More than $1.3 billion diverted to other purposes since 2005
The 41,000 Pennsylvanians who were dropped from their state-subsidized health coverage earlier this week should place the blame on former Gov. Ed Rendell and the state General Assembly for redirecting health funds to fill budget holes since 2005, according to Auditor General Jack Wagner.
In a new report released Thursday, Mr. Wagner points to more than $1.3 billion in budgetary diversions over the last five years which drained money from the state’s tobacco settlement fund. The fund was the primary source of funding for adultBasic since the program’s inception in 2001.
Tobacco fund money for adultBasic plummeted over the past seven years, from a high of $112 million in the 03-04 budget year to only $21.7 million in the current year. To make up the difference caused by the redirections, former Gov. Ed Rendell convinced four of the state’s private health insurers to make voluntary contributions to sustain the adultBasic program.
Auditor General Jack Wagner detailed a series of budget gimmicks used in recent years. He said they were largely responsible for the lack of funding for adultBasic.
Those voluntary contributions came to an end on Feb. 28, leaving the program without a source of funding. Gov. Tom Corbett decided not to direct additional state funds to keep adultBasic running.
When adultBasic shut down, it left about 41,000 Pennsylvanians without health coverage. Another 50,000 were on the waiting list for the program, which covers individuals who make too much to be eligible for Medicaid.
In addition to the redirection of adultBasic funds, the previous administration drained more than $658 million from the Health Endowment Account, which will be empty at the end of the current budget year.
“It is unconscionable that this account, designed to provide funding for health-related programs if and when the annual settlement payments decreased or stopped, has essentially been raided to cover General Fund budget shortfalls,” said Mr. Wagner.
All told, $1.34 billion were redirected from the tobacco settlement fund. About $432 million were used to fill various budget holes in the state General Fund, and $795 was used to fund Medicaid long-term care for seniors and the disabled.
Another $121 million was used to make payments to the Public School Employees’ Retirement System, which operates pension plans for the state’s teachers.
When Pennsylvania won a portion of a national lawsuit against the tobacco industry in 2001, the state’s Tobacco Settlement Act divided up the annual payments. According to the act, 8 percent would be deposited to an endowment account for the future, 30 percent for adultBasic and Medicaid for workers with disabilities, 18 percent for health research, 13 percent for home- and community-based services for the elderly, 12 percent for tobacco prevention and cessation programs, 10 percent to reimburse hospitals for uncompensated care, 8 percent to expand the PACENET prescription drug program, and 1 percent for cancer research.
The programs were funded as mandated until 2005, when Pennsylvania began making budgetary redirections which have continued in every year since, said Mr. Wagner.
Mr. Wagner said the governor should use incoming tobacco settlement funds – the state is due to receive $370 million this year – to keep adultBasic running.
“There is a way to do this and there is a funding source to do it,” said Mr. Wagner. He said the state could make an effort to engage the charitable foundations in the state to supplement the tobacco settlement funds to keep adultBasic running.
Bill Patton, spokesperson for House Democrat Leader Frank Dermody (D-Allegheny) said reinstating adultBasic should be a top priority.
“Democrats in the House and Senate have proposed several methods to restore adultBasic coverage for these 41,000 working Pennsylvanians, including higher premiums,” said Mr. Patton. “So far, we’ve heard no ideas from Gov. Corbett. His silence would seem to indicate indifference to the light of thousands of dis-enrollees.”
Mr. Wagner said the programs operated with tobacco settlement fund money have been “held hostage to the busted budget process” and blamed both parties.
“In order for this to happen, you had to have the agreement of a governor and a bi-partisan agreement in the House and Senate,” said Mr. Wagner. “In order for it to change, you need the same.”
Steve Miskin, spokesperson for House Republican Leader Mike Turzai (R-Allegheny), said the budget process this year was going to be a “paradigm shift” from the methods of Mr. Rendell, which included using fund transfers to balance budgets.
“Those gimmicks are what got us in this situation in the first place,” said Mr. Miskin. He said such maneuvers would not be necessary if the state’s budget was in line with revenues.
Mr. Rendell could not be reached for comment.
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MORE INFO:
Read the auditor general’s full report here.
