PHOENIX-Arizona providers are dissatisfied with the way state legislators are allocating the proceeds of a statewide tobacco tax. They say only about one-third of funds raised from the tax are improving healthcare coverage and services for the state's uninsured and indigent population.
For the past two years, legislators and providers have wrangled over the allocation of more than $110 million the tax raises annually. Voters approved Proposition 200, which gave rise to a 40-cents-per-pack tax and created the Tobacco Tax and Health Care Fund in November 1994.
As it stands, 70% of the money raised each year goes into a primary-care fund for Arizona's poor population. The tax will infuse the medically needy account with $81.5 million in fiscal 1996, which began July 1, 1995, according to estimates by the state's Joint Legislative Budget Committee (See chart).
Of the remaining revenues, 23% goes toward the consumer education account, with the goal of reducing tobacco use, and 7% funds research and administrative costs.
Legislation passed last year allocates about $34 million a year in block grants for primary-care programs and community health centers. Earlier this year, the Arizona Department of Health Services awarded $10 million of those allocated revenues to start-up primary-care programs and existing clinics (March 25, p. 72).
However, supporters of Proposition 200 are concerned that most of the funds are going back to the community in a piecemeal fashion-or not at all.
State legislators recently resolved to keep $30 million from the medically needy account in a "rainy day" fund for the Arizona Health Care Cost Containment System, the state's Medicaid managed-care program.
The stabilization fund is "nothing more than a slush fund," said John Rivers, president of the Arizona Hospital and Healthcare Association. Legislators who support the stabilization fund have argued it staves off the threat of possible upcoming federal Medicaid cutbacks.
Aside from the $34 million in block grants, in the most recent legislative session another $20 million was earmarked to launch a program to subsidize health insurance premiums for the state's working poor, beginning in 1997. In addition to the insurance premium bill, a $150,000 program for needy kidney-transplant recipients was approved. The session adjourned April 20.
"The session has ended with virtually every tobacco-tax expenditure bill having failed," said Kevin DeMenna, a Phoenix-based lobbyist who represents the Coalition for a Tobacco-Free Arizona, as well as the local cancer, heart and lung associations.
"There's not enough interest in providing healthcare within the Legislature," said state Rep. Susan Gerard, who chairs the House health committee.
Gerard sponsored a bill that would have allocated $15 million of the fund to provide health insurance to children through their schools. Conservatives killed that initiative, citing concerns about the program's costs.
The majority of the funds available to providers come from the medically needy account. But providers and other healthcare proponents also are concerned about the $27 million consumer education account because the amount available from that fund was capped at $10 million for this fiscal year and $15 million for fiscal 1997. That cap, which froze about $17 million annually within the education account, resulted from the efforts of tobacco industry lobbyists, DeMenna said.
The AzHHA spearheaded the original passage of Proposition 200 and has spoken out to make sure the funds raised by the tobacco tax actually go toward care for the indigent.
In January, the AzHHA rejected the possibility of using the tobacco fund to reimburse state hospitals for a $16 million shortfall. That debt resulted from payments the state has withheld over a three-year period, related to care for medically needy/medically indigent patients, Rivers said.
The tax was "never designed to be a pipeline to resolve old debts," Rivers said. Instead, the fund should be used to enhance the AHCCCS program, increasing the number of people eligible for Medicaid, he said.
That could take a bite out of state hospitals' uncompensated-care load. Arizona hospitals provide about $256 million worth of uncompensated care annually, Rivers said. There are 632,000 uninsured people in the state, he said.
In reaction to this year's disappointing legislative session, the hospital association "will begin work immediately on drafting a comprehensive plan to take to the Legislature next year," Rivers said.
If that doesn't bring results, the AzHHA will hit the polls again, with a more comprehensive ballot initiative, in 1998. However, "that's easier said than done," said Rivers, adding that the association spent more than a year developing Proposition 200.