RomneyCare: Exploding Costs, Higher Taxes

In the wake of budget overruns in the Massachusetts health care overhaul Mitt Romney signed in 2006, Romney's successor, Democratic Gov. Deval Patrick, has already raised business and cigarette taxes in order to help fund the program. Problem solved? Hardly. In fact, Gov. Patrick is now proposing yet more tax hikes to help pay for the program. Via yesterday's Boston Herald:

Senate President Therese Murray declined to say Monday whether she’d support a 20 percent increase in the state cigarette tax proposed last month by Gov. Deval Patrick to help fund the exploding cost of health care programs.

Supporters of the tax defend it by pointing to estimates that suggest higher taxes on cigarettes will reduce smoking. Given that neighboring New Hampshire recently cut its cigarette tax, it may be that the effect turns out to be shifting cigarette purchases across state lines. But what if it works, and smoking rates drop? That means that cigarette tax revenue will also drop. Gov. Patrick's proposal seems to be an attempt to raise revenue by taxing behavior that he'd like to discourage. It's not a defense, but Massachusetts isn't the only state to try funding public health programs with smoking revenues. In the late 1990s, Arizona attempted to pay for an expansion of its Medicaid using revenues from the Master Settlement Agreement between the tobacco industry and the states. The state ended up with an odd public health problem: Too few smokers

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Tim||

    This is why SUGAR is the new TOBACCO.

  • Peter Suderman||

    According to the Herald, Patrick's budget "also calls for an end to the sales tax exemption for candy and soda."

  • o3||

    why was there an exemption to begin with?

  • Alack||

    They're considered food items, which are currently exempt from sales tax.

  • wareagle||

    and govt being govt, we all know that when the exemption on one product is lifted, exemptions on others are soon to go away, too.

  • lily||

    looking for the bilover?---datebi*cO'm--- is a site for bisexual and bicurious singles and friends.Here you can find hundreds of thousands of open-minded singles & couples looking to explore their bisexuality.sign up for free.
    "

  • ||

    If you should have to pay higher taxes for consuming unhealthy things in order to pay for the healthcare costs, shouldn't you also have to pay higher social security taxes for living a healthy lifestyle? If you live healthy, you are going to live longer and collect more social security, which is paid for by all of society. Why should people be allowed to enforce the costs associated with healthy living on the rest of us?

  • ||

    it's almost as if everybody should stop trying to get everybody else to finance their lives.

  • ||

    Reminds me of the studies done during the big AG assault on tobacco a few years ago.

    The "damages" the AGs sought were, supposedly, the increased cost that smokers impose on state budgets. When the numbers were crunched, though, smokers were actually less expensive.

    Why? Well, aside from the pension savings, they die quicker, and that means cheaper.

  • o3||

    from an actuarial standpoint, my insurance agent buddy says they should encourage smoking. >its the waay-old farts that cost the BIG $

  • ||

    Smoking gives you a short relatively inexpensive death. Ending smoking will raise health care costs not cut them. Your friend is right.

  • adam||

    Do these analyses include lost productive years?

  • ||

    I think so. You get lung cancer from smoking usually in your 60s or later when your best work is done.

  • rather ||

    Your premise is not longer applicable: drugs and therapy extend their lives

  • ||

    Only about a 1/3 of them. About 2/3s of the time lung cancer is fatal and fatal very quickly.

  • ||

    I would imagine there is a huge underground market in lower tax cigarettes in Massachusetts. Why not drive up to New Hampshire, buy a few dozen cartons, then sell them at a profit to the other Massholes?

  • Alack||

    Ideas like these are exactly why it's only a matter of time before someone suggests creating a national database that records the information of any cigarette purchase. Y'know, to aid police in rooting out potential black market resellers.

  • ||

    As the blue states and get more and more desperate look for it and road blocks with tobacco sniffing dogs to follow. There is already a lot of money to be made buying the stuff in the South and selling it in New York.

  • sarcasmic||

    so it's just blue states? red states never impose any economic hardships on people?

    can you stop being an asshole for even ten seconds?

    these and other pressing questions tonight, on News at 11.

  • Alack||

    red states never impose any economic hardships on people?

    Of course they do; that's the nature of the beast. But we're talking specifically about cigarette taxes, which tends to be a Blue State issue.

  • ||

    I will stop when you stop dickhead. Why would you ever think that saying that means that red states never do anything bad? Oh I forgot you are total asshole and that causes your thinking and logic skills to erode.

    We are talking about Blue states and taxes. And in case you missed it the blue states are going broke. As they get more broke, they will do more and more desperate things. Are the red states assholes too? Sure. But they are not quite the broke desperate assholes the blue states are.

