TESTIMONY SUBMITTED TO AUDITOR GENERAL WAGNER: USE OF TOBACCO SETTLEMENT FUNDS AND ADULT BASIC HEALTH INSURANCE. May 11, 2011

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1 TESTIMONY SUBMITTED TO AUDITOR GENERAL WAGNER: USE OF TOBACCO SETTLEMENT FUNDS AND ADULT BASIC HEALTH INSURANCE May 11, 2011 Thank you for holding these important hearings and for the opportunity to submit testimony regarding the redirection of Tobacco Settlement Fund payments from their intended purposes. I am the Rev. Amy Reumann, Director of Lutheran Advocacy Ministry in Pennsylvania (LAMPa). LAMPa is a partnership ministry of the Evangelical Lutheran Church in America (ELCA) and its agencies and institutions in the Commonwealth of Pennsylvania. We lead the advocacy work with seven Bishops and their geographic synods (districts) for a total of 1265 congregations around the Commonwealth. We serve alongside 18 social ministry organizations that provide a broad range of services, including long term and nursing care, foster care and adoption, emergency shelters, domestic violence programs, and more. We relate to four colleges, two theological seminaries and numerous outdoor ministries and camps. Our mission is to advocate on behalf of, and in partnership with, those persons who are denied justice and dignity and who lack adequate representation and voice in the arenas of public policy. We have long supported the adultbasic program and I will speak primarily to its value and the need for its continuation. The day after the adultbasic ended on February 28, 2011, I received an from a member of a Lutheran congregation with the following offer. Yesterday, he wrote, while volunteering at Volunteer Doctors Care, a free clinic in Upper Bucks Co., I learned that our clinic will treat any patient that has lost adultbasic coverage as a result of the program's termination that was effective yesterday. Free treatment will be offered for three months upon presentation of a letter or proof of termination of their adultbasic coverage. After three months they will need to submit an application for continuing eligibility. They must be residents of Quakertown or Pennridge School districts in Upper Bucks Co. This is wonderful news, for those who happen to live in 2 school districts out of the 500 in the state. There are no doubt other congregational and community centers around the state that have made similar offers to provide care for those who have lost their coverage. This exemplifies the willingness of faith-based and community organizations to serve those in need. Yet I have heard legislators and leaders in Harrisburg equate this willingness with a faith community capacity to absorb all adultbasic subscribers into their health ministries. This is no solution. Even if there

2 were enough community clinics with sufficient funding, staff, equipment and hours in the right locations to begin to do so, they do not have capacity to tend to the needs of 40,000 new patients or to adequately treat or manage the chronic conditions with which many former adultbasic subscribers contend. The solution lies elsewhere. Justice in Health Care Requires Shared Responsibility Our church s social policy statement, Caring for Health: Our Shared Endeavor states, Health is central to our well-being, vital to relationships, and helps us live out our vocations in family, work, and community. Caring for one s own health is a matter of human necessity and good stewardship. Caring for the health of others expresses both love for our neighbors and responsibility for a just society. As a personal and social responsibility, health care is a shared endeavor. Because health is central to personal well-being and functioning in society, we understand that a just society is one that supports the health of all its members. Health care that is solely an individual obligation or the responsibility of government or up to the mechanisms of the market place cannot provide equitable access or outcomes. Our denomination s conviction, based on our understanding of Scripture and theological tradition, is that health care is a social good, which works best when individuals, government and the health care industry work together, with shared responsibility and accountability on all sides. Therefore we support, encourage and advocate for health policy and programs that emphasize shared responsibility and accountability. AdultBasic is just such a model of partnership that serves the common good by engaging government, the health care industry and consumers in a program that required each to work together to provide affordable and accessible health care: State government directed Tobacco Settlement dollars to fund the program. In the process it supported vulnerable citizens by helping them to maintain healthy and productive lives and to contribute to the common good. At the same time, the state protected all citizens from the high cost of treating uninsured or underinsured individuals. Blue Cross companies agreed to make use of their surpluses and to live up to the charity care portion of their mission to cover people of working age who otherwise could not afford insurance and who did not receive it as part of their employment. Enrollees managed their health and chronic conditions, were responsible for copays and hospital expenses and cycled off the program when their income rose or if they found other forms of insurance, making room for others to access the same support to get ahead.

