ACHI: Smoking costs insurers $542 million annually

Arkansas’ private insurers pay $542 million annually for smoking-related diseases in individuals ages 30-65, according to a newly released infographic by the Arkansas Center for Health Improvement.

The most common smoking-related ailment among that group was chronic obstructive pulmonary disease. It affected 48,047 people. Diabetes was the second most common, affecting 22,258. Lower respiratory infections was third, affecting 20,987.

Rounding out the top 10 were obstructive pulmonary disease, ischemic heart disease, cardiovascular disease and circulatory issues, tuberculosis, breast cancer, asthma, and colon and rectum cancer. Some individuals were affected by more than one disease.

ACHI created the cost figure based on the Arkansas All-Payer Claims Database. It does not reflect smoking-attributable costs related to pregnancy, pre-term deliveries, neonatal care or childhood conditions. It also does not include costs for employers with self-funded health plans.

In January, ACHI reported that smoking-related diseases among that age group cost Medicaid $795 million. Meanwhile, the Department of Finance and Administration said taxes on cigarettes and other tobacco products, not including cigarette papers, raised about $230.4 million in 2017. That’s a difference of about $565 million between tobacco taxes and Medicaid costs.

Medicaid is the government program serving lower-income Americans, the disabled and others. ACHI is an independent health policy research, advocacy and program development center.

The report comes as some legislators are considering increasing tobacco and e-cigarette taxes. House Bill 1442 by Rep. Andy Davis, R-Little Rock, and Sen. Jonathan Dismang, R-Beebe, would have created a tax of 10 cents per milliliter of e-liquid sold, and it would have increased the excise tax on cigarette paper by 50 cents per package of about 32 sheets. It also would have increased from 4 percent to 6 percent the sales tax remitted by marijuana cultivators and dispensers.

It has since been withdrawn, but Davis said the two are filing a similar bill. It would have no new marijuana taxes, though it would take advantage of some existing ones to raise $10.5 million.

Those revenues would be dedicated to a proposed University of Arkansas for Medical Sciences National Cancer Research Center Designation Trust Fund. The fund is meant to enable UAMS’ Winthrop P. Rockefeller Cancer Institute to attain a NCI Research Center designation.

The fund will be created by Act 181 by Sen. Missy Irvin, R-Mountain View.

Attaining NCI Research Center status would provide the Institute more access to research funds and would give patients access to clinical trials, cancer treatments and prevention services.

Meanwhile, Senate Bill 347 by Sen. Will Bond, D-Little Rock, would create a privilege tax on e-cigarettes equal to the total tax levied on tobacco products. The first $10 million would be dedicated to the trust fund, with any remaining revenues credited to UAMS’ operating cash fund.

House Bill 1519 by Rep. Lee Johnson, R-Greenwood, would prohibit the sale of tobacco, vapor, alternative nicotine, and e-liquid products, as well as cigarette papers, to anyone under age 21. Members of the Armed Forces would be exempted. Courts could order minors to complete three hours of community service, enroll in a tobacco education program and impose other punishments.

Arkansas’ cigarette tax is $1.15 per pack. Oklahoma last year raised its tax by $1 to $2.03 a pack. Missouri’s, by contrast, is 17 cents per pack and can only be changed by the voters.

The national average is $1.73 per pack, according to the Truth Initiative, a nonprofit public health organization funded by the 1998 tobacco settlement between states and major tobacco firms.

Arkansas subjects e-cigarettes and other vapor products, which also contain nicotine, only to sales and use taxes. According to the Truth Initiative, e-cigarettes are not subject to a federal excise tax, and only eight states and the District of Columbia have an e-cigarette tax. Louisiana is the only state bordering Arkansas that has one. Kansas also does.