state could get unexpected from tobacco tax

Known as "Obamacare" to its opponents, the federal health care law is designed to make sure nearly all Americans have health insurance, either through Medicare, Medicaid, employer-sponsored plans or individual plans purchased with government subsidies. Assuming it survives a U.S. Supreme Court challenge that is set for oral arguments this week and the national elections of November, the law takes full effect Jan. 1, 2014. That's the day the law says just about everyone should have health insurance and the day that a big part of Oklahoma's tobacco tax becomes homeless. When state voters approved a net 55-cent-per-pack increase in the cigarette tax in 2008, they dedicated much of the revenue to health care. The state used much of that funding for Insure Oklahoma, a state program that mixes Medicaid funding, employer contributions and tobacco tax revenue to provide health insurance for working Oklahomans who earn up to 200 percent of the federal poverty level. For 2012, that means a family of four would be eligible for the program if it earned up to $46,100 a year. In fiscal year 2011, Insure Oklahoma received about $46 million in tobacco tax money, said Ron Jenkins, spokesman for the Office of State Finance. But all that changes Jan. 1, 2014, said Nico Gomez, spokesman for the Oklahoma Health Care Authority, which runs Insure Oklahoma. "Insure Oklahoma effectively goes away," Gomez said. Under the federal health care law, people who earn up to 133 percent of the federal poverty level will be covered by Medicaid. Everyone above that level who doesn't get insurance through an employer would be eligible to purchase insurance through a health insurance exchange with assistance of a federal subsidy. Insure Oklahoma is left without anyone to serve.The funding is a long way down the road, legislatively speaking, and lawmakers are hesitant to talk about it. Rep. Earl Sears, R-Bartlesville, chairman of the House Appropriations and Budget Committee, said he is aware of the potential future money but said there are a lot more immediate and pressing tax and budget issues to deal with first. The Legislature is currently in the early stages of putting together the fiscal year 2013 budget. The tobacco tax money wouldn't be available until halfway through fiscal year 2014. One source suggested the money still would have to be used for health purposes, and one possible use would be increasing the number of state-funded medical residencies at hospitals, a means of dealing with the state's shortage of physicians, especially in rural areas. Rep. Doug Cox, R-Grove, a physician, pointed out that it might take all the extra tobacco tax money and more for the state to deal with other financial issues forced by the federal health care law. There is a good deal of debate about the potential state budget impact of the federal law. An analysis by the Oklahoma Council of Public Affairs says the state's cost would be $11.4 billion in the first 10 years as private employers dump their workers' health insurance. But the Congressional Budget Office estimates the law will result in a state budget impact of only $23.8 million to $31.2 million a year and those costs could be more than offset by new tax revenue that results from adding thousands of people to the state medical system. One study puts the state's potential economic impact of that expansion at $530 million to $574 million with a state tax revenue impact of $71.7 million to $79 million a year.