By M.D. Kittle | Wisconsin Reporter

MADISON — First pensions. Now cigarettes.

Gov. Scott Walker is asking some state public employees to kick in again — this time to kick the habit.

PAY UP: Wisconsin Gov. Scott Walker wants public workers who light up to pay up – $50 per month more. What do you think?

Tucked inside the governor’s 500-plus page, $67.999-billion budget proposal is a “win-win” state wellness program aimed at cutting health care costs. Among other provisions, the governor recommends assessing state employees who smoke $50 per month hoping  they will be “encouraged to avail themselves of smoking cessation and other services designed to help them kick the habit.”

The provision could affect about 10 percent of employees, out of approximately 69,000 state employees total, according to the state Department of Administration.

There were 70,155 active employees in state employee health plans in 2011, according to the state Department of Employee Trust Funds’ 2012 Group Health Insurance Fact Sheet. Another 24,860 retirees were enrolled.

The fee is expected to “save the state” $2.7 million over the biennium, DOA said.

The idea is clear: Smokers have more health-related problems, costing taxpayers more money.

“(B)ecause health care costs of smokers and other people who use tobacco are estimated to be 30 to 35 percent higher than nonsmokers, the Governor recommends that a tobacco user charge be included for state employee health plans beginning in calendar year 2014,” Walker’s budget states.

But no matter how you slice it, the fee is akin to a “sin tax,” in the same vain as a $2 tax on a pack of cigarettes, says Adam Hoffer, assistant economics professor at the University of Wisconsin-La Crosse.

Hoffer is co-author of “Sin Taxes: Size, Growth, and Creation of the Sindustry,” a study by the Mercatus Center, a free-market research organization at George Mason University.

“It’s just a separate tax on smokers, in a different form,” he said.

Private companies and the public sector have long provided prevention incentives, from employee smoking cessation and weight loss programs to cash for reaching health goals.

Wisconsin appears to be out in front of the public worker “sin tax” concept, according to Hoffer. Arizona has proposed a so-called “fat tax,” a $50 annual fee on Medicaid patients who fail to lose weight or quit smoking. Critics have dubbed that proposal “cruel and regressive” because it targets after poor people.

Stephanie Marquis, spokeswoman for the state Department of Administration, said 13 other states have a similar provision or the same provision.

Hoffer questions whether the state of Wisconsin would have to administer screenings to determine whether employees would have to fork over the $50 a month smoker’s fee. Would such testing offset revenue from the fee?

Walker proposes state workers participate in a wellness assessment and biometric screening, to help identify potential health concerns. The data would remain confidential, according to the budget document, but aggregated data would be kept so that the state could “design effective and targeted wellness programs that best meet the needs of its workforce.”

“In this, the Year of Well-being, the Governor will kick-off a concerted effort to encourage all state employees to focus on and improve their health and well-being,” the budget states. “In addition to important benefits to the individual, this effort will save money in the long run, by preventing chronic diseases and reducing treatment costs as well as reducing absenteeism and use of sick leave, helping state government to be more effective and efficient.”

Just how public employee labor unions feel about the governor’s proposal isn’t clear. Several American Federation of State, County and Municipal Employees locals did not return Wisconsin Reporter’s calls for comment. At least three state employees smoking outside state agency buildings Thursday afternoon on Madison’s Webster Street did not want to comment on the record.

Walker’s Act 10, which curbed collective bargaining for most public employees in the state, required, among other demands, public-sector employees contribute to their pensions and more to their health care.

The smoking fee would target a select group of public employees. Hoffer said the assessment could face a challenge — under the Affordable Care Act. The health care law, dubbed Obamacare by critics like Walker, stipulates that insurers cannot discriminate based on a pre-existing condition.

“I think someone could argue smoking is a pre-existing condition,” the political science professor said. “If you have been smoking for a long time it seems almost unfair, according to this new act, to charge them a new rate.”

Virginia’s Fairfax County Board of Supervisors has asked the county attorney to determine whether they can legally require employees to quit smoking or if they can institute a ban on hiring smokers, the Washington Examiner reported in December.

A Walker spokesman did not respond to a Wisconsin Reporter email asking whether the administration has any concerns about potential legal questions surrounding the smoking fee.

The governor takes aim at the ACA in his employee wellness proposal.

“Health care is one of the fastest growing costs for both the public and private sectors. This trend will only accelerate as the federal government implements the Affordable Care Act, which contains numerous taxes and fees on providers and on employers who offer their employees health care coverage,” the budget states.

The Mercatus study noted that the temptations for states to use selective excise taxation is “politically irresistible since the revenues generated in such ways can be reallocated to the public treasury, while some taxpayers, who are portrayed as imposing costs on society at large, are penalized.”

Wisconsin, for instance, used of a Big Tobacco lawsuit settlement and the cigarette tax money.

The Badger State was one of 46 states that received a combined $206 billion in the late 1990s Master Settlement Agreement. The Badger State was awarded $5.2 billion over 25 years. But when budgets tightened early last decade, then-Gov. Scott McCallum sold the payout and the state received a lump sum payout of $1.6 billion. The money helped solve the state’s budget crisis — until the next budget crisis.

“That money is gone, and now the cigarette tax is the only source” for the existing Tobacco Control and Prevention Program,  Dona Wininsky, director of public policy and communication for the American Lung Association – Wisconsin, told Wisconsin Reporter earlier this month.

Hoffer, a state employee who doesn’t smoke, said he would be interested to see whether the $50 monthly smoking fee goes to offset health care costs.

Contact M.D. Kittle at mkittle@wisconsinreporter.com