An IR View: Tobacco tax hike, while not ideal, is the only solution we have

Posted on Sunday, October 7, 2018

Helena Independent Record

Although there are some valid arguments against Montana Initiative 185, we believe there’s too much at stake to vote no.

Namely, the program that 94,000 low-income Montanans rely on for their health care.

The initiative would raise the state cigarette tax by $2 per pack and impose taxes on vaping products for the first time to help fund Medicaid expansion and a variety of other programs. Montana’s Medicaid expansion program is currently scheduled to expire in June, and the initiative would make it permanent.

Montana’s share of Medicaid expansion costs are expected to rise from about $58 million in 2020 to $66 million in 2023.

The initiative is projected to generate $74 million per year, which would be plenty to cover the state’s costs, but the amount that can be used for Medicaid expansion is capped at $26 million per year.

While opponents of the measure are rightly concerned that the initiative would not provide enough tax revenue to pay for the program it mandates, proponents say the premiums paid by policyholders and the tens of millions of dollars the state will save by keeping people off traditional Medicaid will make up the difference. Many of those covered by the expansion also qualify for traditional Medicaid, for which the state pays a much higher share.

The increase in tobacco costs is also expected to cause more people to quit smoking. While that would decrease the amount of revenue the state receives from the initiative, it would also decrease the amount of taxpayer money spent on issues caused by smoking, which is currently estimated at $779 per household in Montana.

Opponents have referred to I-185 as a “cash grab,” and we don’t necessarily disagree. Most of the revenue from the initiative would fund new and existing programs that have nothing to do with Medicaid expansion, and a projected $15 million would be funneled into the general fund.

Opponents have also argued that I-185 violates the section of the state constitution that prohibits the use of ballot initiatives to appropriate money. While that didn’t appear to be a problem when Montanans approved a tobacco tax hike to fund health programs in 2004, only a judge can make that call.

Without knowing every Medicaid expansion recipient’s personal situation, there’s no way to know whether any of them are abusing the system as some opponents have suggested. But what we do know is many Montanans with no other options are at risk of losing their health insurance if this initiative fails.

Like many of the initiative’s opponents, we do not want Medicaid expansion to expire and believe the Legislature should be responsible for figuring out how to fund it. But we have also seen what happens when our Legislature is tasked with finding funding for important programs. If past behavior is any indicator of future performance, it’s unlikely that our legislators will be able to find a solution before thousands of Montanans lose their health care coverage next year.

That’s simply not a chance we are willing to take.

Despite its many problems, we believe I-185 is a workable, bipartisan solution to a serious problem facing nearly one in 10 Montanans.

This is the opinion of the Independent Record editorial board.