Wagner proposes restoring adultBasic with tobacco fund

HARRISBURG - Auditor General Jack Wagner is offering his solution to restore health insurance for the thousands who lost it when a state program for low-income workers ended this week: Return to the original funding source, the tobacco settlement fund.

At a news conference Thursday, Wagner said the adultBasic insurance program ran out of money because its initial source of revenue had been diverted to other areas.

He said Gov. Ed Rendell redirected a total of $1.3 billion, once set aside for health-related uses, to cover general budget holes and support other programs over five years.

As a result, more than 40,000 low-income workers - two-thirds of them women - lost their coverage Tuesday when the adultBasic program ran out of money and Gov. Corbett discontinued it.

Wagner said recommitting a small portion of the 2011 settlement allocation of $370 million back into adultBasic would enable the state to restore the insurance lifeline to those 40,000 people.

Allocating more of the money would allow coverage of as many as 60,000 additional low-income people until 2014, when the new federal health-care law kicks in, he said.

With the tobacco money committed to other things, Corbett has said there was no money in the budget to cover even the $51 million needed to keep the program solvent until July 1.

Wagner said the settlement money would be available in state coffers in April.

Corbett supports using the fund for health-care related programs, spokesman Kevin Harley said, but the question of whether to restore adultBasic would be for the legislature to decide.

Harley and Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), said that with a projected deficit of more than $4 billion, all budget items would get additional scrutiny.

"Sen. Pileggi has said several times that the issue of health coverage for the uninsured will be, and should be, discussed during budget negotiations," Arneson said.

The adultBasic program to cover people not qualified for Medicaid was created as a result of the 1998 federal settlement with tobacco companies over a lawsuit filed by 46 states involving costs of health coverage for tobacco-related disease.

Under the state's 2001 Tobacco Settlement Act, payments to Pennsylvania were to go to health-related programs, such as adultBasic, medical research, Medicaid, and antismoking programs.

In 2005, the private insurers Blue Cross and Blue Shield came under scrutiny for the size of their surpluses, and they agreed to help finance adultBasic through 2010.

With money streaming in from private insurers, the Rendell administration shifted money to other budget items over five years, including $432 million that went to the general fund for unspecified purposes and $121 million to help cover pension obligations for public school employees.

"The health programs were held hostage to a busted budget process," Wagner said.

Wagner urged Corbett to restore tobacco-settlement funding for adultBasic as part of the budget negotiations and reopen talks with the Blues, as well as private foundations, to reach a solution.

"There is still hope for Pennsylvanians to get health insurance through adultBasic if we put forth the effort and are innovative in the process," Wagner said.

Pennsylvania has received $4 billion in payments so far through the program and is expected to receive $5.4 billion more by the time the settlement expires in 2015.