    Now do yourself a favor and get a crowbar and pull your head out of
    ass. I can't handout programs explaining everything to you.

  • Apatheist||

    I wrote up a long response showing why you were wrong and I don't feel like rewriting it but here is a summary:

    Here is red state doing exactly what you accuse blue states of doing in the future:

    http://www.knoxnews.com/news/2.....ins-today/

    Also Texas has almost twice the cigarette tax of California.

  • Apatheist||

    Note: it was rejected as spam despite having only one link...

  • ||

    "Are the red states assholes too? Sure. But they are not quite the broke desperate assholes the blue states are."

    Did you miss that sentence or just ignore it?

  • Apatheist||

    I didn't ignore it, or this:

    As the blue states and get more and more desperate look for it and road blocks with tobacco sniffing dogs to follow.
  • al Qaeda||

    what?

  • ||

    Aren't there Indian reservations around there? They must do a huge business in cigs.

  • tarran||

    John,

    The MA state police have anti-smuggling teams that stake out gun and tobacco shops and write down the license plates of MA shoppers.

    Essentially, if your license plate shows up too frequently, or they see you coming out of the store with a bulk purchase, or you buy a gun - they radio their uniformed brethren, and a marked cruiser will stop you as soon as you are comfortably inside the state.

    If you don't consent to the search, they'll just hold you until they get a warrant, and then rip apart your car.

    The smuggling gangs get around it pretty easily (you switch cars, duh!), but the staties do catch a lot of casual amateurs.

  • ||

    I am not surprised. What a fucking police state that shithole is.

  • tarran||

    I'm just waiting for the day they cancel the reenactment of the battles of Lexington and Concord because the muskets are promoting gun-violence.

    You know it's coming... :)

  • ||

    I am surprised they haven't. Children go to those things.

  • Alack||

    What a fucking police state that shithole is.

    They're still Puritan at heart. Of course, it's okay since they do it For Your Own Good(TM)

  • Massachusetts State Motto||

    For you...we're only doing this for you!

  • tarran||

    Whups, I forgot to say that the stores being staked out are in NH primarily and occasionally in VT.

  • ||

    That goes back decades. If you read the book Wise Guy, the book Goodfellas was based on, one of the major businesses they were in, when they were not hijacking cargo, was smuggling cigarettes from Virginia and North Carolina and selling them in New York.

  • ||

    The staties also love to hang out on the border with CT and specifically target CT drivers for harassment. Every time I used to drive into Sturbridge on 84 I'd get immediately wary and start looking for unmarked cars. Massholes.

  • ||

    Interesting. I have been on that very road probably 40 times and never had a problem. But I have never had a Connecticut plate either.

  • tarran||

    I was shocked a few days ago to see the staties were using SUV's that looked like crap cars. This guy was tailgating me on the pike in the left lane - inches off my bumper. I kept my cool, stayed on the cruise control until there was room to move the the middle lane and moved over. He goes by, so I look over to give him a disapproving look, and all I see is the laptop in the center console.

    The bastard did that to two more cars until he got someone to speed up and bang, he got his ticket.

    I'm sure his mommy is very proud of him.

  • ||

    I really fucking hate cops. Terrible thing to say. But for the most part they are just pathetic bullies. The power goes straight to their heads. If it didn't they wouldn't apply for the job.

  • ||

    Jesus. What state are you in?

  • Confusius Say||

    This guy was tailgating me on the pike in the left lane - inches off my bumper.

    Foot off gas and GEAR DOWN.

  • tarran||

    Foot off gas and GEAR DOWN.

    Oh yes, because having a collision with a police car + self serving report of how it was my fault + the inconvenience of getting my car fixed + increased insurance premiums + my ex's divorce lawyer pounding the table as to what a reckless scumbag I am will really show him.

  • ||

    Nah. I just slow down until they pass me. Then I speed back up. If I'm feeling particularly dickheaded that day, I'll make the tailgater really work for it.

    I will move over for *anyone*, until you tailgate me. After that, it's "fuck you."

  • ||

    The best is when they tailgate you and flash their high beams. No thank you sir, I don't feel like letting you pass me. In fact, I feel like matching this truck's speed for the next 20 miles, thank you very much.

  • Brett L||

    Depends. If you've been cruising in the left lane for the past 10 miles at +/-1 mph of the traffic on the right, I'll practice my drafting.

  • ||

    I would have given him a brake check, which probably would have pissed him off and gotten me a ticket or worse.

  • ||

    That is what I would have done too. And sadly either of us would have ended up the subject of the next Balko story.

