The Health 202: Montana is voting on whether the tobacco industry should pay for Medicaid expansion

The tobacco industry has spent more than $9 million to date to persuade Montana voters to vote “no” on a ballot initiative to make Medicaid expansion permanent in the state, according to state campaign finance filings.

The reason that tobacco companies want to prevent low-income Montanans from accessing health coverage? The industry would have to pay for it.

In November, Montana voters will get to choose whether to increase taxes on all tobacco products to fund Medicaid expansion and other health programs. Advocates of  the “Healthy Montana Initiative” argue that smoking contributes to a range of illnesses, so the industry producing them should help bear the burden of increased health-care costs.

Under the Affordable Care Act, states are allowed to expand their Medicaid programs to cover people earning up to 138 percent of the federal poverty level, or about $16,000 a year. The federal government paid 100 percent of expansion costs through 2016. Since then, federal funding has been tapering off and by 2020 the states will have to pay 10 percent of the cost of any Medicaid expansion.

Montana didn’t expand Medicaid until 2015 and then, to make the growth palatable to conservatives, did it as a sort of trial run for several years, allowing the expansion to sunset in 2019. If the program is not renewed, close to 100,000 Montanans are at risk of losing their coverage.  For perspective, there are only 1 million people in the entire state.

Advocates of the ballot initiative — which would raise the taxes on a pack of cigarettes by $2 and 33 percent on other tobacco products like e-cigarettes — say that the Medicaid expansion has helped provide health coverage to many Montanans who otherwise would not have it.

“It’s one of the best things to happen to Montanans and the only way to sustain that is through a source of revenue,” said Jonathan Schleifer, executive director of the Fairness Project, which is working to “improve the economic lives of everyday Americans” in states by raising the minimum wage, increasing paid sick leave and expanding Medicaid.

Earlier this year, with no sign that the state legislature would act to reauthorize the Medicaid expansion, two health-care companies, the Montana Hospital Association and the American Heart Association, collected enough signatures to secure a ballot initiative known as I-185 that allows voters to determine the future of the Medicaid program.

But the groups’ decision to make the tobacco industry pay for permanent expansion put them up against a powerful adversary.  The initiative is expected to generate more than $74 million each year by 2023, the Associated Press reported in April.

A political action committee created to launch an opposition campaign against the ballot initiative, called Montanans Against Tax Hikes, is almost entirely funded by tobacco companies like Altria, Inc., which is the parent company for Phillip Morris.  In its most recent state campaign finance filing, which covers the period from July 28 to August 27, Altria had given the PAC more than $7 million.

Montanans Against Tax Hikes doesn’t have its own Internet presence, and the treasurer on its campaign filings is Chuck Denowh, a GOP consultant in the state. The Health 202 couldn’t reach him for comment but, in August, Denowh issued a statement to Montana Public Radio after refusing a reporter’s request for an interview about the campaign:

“I-185 is a massive new tax increase that permanently expands Medicaid but does not allocate enough money to pay for it, leaving all Montanans on the hook for tens of million of dollars per year. Montanans Against Tax Hikes plans to run a campaign and make sure voters understand why they should reject I-185.”

Advocates of the ballot initiative say the tobacco industry is using a well-worn playbook to mislead voters. The tax is only on those who use tobacco products. And a study conducted by the Bureau of Business and Economic Research, a research department within the University of Montana, examining the Medicaid expansion’s economic impact on Montana found it ultimately saved the state money.

“While the state pays a nominal amount for these benefits, the costs to the state budget are more than offset by the savings created by Medicaid expansion and by the revenues associated with increased economic activity,” the authors of the study wrote.

Healthy Montana, the group created to organize the campaign to keep Medicaid expansion, needs to convince voters of that against an onslaught of critical messaging. So far, the group has raised $2 million — almost five times less than the tobacco-backed group.

Amanda Cahill, director of government relations for Montana’s American Heart Association chapter, said they “thought long and hard” about the challenge of taking on the tobacco industry.

“It’s intimidating but we expected them to come out with a lot of money,” Cahill said. “So I think we’re probably seeing a lot of what we expected. It doesn’t make for an easy campaign, but we think it’s worth it.”

Those supporting the initiative have seen some successes already. They beat back a tobacco industry-funded lawsuit to change the language on the measure. On Monday, Montana’s campaign regulator ruled that two tobacco companies, Altria and RAI, parent company of RJ Reynolds Tobacco, had violated some state campaign finance laws.

With one in 10 Montanans benefiting from Montana’s Medicaid expansion, the issue is personal for many. It’s an issue, Schleifer said, that drew people from across the political spectrum — “those wearing MAGA hats and those people wearing Bernie Sanders t-shirts” — to sign the petition to get Medicaid expansion on the November ballot.

“In Montana, they’ve experienced the benefits,” he said, “and saying ‘hell no’ to having it taken away from them.”