Cigarette Money -- Who gets it?, October 1999

Denver Women's Commission
Cigarette Money -- Who gets it?, October 1999

Chaer Robert

October 11, 1999

Cigarette Money -- Who gets it?

If it were up to you to decide who gets $100 million a year in Colorado’s tobacco settlement money, how much would you give to:

 Health insurance for all children in poverty

 2nd and 3rd grade reading programs

 Smoking prevention efforts

 Health care for those in poverty too sick to work

 Home visitation for new parents

 Repairs to dangerous school buildings

 Treatment for all addictions -- cigarettes, alcohol and drugs

 Research on tobacco addiction and diseases

 Health insurance for “working poor” adults

 Prenatal care for undocumented workers

 School violence prevention

If you knew that the money would only be available for 25 years, how much of it would you set aside, in a trust fund, for funding programs after the money ran out?

Would you be uncomfortable with the knowledge that money for these programs would depend on people continuing to smoke? Would it feel like less of a conflict of interest and less of a gamble to sell rights to future payments by tobacco companies ? Cigarette smoking rates may fall. Tobacco companies might declare bankruptcy. An entirely new foreign brand (not subject to the court settlement) might emerge to take major market share. If a third party was willing to gamble, would you sell them future revenues for a smaller,but certain, amount today? State Treasurer Mike Coffman is promoting this approach.

These are the questions that will face the state legislature , the Governor and the State Treasurer in the coming year.

Originally, most states sued the major tobacco companies to recoup money they had spent on public health care for indigent smokers. Smokers, on average, are poorer than non-smokers, less likely to have health insurance. One third will die of a smoking related illness. The average person with lung cancer will use about $100,000 in medical care before dying. States thought tobacco companies should help taxpayers with these tobacco use expenses.

Colorado’s lawsuit, however, was not based on Medicaid reimbursement. Former Attorney General Norton sued on the basis of false advertising, anti-trust, and racketeering. The State and the tobacco companies agreed to a settlement of approximately $2.7 billion-- $100 million a year for 25 years. Still, a task force she convened on the lawsuit, and Judge Bayless , assumed the money would be used for health related purposes. Because the money came from a lawsuit as compensation for damages, it is believe to be not subject to TABOR spending limits. Once legislators and lobbyists were aware of the pot of gold, the scrambling began.

Senator Norma Anderson carried last year’s bill for allocation of the tobacco money. About 90% of smokers start as teens. In Colorado, 35% of high shool students smoke. Her priority was child and youth health programs that would promote health and prevent individuals from beginning to smoke. Funding for the Child Basic Health Plan, home visitation to new parents, dropping the Medicaid assets test, tobacco prevention and cessation and a small percent for research were her priorities. Adult health care, even for those on Aid to Needy Disabled state stipends, unable to work, often suffering from smoking related illnesses, were definitely not part of her vision.

The Governor’s priorities included quadrupling enrollment in the Child Basic Health Plan-- an extremely ambitious goal-- from 15,000 to 60,000. He also insisted that tobacco money be used to fund elementary school reading programs, and school capital construction. While both the legislature and the governor had some flexibility in how they wanted to see the money allocated, they could not find common ground before the legislature adjourn. The bill died.

Health groups, through the Coalition for a Tobacco-Free Colorado , continue to push for using all the tobacco money for health programs. Among their 40+ active member groups are the American Cancer Society, American Lung Association, Children’s Hospital, Colorado Nurses Association , LARASA, etc.

Education advocates, of course, welcome new resources for reading programs, though they worry that the net effect could be to replace general fund dollars with tobacco dollars. Colorado Association of Alcohol and Drug Service Providers would like to see substance abuse as a covered benefit for Medicaid. The Colorado Coalition for the Homeless would like those on the State’s Aid to the Needy Disabled covered with health insurance. The Coalition for the Medically Underserved would like to see full funding of the Child Health Plan, a change in the Medicaid Asset test , prenatal care for the undocumented, and creation of an Adult Basic Health Plan, similar to the Child Basic Health Plan.

In general, the legislature is more likely to focus p