Health Care Industry Seeks Share of Tobacco Funds

More than two dozen health care industry lobbyists converged at the Capitol on Tuesday to demand that Gov. Gray Davis earmark California’s share of the $206-billion tobacco litigation settlement for medically related uses.

California stands to receive $562 million next year, and similar sums annually for the next 25 years, as a result of last year’s landmark settlement in states’ lawsuits against the tobacco industry.

Davis has balked at setting the money aside for health care. Instead, he wants to put it in the state’s $63-billion general fund, which is used to pay for everything from public education and prisons to environmental protection.

Senate President Pro Tem John Burton (D-San Francisco), joined by several Democratic legislators and health and physicians groups, called on the Democratic governor to use the money for health care for the poor, for care of the severely mentally ill and to fight tobacco consumption.

Burton also suggested that some of the money could be used for increased tax breaks for companies that provide health care coverage for workers--a gesture aimed at attracting Republican support.

“California can be a beacon for this nation,” Burton said. “California has the opportunity to be first in the nation in health care programs.”

But Burton holds out little hope that any money will be set aside in the 1999-2000 budget now being negotiated. So he and state Sen. Joe Dunn (D-Santa Ana), who is taking the lead on pushing Davis to designate the money for health care, are advocating that the governor create a so-called health care trust fund and fill it with tobacco settlement proceeds.

“We are at a unique point in the history of California,” said Dunn, a trial lawyer who was among those who sued the tobacco industry. “With the money from the tobacco settlement, we can address many of the . . . health care problems we now face.”

Davis spokesman Michael Bustamante said the first-year governor wants to use the settlement money for general purposes.

“There are needs across California,” Bustamante said. “For years, California has spent general fund [money] on health care costs. So there isn’t anything inappropriate about putting these funds into the general fund for a host of programs.”

Many of the most influential lobbyists in Sacramento joined Dunn, Burton and other Democratic legislators Tuesday. They range from the California Medical Assn. and other physicians organizations to those representing hospitals and health maintenance organizations, nurses, pharmaceutical companies and anti-smoking groups.

“We have a once-in-a-lifetime opportunity to make a difference,” said C. Duane Dauner of the California Healthcare Assn., which represents hospitals.

Even if Davis agreed to establish a health care trust fund, it would only be a first step. Should such a fund be created, lobbying groups probably would find themselves battling over how much is spent on various health-related initiatives.

Some want to use the money to expand health care coverage for the estimated 7 million Californians who lack medical insurance. Some want to use part of it to raise the pay of in-home health care workers. Anti-tobacco forces want a significant chunk for a renewed crusade against tobacco use.

Paul Knepprath of the American Lung Assn. of California said anti-tobacco efforts should receive at least 15% of the settlement money. While the annual payments are expected to fluctuate, 15% could amount to about $75 million a year.

“We’ll be doing well to get the health trust fund set up in the budget [for the future],” Knepprath said.

A Centers for Disease Control analysis estimates that California should be spending $156 million to $407 million a year for an effective tobacco control program. California now spends $119 million for a variety of anti-tobacco efforts, paid for by the 25-cent-per-pack tax on cigarettes imposed when voters approved Proposition 99 in 1988.

California joined most other states in a major lawsuit against the tobacco industry earlier in the 1990s. The case was settled as part of a nationwide deal between the tobacco companies and attorneys general of the various states.

The state is expected to receive its first payment of $562 million in December or January, according to the state Department of Finance. Over the next 25 years, California will receive $25 billion, with half going to local governments.