    That needs to be a verb. Whenever someone is fucked over by the cops they are "Balkoized".

  • Sparky||

    To be fair, people in CT are shitty drivers.

  • .||

    Same thing happens when Minnesotans visit Wisconsin for the purpose of purchasing fireworks.

    Whether we're talking smokes, fireworks, guns...it always comes down to regulating fire.

  • ||

    Fire bad!!

  • Zeus||

    That's what I told Prometheus.

  • ||

    Tree pretty.

  • T||

    The larger Texas cities do this for fireworks as well.

  • ||

    MA must have made it a crime to possess too many cigarettes, I assume. The thought of that is mind-blowing.

  • tarran||

    It's not the owning of the ciggarettes so much as the requirement to pay sales tax on out of state purchases.

    In theory whenever you buy something in another state, you record how much you paid, and how much sales tax you paid. Then as you are preparing your state tax return, you enter those numbers in a special form which tells you how much extra sales tax you owe to MA.

    If they can't get you for cigarette smuggling, they'll get you for lying on your tax returns.

  • ||

    But if I just bought the cigarettes, how can they prove I wasn't going to declare them?

  • tarran||

    My understanding is that they document a pattern of bulk purchases in NH.

    Then they get evidence that you brought one of those shipments into MA.

    Then they ask for the forms for all the purchases they can document you as having made. And since nobody files that paperwork, BAM! They got you for tax evasion.

  • ||

    That is so dumb. I would imagine the real gangs that do it just have members live in New Hampshire and do all of the purchases.

  • ||

    That would be pretty easy to counteract - especially if you had a pool of cars to 'borrow' from. Either use your friends' cars, or start stealing plates. Or have a NH resident buy 'em and then transfer the ciggies to you at another location.

  • ||

    Yup. A woman I work with hasn't received her state income tax refund check for several years; the state just grabs it to reimburse itself for sales tax she owes for buying too many cigarettes out of state. I personally drive to Vermont for cigarettes once in a while, and load up on them any time we travel to Virginia or North Carolina. Still, as a smoker, I'm accustomed to being taxed more every year in order to pay for shit for nonsmokers. Adding sales tax to candy and soda is pissing me off a lot more at the moment.

  • Confusius Say||

    The MA state police have anti-smuggling teams that stake out gun and tobacco shops and write down the license plates of MA shoppers.

    By federal law Massachusetts residents can't buy a gun from a store in VT or NH unless it's shipped to a FFL dealer in MA where it's transferred to him under MA law.

  • ||

    No. True for handguns, wrong for long guns.

  • tarran||

    In Mass you have to be licensed to own any gun period - licenses controlled by the local chief of police.

    Most of the smuggling is in the form of hand-guns, which are very difficult to legally own in the Boston area.

  • ||

    Sure, but federal law has nothing to do with that.

  • tarran||

    Oh, I agree.

    The staties are going after violators of the state law - which while more liberal than NY (that bar is lower than a limbo stick at carnival time) is surprisingly draconian.

  • Brett L||

    Too bad NH and VT don't have broad wiretapping laws that require the consent of both parties.

  • ||

    Reason number 8 million why the BATF and federal firearms law need to go.

  • wareagle||

    why is that the left refuses to comprehend the reality of: when you raise taxes on an activity, you tend to discourage that activity. This notion of raising taxes on this group or that product consistently refuses to consider what impact the higher tax may have on the conducting of the activity or consumption of the product.

  • ||

    They comprehend it just fine. That is how the sell the taxes. "We need to stop people from doing this so tax it". But they are so addicted to money they just can't help themselves but to get used to the money rolling in when the tax is first levied.

  • wareagle||

    I don't know...when the effect of the higher tax has the predictable outcome of fewer people paying it, that does not show signs of high comprehension skills. Then again, these are liberals so what was I expecting.

  • ||

    Taxes are magic, don't you know?

    People don't respond to incentives or disincentives at all. They just do as they're told by their betters.

  • ||

    From the authoritarian's perspective, its a no lose deal. They either get your money, or they get you to act the way they demand.

  • Tim||

    There's another effect: people with low skills just drop out and go into the underground cash economy. The State picks up their rent, utilities and food for them.
    I wonder what portion of our unemployed are simply just happily living in the cash underground.

  • ||

    Lots. Who wouldn't be? I make too much money to make an underground life work unless I am willing to start dealing coke. And that is a bit risky for my tastes. But suppose I was a high school drop out. And the best I could do was a minimum wage job. Why work for $8 an hour and pay taxes, when I can get welfare and do something on the side tax free? It makes no sense for someone in that situation to live a straight life.

