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

1. How to $pend $175 millionA Briefing on Amendment 35, the New Tobacco Tax Constitutional Provision Presentation to Hot Issues in Health Care Conference Colorado Springs, November 2004 Barbara Yondorf, Yondorf & Associates

2. “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

3. 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. Yondorf & Associates

4. 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 Yondorf & Associates

5. 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.

6. 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%.

7. 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). Yondorf & Associates

8. $175 Million/Year in New TobaccoRevenues

9. 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: • Children’s basic health plan (also known as CHP+ Child health plan plus), or • Medicaid Yondorf & Associates

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

11. 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.] Yondorf & Associates

12. 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. Yondorf & Associates

13. 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 .

14. 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)

15. 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.

16. Main Eligibility Criteria: Medicaid & CHP+ Max. Inc. Max. Inc. Hourly as % FPLFamily of 3Equivalent* 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 women 185% $28,990 $13.93 who are not Medicaid eligible * For person working full-time, 40 hours per week.

17. 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

18. 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?

19. 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?

20. 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.

21. 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.

22. Yondorf & Associates Denver, CO 303-355-8817

23. Questions?