TOBACCO: Two Counties Decide Fate of Settlement Money
The San Diego Board of Supervisors will decide today whether to take all of the county's tobacco settlement money now or over a 25-year period, the San Diego Union-Tribune reports. Under the original 1998 settlement, the county would have received $945 million over 25 years to be used for various health services, such as mental health programs, cancer research and health services for uninsured residents. However, the county also has another option: selling the rights to the settlement payments to investors and collecting a discounted amount of $460 million in a lump sum by December. San Diego CFO William Kelly urged the board to take the money up front, saying, "It is prudent, it is responsible and it downplays the downside risks." According to Kelly, inflation over the next 25 years could whittle the funds down to $428 million, and future lawsuits against tobacco companies could cause some of them to go bankrupt, thus "chok[ing] off the stream of settlement payments" (Monteagudo, San Diego Union-Tribune, 10/31).
A new study contradicts the arguments of proponents of Measure H, which would allocate 80% of Orange County's $30 million in tobacco settlement money toward health services. Measure H's supporters have contended that the county's "spotty compensation record for serving poor and low-income residents" has resulted in the closure of 14 county hospitals over the past decade. But according to the Los Angeles Times, a county Health Care Agency report released Monday reveals that only three hospitals have closed and the rest were "converted to specialized facilities." Two of the three closed hospitals -- Pacifica and Suncrest -- were acute care facilities; the other one, Capistrano by the Sea, was a psychiatric hospital. Supervisor Cynthia Coad asked the agency to research the claim by Measure H supporters, stating that she wanted to "set the record straight" on the number of hospital closures. Coad added that nearly half of the closed or converted facilities were psychiatric hospitals or clinics. The report stated that all the converted facilities were transformed into "health or specialized residential care programs for underserved Orange County populations." Supporters of Measure H, however, are not convinced with the county's findings. Michele Revelle, a spokesperson for the Orange County Medical Association, said the report failed to address the political forces behind the closures and conversions of the hospitals. Healthcare Association of Southern California's Jon Gilwee added that the report "failed to include such things as the withering of the county's regional trauma center network." Gilwee cited as an example Tustin Hospital, which the county report listed as having closed and reopened, although it did not mention that the hospital no longer offered emergency services. In addition, Gilwee said, the closures of acute care hospitals, which contain emergency rooms and other community services, are "the most significant closures to recognize." Yes on H, a coalition of doctors, hospitals and clinics backing the measure, has cited the higher closure numbers in its campaign material. The measure faces competition from Measure G, which would funnel 40% of the settlement money into paying down the county's bankruptcy debt and only 42% into health care (Reyes, Los Angeles Times, 10/31).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.