In 1998, the tobacco industry settled its Medicaid lawsuit with 46 states by, among other things, agreeing to pay the states a minimum of $206 billion over the first 25 years of the agreement. In Vermont, our share was estimated to total $962 million.
In a sense, that was free money. We had no right to expect it. True, the tobacco companies were responsible for creating the problem in the first place, but sugar also has an impact on public health, and the sugar industry isn’t sending us million dollar checks.
In other words, when the details of the tobacco settlement were first understood, it should have been seen for the potential that it held. For $30 million–plus each year, for 25 years, we should have been able to change the state’s health care culture.
But we didn’t take that route. The bulk of the money has been used to fund the state’s Medicaid budget. A small portion has gone to smoking cessation programs. Most troubling, the state has now dipped into the Tobacco Trust Fund to the extent that the balance will be an estimated $149,000 next year.
That’s down from the $10 million balance it had a year ago. When the fund was at its peak – pre-recession – it was $30 million.
That wasn’t supposed to happen. Trust funds are set up for the purpose of spending the interest, not the interest and the principal.
It happened because the state needed to plug budget holes, and rather than cut spending elsewhere (or raise revenue), it tapped the tobacco money in the trust fund.
There are several choices. The state could rebuild the trust fund by using less of the tobacco money for Medicaid. Or it could pass a tobacco tax, using the revenue generated to replenish the fund. (The Legislature gave strong consideration to raising the per pack tax by 80 cents, which would have generated somewhere between $8 million and $10 million annually.)
We could also hope for overdue payments from the tobacco industry, but that is questionable, and not something upon which to base current decisions.
It’s crucial to rebuild the fund. It makes little sense to keep plugging holes in the state’s Medicaid budget if there is not an accompanying effort to discourage tobacco usage in the first place. Vermont still has more than 20 percent of its populace that smokes. If the smoking cessation efforts stop, the rates will inch back up.
And we will have accomplished?
If the fund is depleted and continued tobacco settlement payments are shuffled to the state’s Medicaid budget, will that be the concluding statement of how Vermont used almost a billion dollars over a full generation’s time?
Seriously?
In Vermont, we don’t come close to having half the amount of money recommended by the Campaign for Tobacco-Free Kids, the American Heart Association and the American Lung Association for tobacco cessation programs. Only two states, Alaska and North Dakota, fully fund the recommended levels. Only three other states, Delaware, Wyoming and Hawaii, meet the 50 percent level.
That’s a broken promise if there ever was one.
We need to do better in Vermont. It’s pathetic that we had such a limited vision of what could have been done with that much money. But it’s even worse that we could end up with a declining health care picture all because we could not budget a $962 million windfall properly.
Emerson Lynn/St. Albans Messenger.