Lighting up in New Jersey now costs smokers more than ever, and that's good news for hospitals that treat the poor.
Effective Jan. 1, the state's cigarette tax rose 50% to 80 cents per pack while the wholesale tax on tobacco products increased 48%. The tax increases will raise $205 million annually, including $155 million for charity care and other healthcare programs in the state.
Late last month, state lawmakers voted to raise tobacco taxes as part of a permanent $489 million-a-year healthcare funding package. The largest share -- $320 million -- is earmarked to subsidize hospitals' charity-care expenses. The new funding package replaces a charity-care funding law that expired Dec. 31.
Under a 1992 state law, New Jersey hospitals are required to accept all patients, regardless of their ability to pay. But since that law was passed, the number of uninsured has ballooned to 1.3 million from 700,000, says Peter Lillo, vice president of government relations at the New Jersey Hospital Association.
The NJHA, joined by the Hospital Alliance of New Jersey and New Brunswick-based University Health Systems of New Jersey, lobbied heavily for continued subsidies of charity care. Combined, the three hospital groups spent $600,000 on radio, print and television advertising.
Hospitals received an estimated $300 million in state subsidies last year, helping to offset some $450 million in charity-care expenditures, Lillo says.
Lillo says the new funding package is a big win for the industry. "I think they finally did the right thing and took care of the hospitals," he says. The next issue, however, is to decrease the 1.3 million people who don't have health insurance, he adds.
The new package also continues to tap the state's unemployment insurance trust fund, but that funding is scheduled to be phased out by 2002.