State officials near accord on tobacco money
HARRISBURG -- Following months of stalled negotiations, state officials are set to approve a plan today that spends most of Pennsylvania's $11 billion settlement with the nation's largest tobacco companies on the uninsured and seniors.
State officials, who expect to receive about $400 million annually over the next quarter-century, want to use the windfall entirely on health care.
The negotiated plan resembles a proposal put forth by Gov. Tom Ridge in January 2000 that earmarked money for a variety of uses, including uncompensated hospital care, medical research and tobacco prevention and cessation programs. The only addition was pushed by House Republicans: expansion of the state's prescription drug coverage program for seniors.
The state House and Senate are expected to vote on the legislation today. The tobacco money will be available when the new fiscal year begins July 1.
"Seventeen months ago, I asked the General Assembly to join me in dedicating Pennsylvania's tobacco proceeds to making Pennsylvanians healthier," Ridge said. "â€¦ this legislation will trigger the largest, most dramatic investment in Pennsylvania health care ever. It was worth the wait."
With 12 percent of the annual pot set aside for smoking prevention and cessation, almost $42 million will be available next year for anti-smoking groups like the local Coalition for a Smoke-Free Valley. This year, groups spent $2.2 million in their effort to stop smoking.
"We are very, very inspired and looking forward to doing our work in our community," said Alice Dalla Palu, executive director for Smoke-Free Valley. She also serves as vice president for Coalition for a Tobacco Free Pennsylvania.
The compromise should quiet months of criticism by anti-smoking organizations over delays in reaching a spending agreement. Pennsylvania began receiving tobacco payments two years ago and has $800 million collecting interest. Of the 46 states that reached a $206 billion national settlement with the tobacco industry in 1998, only Pennsylvania and Oregon have not adopted spending plans for the windfall.
Most pieces of the Pennsylvania puzzle have been in place for months, but a push by House Republicans to set aside some of the cash to allow more seniors to enroll in the state's drug program, PACE, held up its passage. Republicans made the cause the centerpiece of their re-election efforts last year.
Considered one of the most generous drug programs in the nation, PACE is paid for by proceeds from the state lottery. A second component, PACENET, was added in 1996 for seniors whose income was too high to qualify for PACE.
In January, the House passed a $110 million package to increase the PACENET rolls by 410,000 seniors. It met with opposition by Ridge and Senate leaders, who preferred to wait for Washington to enact a federal plan that would spare more state dollars. Ridge and the Senate leaders relented this spring as it became clear Washington was getting nowhere on the issue.
The deal reached by all sides devotes 8 percent, or about $28 million, of the tobacco cash annually for drug coverage that could benefit 10,500 seniors, the Ridge administration said.
The funding boost will allow the state to expand income limits by $1,000 for PACENET. Currently, eligibility is capped at $16,000 per individual and $19,200 for couples.
While the PACENET expansion is considerably smaller than what House Republicans sought, House Majority Leader John Perzel, R-Philadelphia, said his caucus came through on its election year pledge.
"Getting additional money for senior citizens was a clear victory for older Pennsylvanians," he said. "This marks the first step in our continuing effort to help seniors get the medicine they need to stay healthy."
House Democrats disagree, pointing out that the expansion still doesn't deal with the $500 deductible that must be paid up front for PACENET, a requirement that has left many people who qualify off PACENET rolls because they cannot afford the one-time payment.
Other tobacco allocations are:
30 percent to provide health insurance to 60,000 uninsured Pennsylvanians and Medicaid benefits for 10,000 disabled workers. The largest of the allocations, it has drawn fire from officials of the Pennsylvania Association of Health Underwriters, who argue smaller businesses will dump employees into the government plan.
19 percent for medical research. A federal formula to disburse funding by the National Institutes of Health will be used to divide 70 percent of this pot among the state's research centers. The universities of Pittsburgh and Pennsylvania, which lead the state in getting National Institutes of Health grants, will receive the most. The remaining 30 percent will be made available through a competitive grant process.
13 percent for home- and community-based care for seniors.
10 percent to help hospitals cover losses incurred treating uninsured patients.
8 percent for an endowment to ensure money will always be available for health-related uses in the event the state's share of the settlement decreases through the years as cigarette sales drop.
One-time expenditures in the deal include $100 million for three biotech greenhouses. One of three will involve a partnership between Lehigh University and the Penn State Hershey Medical Center.
Clinics will receive $25 million and rural hospitals $20 million in one-time grants for equipment purchases and capital projects.