  • T||

    If I could get paid cash for engineering, I'd do it in a heartbeat.

    Of course, I say that as someone in the middle of doing his taxes and finding out just how painful last year's distributions were.

  • Brett L||

    Yeah. Uncle Sam is gonna break it off in me.

  • 0x90||

    You just need to draw a distinction between those who advocate for the policy in terms of its face value, and those who do so for political purposes. As the former increasingly achieve their aims, the latter decreasingly achieve theirs.

  • Confusius Say||

    The state ended up with an odd public health problem: Too few smokers.

    Not enough smokers? Or the Underground Railroad of the 21st Century?
    The tobacco companies now all have a 5-carton limit a store may sell a customer at a time. Even so, if you go to a store along I-95 in Virginia, they still sell an unbelievably large number. I've often seen 4 or 5 people with 5 cartons each get into a car with yankee-states plates and drive across the street to another convenience store.

  • I, Kahn O'Clast||

    It's hard enough to breath outdoors in AZ in the summer, why would anyone want to breath in smoke on top of it? Maybe rather than the taxes leading to too few smokers, laws forcing smoking outside were responsible.

  • ||

    KAAAAAAAAAAAAAAHHHNNNNNNNNNNNNNN!
    http://khaaan.com/

  • ||

    Well just as everybody said even people in tobacco control sahigher taxes would lead to massive bootlegging in cigarettes! Look right in maryland the cigarette gestapo!

    9 indicted for cigarette smuggling


    They’re the tip of the iceberg,” Maryland Comptroller Peter Franchot said. “There is an explosion of cigarette smuggling going on.”


    Comptroller’s Supervisory Agent Mike Madison peered through his binoculars, eyeing the black Toyota Camry as it pulled up to the Woodbridge tobacco shop. A man in a polo shirt got out, laid down a mat in his trunk and went inside. He emerged carrying several grocery bags — 10 to 12 cartons of cigarettes, Madison guessed — and drove away.

    It sounds innocuous. But tobacco smugglers like these, officials say, are responsible for hundreds of thousands of dollars in lost tax revenue to Maryland each year. On Thursday, Prince George’s County prosecutors announced that they had indicted nine people — allegedly responsible for nearly $30,000 in lost tax revenue — on criminal charges of transporting and conspiring to transport unstamped cigarettes.

    http://www.washingtonpost.com/.....story.html


    Just like during alcohol prohibition:

    Trade In Black-Market Cigarettes: Hot, Dangerous
    http://www.npr.org/templates/story/st...

  • ||

    Common sense dictates that with price increases, smokers would be deterred from smoking. Instead, the increase in prices has been a boost for illicit tobacco trading. “What happened was that the market size did not shrink, but instead there was a heavy increase in the illicit trade of tobacco because there weren’t enough measures in place to safeguard the market from infiltration by illicit traders,” says Karim Refaat, Head of Corporate Affairs for North Africa at British American Tobacco (BAT).

    According to Refaat, the illicit tobacco trade accounted for a mere 0.01% of Egypt’s 81 billion stick market in the first quarter of 2010 and now jumped to 7%, with the possibility of moving toward the 10% mark. Refaat blames pricing dynamics for allowing illegal brands to gain a wider market share. bt

    http://businesstodayegypt.com/.....on/secId:3

    Illegal tobacco burns a hole in profits for licensed traders
    BENIDORM TOBACCONISTS are alarmed over what they consider to be “a new wave of trafficking contraband” in the city. A high incidence of contraband tobacco has been detected over recent months; business mostly conducted within the British community. Certain establishments are selling the smuggled tobacco well below the market price offered in licensed premises. And some English bars and restaurants are also involved in selling under the counter tobacco amongst other illegal merchandise.

    The Guardia Civil has launched an investigation into black market tobacco, concentrating on premises retaining an overlarge stock and checking on supply source documentation. It is suggested that in some instances the tobacco being sold is of inferior quality and contains unacceptable levels of tar, nicotine and manure mixtures. The illegal tobacco comes mainly from China.

    http://www.roundtownnews.co.uk.....&Itemid=32

  • Paul||

    Better alt-text: It's just... this little bit of skin... is caught in the damned zipper.... damnit it won't come out!

  • eh||

    "Romney's successor, Democratic Gov. Deval Patrick, has already raised business and cigarette taxes in order to help fund the program."

    A democratic governor in Massachusetts raised taxes you say? While I'm sure Romneycare sucks bigtime. That's kinda like blaming Mitt for the weather.

  • ||

    Mitt signed it into law,mitt gets it hung around his neck! RomneyCare is the mother of the Bastard ObamaCare!

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement