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Here’s where money from I-185 would go in Montana

Posted at 8:49 PM, Sep 13, 2018
and last updated 2018-09-13 22:48:29-04

HELENA – Tobacco industry-financed TV ads attacking Initiative 185 say it doesn’t entirely fund Montana’s Medicaid expansion, potentially blows a hole in the state budget, and finances other new and existing programs.

All of these charges are generally true – although supporters of I-185 say the charges conveniently ignore other truths that make the initiative a good deal for Montana and the state budget.

I-185, which will be decided by voters in November, would increase state tobacco taxes by about $74 million a year, including a $2-per-pack hike on cigarettes.

It also would commit Montana to extending and funding Medicaid expansion, which provides government-financed health coverage to 96,000 low-income adults. The program is set to expire next June.

Two tobacco firms have put nearly $9 million into the campaign against I-185, making it the second-most expensive electoral race in Montana.

Here’s a closer look at the charges leveled by opponents’ ads, and the contents of I-185:

“I-185 … deceptively claims to fund Medicaid expansion, but doesn’t provide enough new revenues to pay for it.”

The state’s share of the cost of Medicaid expansion, which is financed primarily by the federal government, is projected to be about $60 million a year, starting next year. I-185 designates a maximum of only $26 million a year of its revenue for Medicaid expansion, thus leading to opponents’ charge that it creates an “unfunded mandate of $34 million a year.”

But the Bullock administration, which supports extending Medicaid expansion, says the program also saves the state about $31 million a year, by providing a better federal match for people who would be covered by Medicaid anyways.

It also says those covered by Medicaid expansion will pay about $4.5 million a year in small premiums for their coverage. Together, these two amounts essentially erase the “unfunded mandate,” supporters on I-185 say.

“I-185 … sends more than half (the revenue) to the general fund and existing programs.” 

A true statement. About 30% of the new revenue generated by I-185 goes to existing programs, like the Children’s Health Insurance Plan and state building construction, and just over 20% — $15 million a year – goes into the state treasury (the “general fund”), with no strings attached.

About 14% of the money raised by I-185 — $10 million a year – also is earmarked for three new programs: In-home services for elderly, low-income Montanans, smoking prevention, and services for veterans, including anti-suicide efforts.

But there’s one prominent aspect of Medicaid expansion not mentioned by opponents in their ads: The program will bring at least $500 million a year of federal money to Montana, to pay for medical bills for thousands of Montanans.

Supporters say those funds improve the health of Montanans and create hundreds of new jobs, in health care and related industries.

I-185 supporters also allege that tobacco use costs Montana hundreds of millions of dollars a year in health costs and that raising tobacco taxes will lead to fewer people taking up smoking and thus lower health-care costs.

-Mike Dennison reporting for MTN News