Tobacco Windfall: It Matters How You Slice It

Carol Wilson didn’t mind getting up early Friday for the drive to the Laguna Beach Community Clinic from her Aliso Viejo residence.

“I needed to bring my daughter in,” said Wilson, referring to 17-year-old Leanna. “She’s 4 1/2 months’ pregnant, and although I work, my insurance won’t accept her. . . . I make too much to qualify for low-income, but I can’t afford to pay for her out of my own pocket.”

For nearly five months, Wilson has tried frantically to find low-cost care for the prenatal visits. What she has found are gaps in the county’s health care web for the working poor.

“Our clinic is bursting at the seams with patients who have no health insurance,” said Dr. Korey Jorgensen, the clinic’s medical director. “They’re employed, but by employers at small businesses who can’t afford health insurance.”

Welcome to Exhibit No. 1 in the debate to pass Measure H, one of two countywide initiatives on the Nov. 7 ballot, Jorgensen said. If passed, the measure would spend 80% of the national tobacco settlement on health care, with 20% going for public safety.

The measure is supported by doctors, hospitals and community groups, as well as a majority of Orange County elected officials, including the delegations in Sacramento and Washington.

An opposing initiative, Measure G, would allocate 42% of settlement funds for health care, 40% to pay down the county’s $950-million bankruptcy debt and the remaining 18% for public safety and jails. It was drafted by Treasurer-Tax Collector John M.W. Moorlach, and is backed by a majority on the Orange County Board of Supervisors, which filed a lawsuit against Measure H, saying it would tie the hands of future elected county officials.

The county expects to receive about $30 million annually for 25 years under the national tobacco litigation settlement, with annual allotments after 2025 to be determined later. Measure H supporters say the tobacco settlement was intended to be directed for health care and anti-smoking programs.

The initiative with the highest vote total wins. If neither gets more than 50%, county supervisors would decide how the money is spent.

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At the Laguna Beach clinic, funding levels are always a source of concern. It receives $1.3 million in revenue a year, including $700,000 in patient billings. The county, state, and other insurance programs don’t cover $270,000 in uncompensated services the clinic has had to absorb, clinic director Maria Anaya said.

“We have to seek grants and rely on fund-raisers to fill the gap,” she said.

For every low-income person the clinic examines, the county indigent program pays $8 a visit. For medication, the clinic receives $2 to $3, Anaya said.

“What family doctors, pharmacists and labs know is that the county’s program pays pennies on the dollar,” she said.

A county grand jury report in June 1999 reached a similar conclusion. But a county Health Care Agency spokesman took exception to Anaya’s characterization.

The grand jury said that emergency health care needs of the poor, including the uninsured, aren’t being met by the county’s underfunded Medical Services for Indigents program.

“If one is ill and indigent in Orange County, there are ways to obtain medical care; but frequently the efforts needed to find the care, complete the forms and qualify turn away all but the most determined,” the report said.

Responding to that report, the agency looked at the average hospital reimbursement rate in 1997-98 and concluded that the rate the county paid “was above the average,” said David L. Riley, the agency’s chief financial officer.

Riley defended the county program, saying it provides coverage to poor people for a wide range of services including diabetes, flu, bladder problems and others. The program offers medical care necessary to protect life, prevent significant disability or prevent serious deterioration of health, he added.

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Ironically, one of the supporters of Measure H isn’t from a hospital or clinic. Tom Uram, the agency’s own director for 12 years before retiring in 1998, said the county made a commitment to compensate area hospitals and clinics after it sold its only hospital in 1976 to UC Irvine for $5.5 million.

“This was a commitment that was not only implied in the law, but was said repeatedly,” Uram said. “Then when we had the bankruptcy, those promises were made by me, the sheriff [then-Sheriff Brad Gates] and members of the board. Why? Because we slashed the medical contracts during the bankruptcy, and those hospitals and clinics have been providing health care to thousands of people over the years and not complaining.”

“No one should question that the tobacco money should be used for health care,” Uram said.

Moorlach has raised $2,000 in contributions for his initiative compared to $628,000 raised by Measure H supporters. But he scoffs that wealthy hospitals such as the seven in Orange County owned by Tenet Healthcare Corp. need any infusion of cash.

“Look at the profits reported by Tenet, they’re up 20%,” he said, adding that Tenet has contributed more than $110,000 to Measure H.

Jorgensen said he recognizes the disparity among health providers.

“I recognize that there are health care organizations making a lot of money, and also I’m aware that the [county] unemployment rate is very low,” he said.

“But I have a hard time squaring that with what I see here at the clinic. We have a rising need for basic medical services for people who are very low income.”

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How to Spend Tobacco Money

Orange County Treasurer John Moorlach is hoping to spend nearly half of a $30 million windfall in tobacco money to help pay down the county’s bankruptcy debt, while health care advocates favor Measure H, which would steer the money toward services for the needy.

Measure G

* 60% is split six ways:

30% public safety and jails

20% seniors and disabled health care services

20% tobacco use prevention programs

10% increase pay to emergency room physicians

10% hospitals for charity care

10% fund nonprofit community clinics

* 40% pays off the county’s $950 million bankruptcy debt

When debt would be paid off under Measure G: 2019

Source: Registrar of Voters sample ballot and Treasurer-Tax Collector John M.W. Moorlach

Measure H

* 80% for health care:

23% for more pay to ER physicians

20% to fund nonprofit community clinics

19% seniors and disabled health care services

12% for tobacco use prevention programs

6% to hospitals for charity care

* 20% to public safety and jails.

When debt would be paid off under Measure H: 2027

Source: Registrar of Voters sample ballot and Measure H supporters.