OCPA: Use TSET money to plug budget holes
By: Catherine Sweeney, The Journal Record

OKLAHOMA CITY – Amid Oklahoma’s continued revenue dry spell, one politically conservative organization recommends tapping a long-established health care savings account.

Continued financial troubles have taken an ax to the state’s ability to pitch in for Medicaid. As the Oklahoma Health Care Authority’s budget continues to shrink, so does the federal match. That has resulted in reimbursement rates to nursing homes and hospitals falling to about half the national benchmark. The reduced rates have sent the medical providers’ margins dwindling. It has become common for them to operate at a loss. Several have already closed, and hundreds more face the same fate.

Instead of raising taxes, some conservatives are advocating for the Legislature to look to a tobacco-fueled medical trust fund to fill the holes.

After settling a lawsuit against some of the tobacco industry’s biggest players in the late 1990s, Oklahoma ended up with one of the country’s few constitutionally protected health care trusts. Almost all 50 states sued the companies, which ended up settling. Among the other provisions, they agreed to make annual payments to the states as long as cigarettes sold. The figures are based on national cigarette sales.

After the companies settled their lawsuits, some states took out hundreds of millions in bonds and implemented payback plans with the annual settlement money. Others created savings accounts statutorily, which allowed legislatures to come in and reappropriate the money during hard times. In 2000, Oklahoma approved a state question creating a constitutional amendment that protects the funding. The attorney general’s office gets a little more than 6 percent, and the Legislature gets about 19 percent. The rest goes into the Tobacco Endowment Settlement Trust, which is also known as TSET. Officials can use the principal only to invest, and they use the earnings on health-related programs. Initially, those focused solely on smoking cessation and prevention. Today, they include overall health promotion, cancer research, and residencies in rural hospitals.

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