Tobacco fund called last resort to cover Medicaid
Four months ago, House Health and Welfare Committee Chairman Bobby Moody said he was going to "exhaust every avenue" before raiding the tobacco trust fund to shore up Medicaid.
It appears all those roads have led to dead ends.
The tobacco trust fund, created from the settlement of Mississippi's landmark lawsuit against the tobacco industry, may be the only way state lawmakers can make up a $124.6 million Medicaid shortfall, Moody, D-Louisville, said Monday.
"We don't know where else we are going to turn to cover the shortfall," Moody said.
If lawmakers do have to raid the fund, Moody vowed that the money would be returned.
"I'm committed to building up the trust funds," he said.
But House Speaker Tim Ford told The Clarion-Ledger editorial board that once money is diverted, "it's hard to put back."
Responding to Ford's remarks, Moody said, "He didn't say it was an impossibility. I'm saying it's possible."
Attorney General Mike Moore, who negotiated the tobacco settlement, remains opposed to using the trust fund for anything outside the scope it was created for, said Special Attorney General Jonathan Compretta.
In 1994, Mississippi became the first state to sue the tobacco industry to recover public costs associated with treating smoking-related illnesses.
Moore negotiated a settlement in 1997, which is now projected to reach $3.3 billion. The fund currently contains about $650 million.
A portion of the trust fund already goes to cover health-care expenditures.
Earnings from the investments of the tobacco trust fund and a portion of the principal are placed in the Health Care Expendable Fund. That fund began with $50 million for fiscal 2000 and increases 10 percent each year until fiscal 2003.
Beginning in fiscal 2004, the amount changes to less than $50 million annually based on current law.
Lawmakers say the Medicaid deficit will be a top priority when the session convenes Jan. 8.
Reasons for the shortfall include:
More children were added to the rolls last year, in part because of expanded coverage for children of the working poor, resulting in an overall enrollment increase of 16 percent.
The high cost of prescription drugs.
State Medicaid cash reserves of $121 million have been depleted.
Last month, Gov. Ronnie Musgrove announced the state hired Health Information Designs Inc., to study the Medicaid program and make recommendations on ways to rein in the costs.
The Auburn, Ala., company will be paid $3.9 million for a three-year contract.
It is hoped the findings from the company will save $40 million on prescription drugs alone.
Moody also has been talking with state Rep. Steve Holland, D-Plantersville, subcommittee chairman of Medicaid appropriations, on ways to shore up the fiscal 2003 budget, which goes into effect July 1.
"There is no need for anybody to panic. Medicaid is not going away," Holland said.
At best, lawmakers will have to tighten benefits a notch, he said.
Ideas include introducing co-payments, reducing transportation costs and rolling back the number of monthly prescriptions from 10 to possibly eight, Holland said. At one time, the program allowed five prescriptions per month.
Prescription drugs costs have risen 30 to 38 percent during the past two years, Holland said.
"We have liberalized the program for the purpose of bringing more recipients on. We want to serve as many people as we can," Holland said.
Rica Lewis-Payton, executive director for the Division of Medicaid, could not be reached for comment.
"I think we are going to have to go back and rethink a lot of things," Holland said.
"I hope we won't have to cut anything out (but) I don't know how realistic that is."