More than $1.3 billion in tobacco settlement funds have been diverted over the past six years from Pennsylvania's adultBasic health insurance program and other health programs to other uses, said state Auditor General Jack Wagner.
Wagner said the diversion, which resulting in the dropping of more than 40,000 residents from the insurance program earlier this week, violates Pennsylvania's Tobacco Settlement Act of 2001, which mandated that settlement funds be used for a variety of state health programs – including adultBasic and Medicaid – smoking cessation programs and reimbursements to hospitals providing uncompensated care.
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"The mishandling of tobacco settlement funds is yet another example of how the state's dysfunctional budgetary process is negatively impacting the lives of Pennsylvanians," Wagner said. "With the commonwealth still mired in its greatest economic crisis since the Great Depression, now is not the time to reduce or eliminate health coverage for hard-working Pennsylvanians – or for reducing funds to prevent smoking and to help those who want to quit."
Funding from the settlement for adultBasic reached a high of $112 million in fiscal 2003-2004, but since then has steadily declined to just $22 million in fiscal 2010-2011. This coincides with an agreement between state officials and private health insurers in 2005 to use the insurers' large cash reserves to help fund the program through 2010.
With money from Capital Blue Cross, Highmark, Independence Blue Cross and Blue Cross of Northeastern Pennsylvania, among other insurers, supporting adultBasic, Wagner said the state diverted the "savings" to other purposes. More than $432 million, he said, was diverted to the state's general fund and another $121 million was used to help cover shortfalls in the pension program for public school teachers.
To date, Pennsylvania has received more than $4 billion in settlement money and is expected to receive another $5.4 billion over the next five years. Wagner said recommitting $51 million of the $370 million of the expected 2011 settlement allocation would restore adultBasic coverage through the end of the fiscal year, on June 30.
But with the state facing a $4 billion budget shortfall, it might not be so easy. Gov. Tom Corbett has said he favors using the tobacco money for health-related programs, but the decision on whether to restore adultBasic funding is a question for the Legislature.
Republican Senate Majority Leader Dominic Pileggi told the Philadelphia Inquirer that all budget items will get scrutiny, but "health coverage for the uninsured will be, and should be, discussed during budget negotiations."