EDITORIAL: Opinion: Should TSET fund part of Oklahoma Medicaid expansion bill?

Aug. 23--State Question 814, if approved, would increase the sum of money the Legislature gets each year from the Tobacco Settlement Endowment Trust. Voters created the trust in 2000 after Oklahoma joined 45 other states in a settlement agreement with tobacco companies.

Tobacco companies' payment to TSET each year is roughly $70 million to $75 million. TSET deposits 75% of that into the trust, with the remainder going to the Legislature (18.75%) and the attorney general's office (6.25%).

SQ 814 calls for giving the Legislature 75% of the amount paid by tobacco companies, and TSET 25%.

SQ 814 "needs to pass," Stitt said recently. "We need to redirect some of those funds to the Legislature so we can actually pay for Medicaid expansion." However, even if the TSET formula gets flipped, the state will need to find other funding sources.

The Affordable Care Act allows states to expand Medicaid to cover adults younger than 65 whose income does not exceed 133% of the federal poverty level. The federal government pays 90% of the costs and the states 10%. The Oklahoma Health Care Authority has estimated the state would pay $164 million per year for expansion. However, Sen. Roger Thompson, chairman of the Senate Appropriations Committee, says that is a "best-case scenario."

During an Aug. 13 meeting of the oversight committee for the Legislative Office of Fiscal Transparency, which is charged with evaluating the effectiveness of state programs, Thompson said he is in regular contact with the Health Care Authority.

"Our numbers keep going up, and so we could be looking at $246 million as the top number," said Thompson, R-Okemah. "... We're going to have to be able to come up with enough funds to be able to fund that this next year in the budget without cutting other services."

The Legislature this year approved a bill that would have increased a hospital fee and generated an estimated $134 million, but Stitt vetoed it, saying it fell short. Such a fee may well make the rounds again in 2021.

As for TSET, the agency is allowed to spend only the interest earnings from the endowment's corpus, which stands at roughly $1.3 billion. It spent $49 million in fiscal year 2019, for a variety of health, education and tobacco prevention and cessation programs. TSET officials worry that depositing less into the trust each year could hurt the agency's ability to pay for future initiatives, particularly during prolonged economic downturns.

Voters decided in June that they wanted Medicaid expansion. On Nov. 3, they must decide whether TSET should help foot some of the bill.

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