Opinion: In PA, health won out over big tobacco, but it could lose in this year’s budget.
June 11, 2019
By Andy Carter, President and CEO, The Hospital and Healthsystem Association of Pennsylvania
A lot has changed since 1998, the year that Pennsylvania and 45 states stood up to big tobacco and helped create the Tobacco Settlement Fund (TSF). 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: “Pokémon,” “Toy Story,” and Pennsylvania’s commitment to keeping the core mission of the TSF dedicated to health care.
It took the 46-state coalition years of fighting with the major tobacco companies in order to come to the 1998 Master Settlement Agreement; 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 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 2017–2018, Pennsylvania’s hospitals received $28.5 million through the TSF 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 CURE grants during the fiscal year 2014–2015, which help universities, hospitals, and research organizations partner to unlock the solutions for cancer, ways to improve the quality and outcomes of health care, and how to address community health issues.
This year, these hospital dollars and research funds could be at risk.
Governor Wolf’s budget plan kept the TSF whole, but we are concerned that this year, some lawmakers want to use tobacco dollars to pay state debt. You see, during the 2017–2018 state budget process, the General Assembly authorized borrowing against $1.5 billion in future TSF payments 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 TSF money went directly to hospitals to fund uncompensated care is because they are underpaid by the safety-net payor, Medicaid, which a recent analysis indicates reimburses at 81 cents on the dollar.
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 of Pennsylvania’s hospitals.
More than a third of Pennsylvania’s hospitals operated in the red last fiscal year. Among that group, more than three-quarters 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 TSF 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 TSF, too. Don’t rob patient care to fill budget gaps.