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.