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How to $pend $175 millionA Briefing on Amendment 35, the New Tobacco Tax Constitutional Provision

Presentation to Hot Issues in Health Care ConferenceColorado Springs, November 2004

Barbara Yondorf, Yondorf & Associates

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“Today I’m announcing that I’ve decided to get out of my family so I can devote more time to politics.”

David Sipress, The New Yorker, October 28, 2002

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Purpose Present an overview of

Amendment 35’s health care provisions.

Highlight some of the issues the legislature will have to address in implementing Amendment 35.

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Topics to be Covered

Background leading to tobacco tax amendment

Major health care provisions of Amendment 35

The legislature’s role

Key issues to be addressed

The wrinkle: HB 04-1455

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Background (1)

The Problem as Perceived by Advocates

Falling revenues mean deep state budget cuts.

Health = 22% of budget and so is big target.

Colorado has among the leanest public health insurance programs in the country. Also had lowest tobacco tax in the country.

– Tobacco is leading cause of preventable deaths.– Price is best deterrent to youth tobacco use.

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Background (2)

Amendment 35 Coalition

36 groups participated in writing amendment; more than 100 organizations endorsed.

Coalition staying together to develop unified position on enabling legislation.

Election Result

Amendment passed, 61% to 39%.

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Major Provisions of Amendment 35

Increases tobacco product taxes, resulting in estimated $175 million per year in new funds.

Allocates new tobacco tax revenues for specific purposes (see chart).

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Associates

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$175 Million/Year in New Tobacco Revenues

16%

19%

49%

16%

3%

Increase enrollment inMedicaid/CHP+

Comprehensive primary carefor uninsured

Tobacco prevention &cessation

Prevention, diagnosis,treatment of cancer, lung,heart disease

Compensate state, localgovt, old age pension fundfor lost tobacco revenues

$80.5 M

$5.2 M

$28.0 M

$28.0 M

$33.3 M

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Major Provisions (p. 2) Amendment guidance on objects of

expenditure:

1. Increase number of low-income children, pregnant women, parents and adults eligible and enrolled in:

8 Children’s basic health plan (also known as CHP+ Child health plan plus), or

8 Medicaid

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Insurance Status of Coloradans with Family Incomes < 250% FPL ($39,175/yr for family of 3)

99,495

442,239

250,196

172,365

2,929

45,000

110,072

316,637

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

Uninsured

Private Insurance and Medicare

Medicaid

CHP+ *

Uninsured

Medicaid

Private Ins. & Medicare

CHP+

CHILDREN

ADULTS < 65FY 2002-2003

* As of 8/04 enrollment had dropped to 35,155.

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Major Provisions (p. 3)

2. Make grants to comprehensive primary care providers serving the uninsured (e.g., community health centers, other clinics).

3. Fund tobacco prevention and cessation programs.

[Note: similar state programs already exist for distribution of tobacco settlement funds.]

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Major Provisions (p. 4)

4. Use funds for prevention, early detection and treatment of cancer, cardiovascular and pulmonary diseases,

5. Compensate General Fund, old age pension fund, local governments for tax revenue reductions associated with new tobacco tax. Funds must be used for health related purposes.

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Other Provisions Amendment gives legislature more latitude

in the event of a fiscal emergency.

New tobacco revenues cannot be used to supplant existing funds.

New revenues are not subject to TABOR or other spending limits.

Effective date: January 1, 2005 .

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Legislature’s Role

Decide which specific programs to fund or a process for doing this (who and what)

Write enabling legislation (when, where and how)

Appropriate funds for specific purposes (how much)

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Some Key Issues Expand Medicaid/CHP+

– Should priority be children, parents, pregnant women, other low-income adults?

– Should the state expand CHP+ or Medicaid?

» CHP+ - State gets $2-for-$1 match, but FF are capped and only kids and parents are eligible.

» Medicaid - State only gets $1-for-$1 match, but state can add all sorts of different groups.

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Main Eligibility Criteria: Medicaid & CHP+ Max. Inc. Max. Inc.

Hourly as % FPL Family of 3

Equivalent*

Medicaid Children 0-5 & pregnant women 133% $20,888

$10.04 Children age 6-18 & adults 65+ 100% $15,670

$7.53 Disabled persons eligible for SSI 75% $11,753

$5.65 Adults < age 65 with children 39% $6,111

$2.94 All other adults Not eligible Not eligible Not eligible

CHP+ Children < 19 & pregnant women185% $28,990 $13.93 who are not Medicaid eligible

* For person working full-time, 40 hours per week.

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Some Key Issues (p. 2) Expand Medicaid/CHP+ (cont’d)

– Potential $80-$100 million in matching funds. Total allows for covering 64,000+ people.

– Should enrollment be expanded by:» Eliminating the asset test» Spending more on marketing and outreach» Raising current income eligibility ceilings» Adding new categories of eligibility» Reinstating presumptive eligibility for pregnant

women or eligibility for legal immigrants

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Some Key Issues (p. 3) Prevention, detection and treatment funds

How much guidance should be given to State Board of Health re:» Amount for prevention, early detection, treatment?» How much for cancer, heart disease, lung disease?» What counts as “prevention”--research to find a

way to prevent cancer?» Who is eligible for funds--faith-based groups?» Are treatment funds only for cases detected early?» What parameters should be given to the Board?

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Some Key Issues (p. 3) Primary care for the uninsured

Funds are to be distributed based on number uninsured or medically indigent served

» How count? Unduplicated? In a given month? Over the course of a year?

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The House Bill 1455 Wrinkle House Bill 04-1455 was passed at the end of

the 2004 Colorado legislative session.

The bill zeroes out appropriations for health care programs for one day only, January 1, 2005--the effective date of Amendment 35.

This effectively negates the Amendment 35 requirement that the new funds be appropriated in addition to any currently existing funds.

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The House Bill 1455 Wrinkle Issues for the legislature:

– Take advantage of HB 1455 to use new tobacco revenues for existing purposes thus freeing up money for other purposes?

– Appropriate funds pursuant to Amendment 35 and not invoke 1455.

– Consider likely proposals to eliminate 1455.

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Yondorf & Associates Denver, CO

303-355-8817

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Questions?