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Tobacco tax for Medicaid plan faces challenge in Oklahoma

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OKLAHOMA CITY – A plan to shift coverage for some of Oklahoma’s Medicaid recipients in order to trigger an infusion of federal funding appears to be gaining support among Republican lawmakers, but the idea of funding it with a tobacco tax is facing uphill sledding in the GOP-controlled Legislature.

The Medicaid Rebalancing Act of 2020 was unveiled this spring by state health officials as an alternative to a traditional expansion of Medicaid authorized under the Affordable Care Act.

Although the plan still would require federal approval, the biggest hurdle is how the Legislature could afford the more than $100 million price tag while facing a $1.3 billion shortfall in next year’s budget.

The funding mechanism currently eyed is a $1.50-per-pack cigarette tax increase, which would make Oklahoma’s tax the highest in the region.