The two boards of Big Sky Economic Development (BSED), Yellowstone County’s economic development agency, have thrown their support behind the concept of extending Medicaid in Montana and in support of I-185. At a joint meeting of the Economic Development Authority and the Economic Development Corporation boards, recently, following a lengthy discussion, board members overwhelmingly voted to support the concept of Medicaid expansion, even though there was some concern expressed about the approach taken in I-185 to increase taxes on tobacco, as the primary state revenue source.
Representatives from Billings’ major medical institutions, Billings Clinic, St. Vincent Healthcare and Riverstone Health (city-county health department) will be invited to the October BSED board meeting to explain the importance of Medicaid to their businesses and the local economy. Their next meeting is Oct. 11, 7:30 am, Granite Tower.
While there is concern about the means of funding, Steve Arveschoug, BSED Director, pointed out, “I-185 is the only tool that is in front of us to support Medicaid.”
The request to submit the initiative to the boards for their support was first vetted, a week earlier, at a joint meeting of the executive committees, which gave their unanimous approval to be referred to the full boards.
One board member, Steve Loveless, President & CEO of St. Vincent Healthcare, urged the committees’ support, underscoring how much the funding will support the medical business in Billings. Opposition to the initiative is being funded primarily by tobacco companies, said Loveless.
The proposal would generate revenue for Medicaid in Montana by imposing an additional $2 tax on each pack of cigarettes sold. With that increase in tax “you will see some decrease in cigarette usage,” conceded Loveless, “but if everybody stopped smoking it would be a good thing.” About the negative impacts suffered by people who smoke, Loveless said, “You and I are paying for it.”
Under EDA bylaws, three-fifths of the board must vote in support of taking a position on a political issue. And, the issue must have a very clear nexus to economic development, which I-185 does in that “Medicaid expenditures have a direct impact on our economy,” said Loveless.
It was noted in executive committee discussion that some local tobacco retail outlets have claimed the initiative will push them out of business. Those businesses are likely to go out of business anyway, because of competition from on-line sales, speculated some of the committee members.
The group’s overall focus was what the federal and state funding of Medicaid does for the local medical industry.
The committee referenced an article in Montana Business Quarterly, by Bryce Ward, which cited a study funded by the Montana Healthcare Foundation and Headwaters Foundation, which concluded that overall the expanded Medicaid Program “significantly boosts the state’s economy,” because of the large amount of federal funds it pulls into the state.
The study said that Medicaid expansion brings in $350 million to $400 million in new spending to the state, “which will generate thousands of jobs and hundreds of millions in personal income over the next two years.”
“Approximately 75 to 80 percent of Medicaid spending is new money. This means spending on Medicaid expansion rivals some of the larger sectors of the state’s economy,” said the article.
Since the state legislature approved Medicaid expansion, it has “provided beneficiaries more than $800 million in health care and infused a significant amount of money into the economy.”
Loveless pointed out that Billings has benefited greatly from that infusion, and that much of it would be lost if the Medicaid expansion is not continued.
I-185, the “Extend Medicaid Expansion and Increase Tobacco Taxes Initiative (2018)” gained the necessary number of signatures to be on the November ballot. It will increase taxes on all tobacco products, including electronic cigarettes and all vaping products. The tax on a pack of cigarettes would increase $2, and a 33 percent tax would be imposed on other tobacco and vaping products. The measure would eliminate an expiration date (June 30, 2019) on extending Medicaid services that was previously set by the state legislature.
The federal government currently funds about 95 percent of Montana’s Medicaid coverage, but that will decrease to 90 percent by 2020, and the state will have to pay the remainder of costs. The State Legislature expanded its Medicaid program in 2015, as part of the ACA (Obamacare). It passed the Montana Health and Economic Livelihood Partnership (HELP) Program, which supplemented the federal program with up to $25 million per fiscal year.
Revenue raised under I-185 is projected to generate $74.3 million by 2023, but maybe less if tobacco consumption declines. The state will need additional revenues as more of the Medicaid burden falls to the state, and as participation in the program increases. Some are concerned that the funding will be inadequate and that I-185 sets up a permanent program that will have to be funded in perpetuity.
The proposal is being advanced by Healthy Montana for I-185, and opposed by Montanans Against Tax Hikes.
Healthy Montana is funded by the Montana Hospital Association, the American Cancer Society Cancer Action, Families USA Action (a primary lobbying organization behind the ACA), Montana Tobacco Tax Exploration Committee, and SEIU 775 MT Quality Car Committee (Service Employees International Union).
Funding for Montanans Against Tax Hikes comes from Altria Client Services LLC and RAI Services Company. Altria Group is the parent company for Philip Morris USA, John Middleton, U.S. Smokeless Tobacco Company, etc. Altria Client Services Inc. provides Altria Group Inc. with services including compliance, legal, and information services. The company is based in Richmond, Virginia, and operates as a subsidiary of Altria Group Inc.
RAI is Reynolds American Inc., an indirect, wholly owned subsidiary of British American Tobacco PLC and parent company of R. J. Reynolds Tobacco Company.