In two weeks, Oklahoma voters will decide whether they want to take annual payments from a public health program and put them toward Medicaid expansion. But, State Question 814 is not the first time Oklahoma has considered taking money out of the state’s tobacco settlement program.
There is a lot of history behind State Question 814. If you’re not an Oklahoma government buff, you might not be familiar.
First, here’s a TSET primer. It stands for the Tobacco Settlement Endowment Trust. In the 1990s, 46 states including Oklahoma sued the major tobacco companies to recoup health care costs associated with tobacco use. The companies settled, and they agreed to pay those states a share of their annual sales.
Many states put those eight-figure payments into their general funds — essentially the state’s checking account. Oklahoma officials instead devised a plan to create TSET. Some of the money goes to the general fund, but 75 percent of it goes to an endowment. TSET uses investment earnings off that endowment to fund public health initiatives, such as tobacco cessation programs and contributions to cancer research.
Voters approved of that idea and put it into the constitution about 20 years ago. Because that’s in the constitution, any changes to TSET would have to be in the constitution, too. In Oklahoma, changing the constitution requires a vote of the people. Which brings us to State Question 814.
Unlike medical marijuana and criminal justice reform, this State Question didn’t start out with voters and an initiative petition. The Legislature put it on the ballot.
It’s looking for a way to cover Oklahoma’s share of Medicaid expansion. Earlier this year, voters approved a state question that will open that health coverage to 200,000 working poor Oklahomans. When states expand, they get a 1-to-9 dollar match from the federal government. Oklahoma is expected to get a billion dollars annually in federal funding, but they have to put up $150 million first.
Some more history: this is far from the first time some Oklahomans have pushed to divert the tobacco settlement payments out of TSET.
Drew Edmondson was the attorney general who filed the lawsuit against the tobacco companies back in 1996, and he was part of the team that designed TSET. He said efforts to shift those payments started right at the beginning.
“I have a big old cartoon on my wall,” Edmondson said. “I have a bunch of them. But one is a tug of war between Governor Keating and me, after the fact, after we won. There’s a big bag of money and we’re tugging on either end of it. And the Keating character is saying, ‘Spend, spend, spend, spend, spend.’ And the Edmonson character saying, ‘save.’ One word, ‘Save.’”
Edmondson says support and opposition didn’t fall along party lines. It was more philosophical. He attributes the ongoing opposition to TSET to the school of thought that says government should never interfere with business.
“They didn’t like something that trial lawyers have jumped on for decades — trying to alter corporate practice through the courts,” Edmondson said.
Another factor at play is the belief that government funding should be limited and focus on basic government functions such as highway infrastructure and public safety.
The Oklahoma Council of Public Affairs, a think tank in Oklahoma City that advocates for free-market, limited government policy, has long supported changes to TSET funding, similar to the ones proposed in SQ814.
That pitch entered the spotlight in 2017. During a revenue crisis that year, the Legislature created a fee on cigarettes. The Oklahoma Supreme Court ruled it an unconstitutional tax in disguise and struck it down, creating an even more grim budget hole. OCPA pushed for a state question routing TSET funding to Medicaid at that time, to no avail.
The organization has criticized several of TSET’s initiatives, such as a campaign to cut down on sugary drinks and a program that helps bars and nightlife venues go smoke free.
Curtis Shelton, one of the organizations’ policy research fellows, weighed in.
“TSET’s mission may have started out very specific, but as that endowment has grown — like I said, it’s over a billion dollars now — it’s really just up to their discretion what they get to spend it on,” he said. “As the money’s grown, it’s become easier and easier for them to kind of siphon off some of that money to these lesser-priority programs.”