3 In short, support for continuing adultbasic makes this Commonwealth more robust, more compassionate and more just. A Just Society Gives Priority To Those Who Suffer From Our Failure to Implement Adequate Public Health Protection The ELCA Social Statement Caring for Health: Our Shared Endeavor calls on church and society to give priority to people and groups who are not benefitting from access to health care services and research: people who are uninsured and underinsured, people living in poverty...and those suffering the consequences of our failure to implement adequate public health protection". It reminds us that health care is the kind of good most appropriately given on the basis of need. Too often, however, health care is distributed on the basis of merit, social worth or contribution, marketplace value, or ability to pay. Lutherans in Pennsylvania have advocated for years in order to expand adultbasic as a health care program that was just, compassionate and effective. It allowed the working poor to maintain and manage their health so that they could stay employed, contribute to the economy, pay taxes, care for their families and participate in their communities. The existence of adultbasic made the difference for some during the last years of recession, sheltering families from the recession, protecting jobs and preventing foreclosures. AdultBasic is unique in that it provided for its enrollees help in creating pathways out of poverty, by giving them the support they needed to continue to work. It has been affordable for those who would otherwise fall through the cracks or be priced out of the marked or denied coverage due to pre-existing conditions. It is also important to remember that the loss of adultbasic impacted not only the 40,000 on it, but also the nearly half a million on its waiting list, for whom the program s limited but affordable care were more than they currently could access. Tobacco Settlement Funds Must be Used According to their Original Intent We support returning use of Tobacco Settlement funds to their original purpose, as determined by the Tobacco Settlement Act. Funding for adultbasic came entirely from these funds during its first three years of operation, beginning in 2002 and covering between 34,000 and 43,000 enrollees. In 2005, the state s non-profit Blue Cross-Blue Shield Insurers began their five-year funding agreement which allowed total funding and enrollment to increase. This Community Health Reinvestment Agreement supplemented existing funding, allowing the program to expand coverage to more than 54,000 Pennsylvanians in 2007, until it ended on February 28, 2011 with over 40,000 enrolled. The redirecting of $1.34 billion from the Tobacco Settlement Fund since 2005 only hastened the demise of adultbasic. According to the 2001 law, adultbasic and the Medical Assistance for Workers with Disabilities (MAWD) should together have received 30% of the Tobacco Settlement Fund payment last year ($109 million). Instead, the programs received a combined $76 million (20% of the Tobacco Settlement Fund payment), with only 16% of that going toward

4 adultbasic. Where adultbasic drew $36.6 million in tobacco funds in , it received only $10.7 million in In 2011, for the first time, none of the money Pennsylvania is receiving from the Tobacco Settlement Fund will go toward adultbasic. Instead, according to Governor Tom Corbett s budget proposal, these payments will go to the General Fund and be directed towards the proposed Liberty Loan Fund. It is questionable whether a Governor has the authority to change the allocation of the Tobacco Settlement Fund dollars to this extent without the Legislature voting to officially repeal or substantially alter the existing statute. Restoring Funding For AdultBasic is the Right Thing and the Smart Thing In the meantime, people suffer. The loss of adultbasic added 42,000 more people to the ranks of the state s 1.2 million uninsured residents and has placed additional strains on the Commonwealth s community health centers and hospital emergency rooms. We are hearing stories of persons formerly on adultbasic deciding to ration their care, making the agonizing decision to ignore a pain or a symptom because they cannot afford to have them diagnosed or treated. Many who relied on adultbasic may now have to choose between healthcare, food, or paying their mortgage or rent. Others fear that without preventative health care to manage chronic conditions, they will no longer be able to work and support their families. In all these cases, those formerly on adultbasic will turn to already-strapped human services, for support and programs that may address some of their needs, but that will not offer the medical care they require or offer the peace of mind that comes with knowing you are covered. It makes no economic sense for the state to divert funding from adultbasic. As adultbasic was ending, Robert Rundle, CEO of Lutheran Social Services for South-Central Pennsylvania, noted the economic cost of termination through the end of the fiscal year. He calculated it would cost $52 million to continue adultbasic for all 42,000 people through June, which translates into roughly $1,250 per participant. Based on 2008 data, he said, it costs $1,265 per emergency room visit. He said, We re telling people to leave a health insurance program that gives them both care as well as the comfort they need to move forward and, in return, go to our community hospitals, go to our emergency rooms and drive our costs up," he said. "I do not think that is a good and wise use of our limited resources. It is neither good nor wise to take a program that works, that combats poverty by supporting human health and dignity, that helps citizens to be productive and contribute to our Commonwealth s economy, and let it end in the way that adultbasic has ended. Both the diversion of dollars that weakened the program, as well as the proposal to completely redirect funds, constitute a moral failure for our state and an abdication of responsibility by our government in seeking the common good. In the case of adultbasic, it is particularly tragic as it will only be needed for three more years as a bridge to 2014 when federal health care reform will provide new options for enrollees.

5 Again, our healthcare social statement says, As guarantors of justice and promoters of the general welfare, governments also have the unique role of ensuring equitable access to health care for all. Governments have the obligation to provide leadership and coordination in balancing competing private and social interests in moving toward the goal of equitable access to health care. We support the recommendations made by the Auditor General in his report and the input invited by these hearings as a positive indication of the will to restore the adultbasic, along with support for tobacco cessation/ prevention /control and other programs through returning to the intended use of Tobacco Settlement Fund dollars. These exemplify actions of a government that works as a guarantor of justice and promoter of general welfare. Thank you for your leadership and effort to restore healthcare and dignity to the many who have benefitted from these funds in the past, and who will stand to benefit in the future.