World's biggest tobacco companies aim to kill Montana healthcare initiative

Industry heavyweights fiercely oppose proposed $2 tax on packs of cigarettes to be used to fund Medicaid in the state

Two of the world’s largest tobacco companies are financing opposition to a Montana ballot referendum that would lead to government-funded healthcare for around 94,000 people in the state.

This week, regulators found that Altria and RAI Services, the corporate parents of the Marlboro and Camel cigarette brands, violated the state’s campaign finance rules by failing to disclose support to a group campaigning against the measure, called Montanans Against Tax Hikes (Math).

“It’s a simple choice – Medicaid saves lives. Big tobacco kills,” said Jonathan Schleifer, executive director of The Fairness Project, which is helping organize the ballot initiative.

This November, Montanans will vote on whether to add$2 to the tax on packs of cigarettes. The referendum calls for the tax to be used to fund Medicaid, a government health insurance program that provides care for the poor.

Medicaid eligibility was expanded in Montana under the Affordable Care Act, Barack Obama’s flagship legislation as president that is sometimes nicknamed “Obamacare”. The reform gave states the option to provide government-run health insurance to people who earn slightly more than the federal poverty level, and provided federal money to pay for 90% of the cost.

However, Montana’s expansion program will expire in 2019. To stop the program from shrinking – and leaving 94,000 Montanans without healthcare coverage – the referendum seeks a permanent expansion and a cigarette tax to pay for it.

Cigarette taxes have been found by the US Surgeon General, the World Bank and the World Health Organization as the most effective way to encourage smokers to quit and discourage young people from smoking. Montana’s current cigarette taxes are $1.70 per pack, about the median in the US.

Industry heavyweights collectively known as Big Tobacco fiercely opposeMontana’s proposed tax hike. Together, Altria and RAI Services spent $7.7m opposing the tax hike through contributions to Math, which produced television, radio and digital ads. The race is the second most expensive in Montana, behind a campaign to unseat Democratic US Senator Jon Tester, according to local station KTVH.

According to a decision from Montana regulators, the tobacco companies failed to register as “incidental committees” in opposition to the ballot initiative, as the rules require. They also failed to disclose travel expenses, when cigarette lobbyists flew to the state to lobby the Montana Chamber of Commerce.

The Montana regulator’s report shows the depth of lobbying Math engaged in. In mid-May, Math had no public presence, but was “aware” of focus groups Altria and RAI had conducted in Montana.

The campaign against the Medicaid referendum picked up steam in June. At that time, Math told campaign finance regulators it was aware Altria and RAI were polling in Montana, but the activity was “for the sole benefit of Altria Client Services LLC and RAI Services Company and was not an attempt to influence voters”.

After that, Math, Altria and RAI appeared to work in lockstep. Together, the three entities planned a meeting to lobby the Montana Chamber of Commerce to oppose the ballot initiative. RAI prepared materials for the meeting, an Altria representative flew in to Montana, and Math attended as well.

Later, polling and focus groups conducted by Altria and RAI were reported as in-kind services donated to Math. Altria and RAI even filed lobbying reports on the same days.

Chuck Denowh, Math’s treasurer, told the Guardian Math had, “a broad base of support”. Denowh refused to answer when asked about Math’s primary backers – Altria and RAI Services – and said he would not stand “this run around”, before hanging up. But Altria and RAI Services, are not just Math’s most significant funders – they are nearly their only funders.

A phone number provided for Math in the group’s campaign finance filings went to the voicemail of Shelby DeMars, partner in the lobbying firm the Montana Group. DeMars worked as communications director for secretary of the interior Ryan Zinke when he served in Congress. Denowh is also a partner at Montana Group, but said Math washis “project”.

The Montana Group has run other “grassroots” campaigns in the past, including Count on Coal Montana, which promoted coal-fired power plants in the state, and United Property Owners of Montana, which opposes public lands efforts such as the establishment of free-roaming bison herds.

Math later provided a statement via email, calling the ballot initiative (I-185) “a massive new tax increase that permanently expands Medicaid but doesn’t allocate enough money to pay for it, leaving all Montanans on the hook for tens of millions of dollars per year. Montanans Against Tax Hikes plans to run a campaign and make sure voters understand why they should reject I-185”.

Altria and RAI did not respond to requests for comment.

Smoking costs Montana’s Medicaid program $81.1m each year, or $779 per household in federal and state taxes in the sparsely populated state, according to the Campaign for Tobacco-Free Kids. Each year, tobacco companies spend an estimated $31.3m advertising to Montanans, and $8.9bn advertising across the United States.

The Fairness Project is also aiding on-the-ground organizers to expand Medicaid in Idaho, Nebraska and Utah to expand Medicaid through ballot initiative. Montana’s referendum is the only which also calls for a tobacco tax hike.