowed insurers to charge smokers up to 50% more in premium than non-smokers—virtually all other forms of differential underwriting are banned, but this idea remained as part of a program to ensure overall lower insurance prices and to encourage personal health accountability. We can all readily understand why the cigarette manufacturers and their lobbyists are against this provision of Obamacare, but what is really counterintuitive is that the smoking industry’s arch enemy, the American Cancer Society, has come out against the provision as well. Why? They view the high insurance surcharges as a barrier that could make health insurance unaffordable to cigarette smokers, who are disproportionately low income. So let’s review:
- Efforts to educate the public to stop smoking have been highly effective, leading to fewer smokers;
- Anti-smoking programs have in fact been so effective that they are damaging programs funded by cigarette taxes that teach primarily low-income children how to live a healthier and wealthier life so they don’t start smoking;
- No one wants to pass more cigarette taxes, as evidenced by the failure of Prop 29 in California’s 2012 general election.
- There is also resistance to forcing smokers to pay a higher premium for health insurance because this disproportionately impacts low-income people, who are more likely to be smoking and thus really need to use their health insurance, driving the American Cancer Society to do the dirty work of the cigarette lobby
- California has adopted a ban on differential pricing for smokers who buy from the state health insurance exchange (and may expand this to all insured Californians), thus removing a key disincentive to smoke which will likely result in higher healthcare costs for smokers (and thus the state) and overall higher premiums for healthy people as well.
- And programs like Fast 5 that break the smoking cycle will continue to bleed unless we get worse at anti-smoking campaigns.
All of this drama is, in part, the result of social and political programs that are not operated in a coordinated fashion. Differentiated funding streams, federalism vs. actions by individual states, and the usual and customary conservative vs. liberal litany of drama lead to laws that contradict each other all the time. But when there are clear cut things that everyone knows and no one argues about (not even the cigarette lobby), such as the fact that smoking causes expensive health problems, you would like to think we could figure out a way to make it all work in concert. I know, it’s a pipe dream (no pun intended), but it really points to a burning need (pun intended) for true consumer education and engagement from childhood if we are going to break the cycle of smoking among children.
Yes, it’s far better than it used to be, but it is estimated that even now about 3500 kids (as in people under 18) try cigarettes for the first time every day and that 1000 of them become daily smokers. According to the Campaign for Tobacco-Free Kids, smoking kills more people than alcohol, AIDS, car accidents, illegal drugs, murders, and suicides combined, with thousands more dying from spit tobacco use. Of all the kids who become new smokers each year, almost a third will ultimately die from it.
In addition, smokers lose an average of 13 to 14 years of life because of their smoking. I guess that’s another of those unintended consequences of policies that interfere with programs to help kids stop smoking—the insurance system won’t have to pay for those last 13-14 years—woo hoo! Unfortunately the years that precede those are going to be very expensive so it may well be a zero sum game.
The real lesson from all this may be that taxes that fund specific social programs are tenuous at best. When the source of the tax goes away, so does the program, which may well have become essential to good public policy or, in this case, good public health. But with monumental efforts underway to reduce costs to the healthcare system and a cacophony of voices screaming that prevention is the best medicine, it would seem obvious that some of the funding attached to health reform should go to back fill programs that keep kids healthy and give them the best chance to become healthy adults. Just saying.