Don’t rob patient care to fill Pennsylvania’s budget gaps
Alot has changed since 1998, the year that Pennsylvania and 45 states stood up to big tobacco and helped create the Tobacco Settlement Fund. We may have moved on from CD-ROM, dial-up internet and the Y2K bug frenzy, but a few things have stood the test of time: “Pokemon,” “Toy Story” and Pennsylvania’s commitment to keeping the core mission of the fund dedicated to health care.
It took the 46state coalition years of fighting with the major tobacco companies in order to come to the 1998 Master Settlement Agreement, an accord reached between the states, five U.S. territories, the District of Colum- bia and the five largest cigarette manufacturers in America concerning the advertising, marketing and promotion of cigarettes. In addition to requiring the tobacco industry to pay the settling states billions of dollars annually forever, the agreement also imposed restrictions on the sale and marketing of cigarettes by participating cigarette manufacturers. The funds weren’t distributed in Pennsylvania until the Tobacco Settlement Act of 2001.
Throughout that process, The Hospital and Healthsystem Association of Pennsylvania and the commonwealth’s hospitals played a big role in ensuring that money was preserved for health care — not to fill one-time budget holes or fund other projects. We worked with health educators, researchers and provider groups to find the right balance for everyone.
Since Pennsylvania hospitals first began receiving this money, it has been used to:
■ Help people quit using tobacco products.
■ Provide access to health care for
everyone, regardless of their insurance or health status.
■ Fund research to cure diseases like cancer, and improve the health of all Pennsylvanians.
■ Support financially fragile rural hospitals, which serve large proportions of vulnerable patients.
■ More recently, help hospitals address the opioid crisis.
Specifically, during fiscal year 2017-18, Pennsylvania’s hospitals received $28.5 million through the Tobacco Settlement Fund at the state level, which is then matched by the federal government to total approximately $60 million. This money goes to cover the cost of caring for the uninsured and underinsured.
Pennsylvania also received more than $44 million for Commonwealth Universal Research Enhancement Program grants during the fiscal year 2014-15, which help universities, hospitals and research organizations partner to unlock the solutions for cancer, find ways to improve the quality and outcomes of health care, and to address community health issues.
This year, these hospital dollars and research funds could be at risk.
Gov. Wolf’s budget plan kept the Tobacco Settlement Fund whole, but we are concerned that, this year, some lawmakers want to use tobacco dollars to pay state debt. You see, during the 2017-18 state budget process, the General Assembly authorized borrowing against $1.5 billion in future payments to the Tobacco Settlement Fund to balance the state’s budget. The bond payments now are due, to the tune of $115 million during this budget.
Some of the reasons that Tobacco Settlement Fund money went directly to hospitals to fund uncompensated care is because they are underpaid by the safety-net payer, Medicaid, which reimburses at 81 cents on the dollar, according a 2019 study commissioned by the association, “The Adequacy of Medicaid Program Payments to Hospitals in the Commonwealth of Pennsylvania.”
There are no hospitals or hospital staff that only treat the uninsured or patients insured by Medicaid, and Pennsylvania doesn’t have a public hospital system. As a result, the hospital community treats all patients, regardless of the type of insurance they have — and serves as the safety net for underinsured and uninsured. Even with the improvement in the insurance rate through the Affordable Care Act and Medicaid expansion, we still have people who are uninsured and need help.
Our hospitals rely on these funds to make sure they can stay open and continue to treat everyone. The state has options to balance its budget — options that don’t jeopardize the already stressed financial situations of many Pennsylvania hospitals.
More than a third of Pennsylvania’s hospitals operated in the red last fiscal year, according to the Pennsylvania Health Care Cost Containment Council’s annual hospital financial analysis. Among that group, more than threequarters have been operating in the red for the last three fiscal years. Now, more than ever, these hospitals are relying on the enduring promise that the Tobacco Settlement Fund will be there to help them continue to stay open, remain financially stable, and treat every patient who walks through their doors.
Trends may come and go, but the Pennsylvania hospital community’s mission remains focused on health care. We call on the legislature to make sure it remains the mission of the Tobacco Settlement Fund, too. Don’t rob patient care to fill budget gaps.