We’re All Going to Pay if I-185 Passes

It will create a huge, new permanent appropriation in the state budget without providing enough revenue to pay for it

By Dave Lewis

The corporations bankrolling I-185 want you to believe that only tobacco corporations will pay if their initiative passes. That’s simply not true. I-185 will create a huge, new permanent appropriation in the state budget without providing enough revenue to pay for it. That means that all Montana taxpayers will be on the hook to pay for it.

The Affordable Care Act gave states the option of expanding Medicaid coverage to a broader population, including childless adults who are not disabled. In 2015, the Montana Legislature opted to expand Medicaid on a trial basis.

Today, approximately one in ten Montanans receives state-subsidized Medicaid coverage at a substantial (and increasing) cost to Montana taxpayers. The program has proven to be nearly twice as expensive as the legislature originally estimated, and certain programs intended to help manage costs — like a work training program designed to help enrollees get off government assistance — have completely failed.

The Legislature wisely included in the original bill a “sunset” provision so that they could evaluate overall effectiveness, control costs and discontinue the program if a better option became available. But I-185 would completely bypass this planned oversight. Without evaluation, the Medicaid expansion program will be set up to spend whatever bureaucrats deem necessary.

I spent more than a decade as the former state budget director, responsible for balancing the state budget. From my experience, I can tell you this will be a nightmare scenario for future legislatures. As health care costs continue to increase and funding from tobacco taxes dries up, Medicaid expansion will turn into a runaway train that supersedes all other spending priorities for the state.

I-185 would permanently expand Medicaid in Montana and create more than $60 million worth of spending per year. These costs will fall directly on Montana taxpayers. And though I-185 hikes taxes on tobacco products, the initiative caps the amount of this revenue allocated to Medicaid expansion at only $26 million per year. That means that all other taxpayers will be responsible for funding the $34 million shortfall. That puts existing budget priorities, like education and infrastructure, in jeopardy.

I-185 is presented by its proponents to be an anti-smoking initiative. That, too, is deceptive, as evidenced by the fact that only 4 percent of the new revenue goes to smoking prevention and cessation programs. If this initiative was truly meant to curb smoking in the name of public health, and not just a cash grab, the drafters would have dedicated more money to these programs.

Over time fewer people will purchase tobacco products in Montana due to this increase in price. I-185 would create a declining revenue source. Because Medicaid expansion would be a permanent program and health care costs are notorious for increasing rapidly, the share of the tax burden for this program will shift even more to non-tobacco users in the form of higher taxes and reduced services.

This ballot initiative is not only deceptive and terrible public policy, it will be extremely harmful to families, small businesses and the overall economic growth of the state. I’ve gone through the numbers and I can tell you the math doesn’t add up. Medicaid expansion doesn’t pay for itself, and I-185 doesn’t pay for it. Montana taxpayers will need to pay for it. Under I-185, we’re all going to be on the hook to pay for the massive unfunded mandate created by this entitlement program.

Dave Lewis spent nearly 30 years preparing budgets for four governors — two Republicans and two Democrats. He also served in the Legislature for 14 years serving terms as chair and vice chair of both the House and Senate budget committees.