Tax alcohol to rescue Medicaid

Tax alcohol to rescue Medicaid

Rather than kill off what helps New Mexicans by cutting Medicaid, we should be raising alcohol taxes so we can put an end to what’s really breaking our state’s budget and causing so much of our medical woes.

The Journal’s March 10 editorial raised the alarm that we’re looking at a $417 million Medicaid shortfall. If you think that’s a ridiculously high amount, you’ll be stunned to know that the cost of excessive drinking to New Mexico’s local and state governments in 2013 was $793,500,000! These are costs hidden in our personal income and gross receipts taxes to pay for the extra police, ambulances, court cases, detention and hospital care that results from excessive drinking.

Only 18 percent of New Mexicans drink excessively. The other 82 percent of us drink responsibly or don’t drink at all. So whether or not you drink you’re being taxed the equivalent of $1 per drink for someone who’s getting sloshed. This costs each of us $400 per person per year in “hidden” taxes.

If we want to keep the state healthy, let’s raise alcohol taxes. We can recoup some of the money excessive drinking costs taxpayers and use it for the Medicaid shortfall. New Mexico leads the nation in alcohol-related deaths. Sixteen percent of all deaths in our state are caused by the alcohol crashes, poisonings and long-term diseases like liver failure and breast cancer that excessive drinking causes.

According to the Center for Disease Control’s Community Advisory Panel, raising alcohol taxes is the most effective way to reduce the health harms caused by excessive drinking.

The Alcohol Taxes Saves Lives & Money coalition has been advocating for a 25-cent-per-drink increase to the alcohol excise tax. Alcohol taxes haven’t been raised in New Mexico since 1993. Can you say that about your taxes?

Even though a 25-cent-per-drink increase in alcohol taxes would only recoup a quarter of the harms caused by excessive drinking, it would be a step toward having excessive drinkers pay for the harms their actions cause – rather than continuing to dump these costs on taxpayers.

And raising alcohol excise taxes would not only generate money to help pay for the Medicaid shortfall, it would significantly reduce health care costs because it would reduce alcohol consumption among excessive drinkers by about 10 percent. Their reduced drinking would, over the long run, prevent a sizeable chunk of the diseases Medicaid is being asked to pay for.

A 25-cent-per-drink increase in the alcohol excise tax would raise $154 million a year in revenues. That would be more than enough to pay for the match required for the 200,000 newly enrolled Medicaid recipients and still leave some money to go toward making up the $417 million shortfall. Remember, in 2017 the federal government will be paying a 95 percent match for these 200,000-plus enrollees if we put up the initial 5 percent. The federal match would bring over $1 billion in health care funding to New Mexico, so we’d be fools to let that economic boom slip away.

The beauty of using increased alcohol excise taxes to pay for Medicaid is that the CDC reports 49 percent of New Mexicans haven’t had a drink in the last 30 days. So about half of us won’t be paying an extra cent to keep our state healthy. The 32 percent of New Mexicans who drink responsibly would average paying only about $11 more per year – a small price considering the harms excessive drinking causes. The bulk of the tax increase will be borne by the 18 percent causing the biggest problems.

Before cutting Medicaid, our lawmakers should own up to the fact that they’ve let the alcohol industry get a free pass while every New Mexican is being required to pay $400 a year to subsidize excessive drinking. By shifting the burden of paying for excessive drinking harms to excessive drinkers, we’ll go a long way toward having the money needed to keep Medicaid funded. And we’ll also gain the benefit of having less health care costs over time that Medicaid has to pay out.

All figures used in this editorial are from a report funded by Bernalillo County on the impact of a 25-cent-per-drink alcohol excise tax increase. The full report is available here.

Originaly published March 16th, 2016 in the Albuquerque Journal

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