Dear Legislator:
On behalf of National Taxpayers Union (NTU), the nation’s oldest taxpayer advocacy organization, I write to express our concerns with Senate Bill 322. If enacted, SB 322 would levy an annual $5 million fee on wholesalers of opioid medication. NTU, along with every American, supports ending the suffering the opioid crisis has inflicted. However, punitive taxation of medication is a misguided approach that does not address the underlying causes of addiction and abuse. While the human tragedy of the crisis must remain a priority for policymakers, we respectfully ask that you give careful consideration to both the intended and unintended fiscal policy consequences of SB 322.
Artificially raising the price of medication through taxes would do little to curb drug use, as most addicts are typically unaffected by price increases. Research shows these individuals have an inelastic demand (meaning a change in price will only slightly affect demand) and will continue to use no matter how high the price becomes. To that end, the annual $5 million fee would be unlikely to result in any net decrease in the overall illicit or legal consumption of medication.
A recent study examined the impact of opioid taxes and found they lead to higher insurance premiums and out-of-pocket costs for consumers and increase health care costs for governments. As is the case with most taxes, most of its effects will be passed along to the consumer. In this case, for consumers in the private market, insurers are likely to pass along these increased costs in the form of higher premiums, whether or not they actually purchase prescription medication. Unfortunately, this means that many patients suffering from legitimate ailments could have a harder time accessing medication they rely on.
More than 276,000 Montanans receive health benefits through Medicaid or CHIP, programs that would face immediate financial strains if SB 322 is enacted, thus requiring more taxpayer resources to cover any new costs. Medicaid is already one of the fastest-growing portions of the budget, having grown from $1 billion in FY13 to $1.4 billion in FY17.
The nationwide drug epidemic is a serious matter and requires a comprehensive, multifaceted solution. However, as you work towards finding an appropriate balance among the matters of prevention, rehabilitation, and enforcement, we sincerely hope that you carefully evaluate what SB 322 will mean for taxpayers, patients, and the economic and fiscal health of Montana. Thank you for your consideration of our comments on this sensitive matter, and should you need any additional information or taxpayer perspectives, please consider NTU a resource.
Sincerely,
Thomas Aiello
Policy and Government Affairs Associate