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As State Congressman Rep. Patrick Bauer prepares to take the position of Speaker of the House, I ran across this article about Governor Mitch Daniels’ proposal to raise taxes on cigarettes to fund his new program for providing free healthcare to those who cannot afford it.

This was my letter to Rep. Bauer:

Dear Representative Bauer,

I am writing in response to an article published in the Indianapolis Star yesterday. Here is the link: http://www.indystar.com/apps/pbcs.dll/article?AID=/20061119/LOCAL/611190471

According to this article, Governor Mitch Daniels plans a $.25 per pack increase in cigarette taxes in the short term. The basic concept is that the tax increase on smokers will benefit the state by providing free healthcare to the un/under-insured.

First, I consider myself among the State’s middle-class. I am an I.U. graduate and an information technology professional. Currently, I work as a consultant to medium-to-large businesses, communities and local governments in disaster preparedness and recovery planning.

Second, I am single with no children. Otherwise I would not be able to afford the fact that…

Third, my insurance policy has a deductible of $5000. I have it only in the event of extreme emergencies. Otherwise, I have to save and include into my budget things like regular dental visits, eye exams and physicals (none of which can I afford). Even as a striving entrepeneur trying to grow a technology business in this state, I cannot afford healthcare for myself. How can I ever imagine to grow my business and hire employees? How could I ever expect to take on such a venture if I had children?

And finally, I’m no one special. I grew up in Shelbyville, just me and my mom and my little brother. Though my mom took out some loans, I had to put myself through college, and it took me seven years. The point is, I had every opportunity that everyone else in this state has, no more and no less.

To quote the article, “The plan borrows from a concept known as consumer-driven health care, already being pushed by insurers and businesses looking to curb health-care costs.” I don’t see how this plan is related to the market in any other way than the producer setting a price and the government accepting it and subsidizing it by ‘making up the cost’ to those who need but cannot afford it. The program is ‘being pushed by insurers’, but how, exactly, it reduces costs, well, I am at a loss.

Instead it seems the government is at the mercy of the insurance companies and health-care providers. By agreeing to pay their extreme premiums, the State perpetuates the rising costs. The rising cost of health-care is NOT a simple case of supply-and-demand (ie, not market nor consumer-driven). Instead, it seems somewhat analogous to Federal Government subsidies to U.S. farmers to keep world market prices down. Where the government strives to keep market prices (for crops or healthcare) low by subsidizing the demanded price and reducing the costs for the consumer, it subsequently increases price, reduces demand, lowers quality, fills the gap and perpetuates the situation.

So, back to the cigarette tax. To put this burden of subsidizing extreme health-care costs on smokers is unfounded. Purchasers of cigarettes do not create the disparity between the cost of health-care and what the public can and is willing to spend. The government does that by paying what insurance companies demand and making up the difference with consumers.

The real effort should focus on reducing the costs of health-care and allowing it to be market-driven. Those who can afford it will spend the money. Those who cannot won’t. It’s like Service Merchandise vs. Tiffany’s, or Wal-Mart vs. Nordstrom.

In summary, any increase of taxes on the purchasers of cigarettes is unjustified and narrow-minded. The problem isn’t with smokers and they should not be punished for it. The problem is with the government substantiating the overpricing of health-care.

When it comes time to vote on Daniels’ proposal, I will count on your vote to oppose it.