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Tobacco tax hike idea latest try to stop needed reform

As opposition among some providers for Louisiana’s revamp of its Medicaid program continues to crumble, others make last-ditch efforts to preserve the existing system that inefficiently uses public dollars to their benefit.

The latest effort to forestall reform comes from the organization that protects the largest beneficiaries of the existing system, because the majority of clients in the system are children, the Louisiana Chapter, American Association of Pediatricians. Rather than improve the system, they suggest increasing taxes, specifically on tobacco.

Sin taxes always have their allure, with the arguments that, in this case, smoking would decrease presumably with its attendant problems and raise some revenue on the side. But these hikes usually don’t come close to bringing in projected revenues and they do hurt small business – possibly throwing more unemployed people onto Medicaid (and reduced smoking actually ends up costing more in health costs in the long run).

But the most objectionable part to linking this tax increase with funding for Medicaid is it abrogates the responsibility to increase system efficiency that facilitates the transfer of taxpayer dollars into the hands of a few. As currently constituted, a provider simply bills the state for whatever service, regardless of its actual medical necessity, which places a premium of quantity over quality. Until recently, a plan specifically targeting children’s needs, Community Care, paid a flat monthly rate to providers regardless of any supervision and care, if any, they provided with no quality controls.

State reforms, currently being implemented, now have created benchmarks and performance incentives for this program. They also encourage the creation of provider groups or using third-party administrative entities such as insurance companies, through a plan to give Medicaid recipients the choice of providers. Funding allocation for service provision will be arranged so that inefficient practices that do not contribute to improved health outcomes will be discouraged. As such, this means providers will have to demonstrate quality meaning probably more work on their parts, and they either will have to work harder to administer their plans and/or share profits with outside administrators to do so.

So, from the pediatricians’ perspective, it comes down to either working better and/or reducing their profits, and that’s why they want to paper over the system’s inefficiencies that disproportionately favor them with a tax. As the state’s plan has evolved to address concerns of many providers, some who were in opposition now favor it, isolating those who have really profited off the current inefficiencies.

We shouldn’t blame these providers for tying to make a living, but when they try to do it off the taxpayer when a more efficient way of doing things that has performed well in other states exists, despite their pieties claiming they promote better health, actually their opposition smacks of greed.

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