Ill. House approves raised tobacco tax in plan to close Medicaid hole

May 25, 2012

The Illinois House has agreed to raise tobacco taxes as part of a plan to strengthen the state Medicaid program.

The tax increase passed 60-52 Friday. It now goes to the Senate, which has backed similar increases in the past.

It more than doubles the tax on cigarettes, to $1.98 a pack. Other tobacco products would see a similar tax increase.

It also would create a special tax on hospitals that would then be matched by the federal government and returned to the state.

In all, it's supposed to raise $800 million a year for the Medicaid program.

Officials yesterday approved deep Medicaid cuts. The taxes and cuts are supposed to close a $2.7 billion hole in the Medicaid budget.