Diverting tobacco money from trust fund to health debated
JACKSON - Mississippi is among several states that have created trust funds with tobacco lawsuit settlement money.
But more states have used the money from the settlement of the tobacco lawsuit to enhance health care instead of placing it in a trust fund, according to a report compiled recently by the National Conference of State Legislatures.
A 12-member joint legislative committee appointed last week by House Speaker Tim Ford and Lt. Gov. Amy Tuck will study whether to place less of the tobacco lawsuit settlement money in a trust fund while putting more into enhancing health care in Mississippi.
"If there are critical needs out there - health care needs - especially for children, then I think we should meet those needs,'' said Senate President Pro Tem Travis Little, D-Corinth, who is a member of the study committee. "I think that is a legitimate reason to use those funds.''
Ford and Tuck formed the special committee after Gov. Ronnie Musgrove proposed earlier this summer to divert more of the annual payment from the tobacco companies to health care and away from the trust fund.
According to the study by the National Conference of State Legislatures, that is what most states do.
"Under the tobacco settlement agreement, states have been given a great deal of flexibility in how they use their revenue,'' said Lee Dixon, director of the National Conference of State Legislature's health policy tracking service. "Right now, it is clearly obvious that states are committed to improving the quality and access of the health care programs they offer.''
According to a NCSL news release, 31.6 percent ($6.7 billion) of the money received by the states thus far as a result of the lawsuit settlement has gone toward health care. That does not include the 5 percent ($1.1 billion) that has gone toward the prevention of smoking. The second largest portion of the lawsuit settlement funds, 26.1 percent or $5.55 billion, has gone into endowments or trust funds - much like Mississippi has set up.
Mississippi received one of the biggest settlements per capita from the tobacco companies because state Attorney General Mike Moore filed the first lawsuit to recoup government money spent treating smoking-related illnesses. Moore filed the lawsuit in 1994. The settlement was reached in 1997. The Legislature established the trust fund - a popular concept - in 1999.
Since the settlement was reached, Mississippi has appropriated $188.7 million of the money it received from the cigarette-makers to health care. In addition to that, in a somewhat controversial move, Moore was able to convince the courts to divert $20 million per year from the annual payments to a non-profit foundation he created to prevent youth smoking. The bulk of the payments from the tobacco companies, though, has gone into a trust fund and that trend is scheduled to continue. The trust fund is now at about $650 million.
Dixon of NCSL praised the trust fund approach.
"As the tobacco payments decline, states that have chosen to create trust funds and endowments will continue to be able to fund new programs without finding other sources of revenue,'' Dixon said.
But Musgrove and others, such as Sens. Hob Bryan, D-Amory, and Bennie Turner, D-West Point, have questioned placing the bulk of the money in Mississippi in a trust fund when there are so m many unmet needs. They say there are more creative ways to use the windfall.
Musgrove has pointed out that under terms of the settlement, Mississippi is scheduled to receive annual payments forever from the tobacco companies. He has made a proposal that he said would allow the existing health care trust fund to continue to grow - reaching $1 billion by 2008 - while diverting more of the annual payments from the tobacco companies to programs to enhance health care in the state.
"Many people across Mississippi do not have access to quality health care, health insurance, doctors or affordable prescriptions drugs,'' Musgrove said recently. "I am bound and determined to fix this problem.''
Sen. Little, who is a member of the joint study committee that will consider Musgrove's proposal, said he also would like to be able to draw down more federal Medicaid funds. By using the tobacco money, Musgrove has said the state can draw down more federal Medicaid money that will be used to enhance health care.
Little said he is willing to consider the Musgrove proposal because Medicaid is used to pay for prescription drugs and nursing home stays for the elderly.
In addition, Little said it is morally right to provide health care for needy children. Plus, he said a lack of health care for children might end up costing the state more in the long run.
Still, despite what other states are doing and despite the desire by most to improve health care in the state, Musgrove could face difficult odds in getting his proposal passed.
After all, establishing the trust fund and spending the earnings on health-related matters was popular with legislators in 1999.
"I am against it (Musgrove's proposal,) but I will keep an open mind for the purpose of creating a dialogue for a comprehensive health care plan for the state,'' said Rep. George Flaggs, D-Vicksburg, who is a member of the study committee.