California’s ballot initiative process traditionally has been a laboratory for new methods of campaign deceit. Novel examples of hypocrisy, misrepresentation, deliberate errors of commission and omission all have been paraded past the voters, often lubricated by millions of dollars in corporate funding.
That’s not the case with Proposition 56, a November ballot measure that would more than triple the state tax on cigarettes and levy excise taxes on e-cigarettes for the first time. The tobacco industry’s “No on 56” campaign, which has accumulated a war chest of more than $56 million (so far), is nothing new. It’s based on tried-and-true methods that have beaten down efforts to raise cigarette taxes across the country for more than 20 years — most recently in California in 2012.
As Stanton A. Glantz, the veteran anti-tobacco crusader at UC San Francisco, observed in 2009, the two key arguments of successful industry campaigns were “that the tax increase did not dedicate enough to tobacco control and hospitals and health maintenance organizations would profit.”
Proposition 56 would get us within spitting distance of wiping out smoking in California completely.
Sound familiar? Here are the two main arguments appearing on the “No on 56” campaign website: “Prop. 56 allocates just 13% of new tobacco tax money to help smokers or stop kids from starting,” and “Prop. 56 is a $1.4 billion ‘tax hike grab’ by insurance companies and other wealthy special interests to dramatically increase their profits.”
By “special interests,” the campaign means doctors, insurers and hospitals that would receive higher reimbursements for treating patients through Medi-Cal, the state’s Medicaid program. If Proposition 56 passes, as much as 82% of the proceeds will be spent to increase Medi-Cal reimbursements.
Proposition 56 would raise the state’s cigarette tax of 87 cents per pack, the 36th-highest state cigarette tax in the country, to $2.87, which still would leave it as only the ninth-highest. Similar increases would be imposed on other tobacco products. The measure is expected to raise as much as $1.4 billion in 2017-18, its first year, though the figure is likely to decline as it discourages smoking.
“Proposition 56 would get us within spitting distance of wiping out smoking in California completely,” Glantz says.
Despite that, the No campaign identifies itself as “a coalition of taxpayers, educators, healthcare professionals, law enforcement, labor and small businesses.” It does count the rigorously anti-tax Howard Jarvis Taxpayers Assn. among its backers. But when I asked the No campaign’s spokesman, Brooke Armour, to identify educators and healthcare professionals supporting the campaign, she couldn’t name any other than a single teacher and physician who appear in the group’s campaign ads.
The Yes campaign has raised about $22.5 million, the largest donors of which are the California Hospital Assn. ($10 million), billionaire activist Tom Steyer ($3.5 million), the Service Employees International Union of California ($3 million), the California Medical Assn. ($1 million) and Blue Cross ($1 million).
Glantz says the No campaign’s cavil about the relatively small share of revenue directed to smoking cessation programs is misleading. That money, which would be split between the state Department of Education (2%) and Department of Public Health (11%), would reinvigorate California’s anti-smoking education and information programs.
Those programs have withered because of inflation and the decline in tobacco tax revenue that results from the dramatic reduction in smoking since Proposition 99 of 1988 raised the state tax by 25 cents per pack. In 1998, Proposition 10 raised the tax to the current 87 cents, but directed most of the revenue to early-childhood programs.
That’s when California began to lose what was once its lead in state tobacco taxes. Around the same time, according to studies by John P. Pierce, an expert on smoking and cancer at UC San Diego, the state’s marked progress in reducing per capita tobacco consumption began to fall off.
Regardless of where the Proposition 56 money goes, the increase of $2 per pack should “make a substantial difference” in discouraging smoking, Glantz says. Its impact will be felt especially strongly by youths and low-income persons, among whom smoking remains stubbornly prevalent.
The No on 56 campaign suggests that devoting only 13% of the proceeds to anti-smoking programs will shortchange smokers. “If we’re going to tax smokers, more should be dedicated to helping them quit,” says Beth Miller, the opposition spokesperson.
Do the tobacco companies really believe that? When I asked Miller what level of spending on anti-smoking programs would have prompted her industry patrons to support Proposition 56, she demurred. “I would just say, ‘More,’ ” she replied.
Nor is there anything necessarily unjust about steering tobacco tax revenues toward Medi-Cal, which chiefly serves low-income populations with high smoking rates. Medi-Cal has been impoverished by reductions in the reimbursement rates for doctors and hospitals, especially since a 10% across-the-board cut was imposed during a state budget crisis in 2011. The cut was never reversed, but is likely to be covered by the revenue from Proposition 56.
California’s reimbursement rates average about 80% of the national Medicaid average, and less than half the reimbursements paid for typical patient visits by Medicare. Doctors say Medi-Cal rates often fall below the cost of treating some patients, which in turn keeps participation in the program by primary care physicians below national standards for availability of care.
The image of fat cat insurance executives and rich doctors profiteering from Proposition 56 stands at the hub of the tobacco industry’s campaign. It’s a seductive pitch that supporters may have difficulty combating, especially with their much smaller budget.
It’s also similar to the claim the industry used to slay Proposition 29 in 2012, which would have raised the cigarette tax by $1, mostly to fund cancer research. The tobacco companies mustered nearly $50 million to paint the measure as a research “boondoggle,” defeating it narrowly 50.2% to 49.8%. Supporters of Proposition 56 are hoping that a groundswell of skepticism about the industry, aided by a strong tide of pro-initiative commentary in the press, will put this version over the top.
But initiative campaigns seldom lend themselves to nuanced arguments, acknowledges Jim DeBoo, the campaign chief. That’s a plus for the tobacco industry, he says. “They’ve always played a smoke and mirrors game.”