Go to the well too many times, and it may be unexpectedly empty one day.
That’s the warning Gov. Pete Ricketts, a handful of state senators and Nebraska’s state investment officer have sounded regarding the Nebraska Health Care Cash Fund. And this collection of state officials has raised legitimate concerns about its future after years of perceived overspending.
Perhaps the most jarring comes from State Investment Officer Michael Walden-Newman, who sent lawmakers a memo updating them about the status of the fund.
Its principal and interest were both being spent, the Associated Press noted. Unless spending is reduced, he added, this particular pool of money will shrink to 80% of its current size – which will essentially be half of today’s figure, because of inflation.
Despite being invested as aggressively as possible, he urged officials to cut their expenditures by nearly $9 million, or more than 14%, from last fiscal year. His words must be heeded.
While a portion of the money in the fund comes from excess dollars from a discontinued federal Medicaid program, much of it stems from the 1998 settlement with tobacco companies.
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Several factors dictate how much money the states receive annually. However, the Tobacco Control Legal Consortium reported in 2015 that decreases in cigarette shipments and sales mean “actual annual payments have been lower than those set forth as base amounts in the MSA and (that) can be expected to continue.” That success has a financial cost.
Accordingly, Nebraska’s fund likely won’t be replenished at the rates it has in the past. The timing couldn’t be worse, given the rise of vaping among youth that requires the same types of smoking cessation efforts needed to convince Americans that cigarettes were in fact harmful to their health. Last year, Nebraska spent just $2.6 million of its $62.9 million on tobacco-prevention programs.
Nebraska isn’t alone here, although the state at least uses the money for health-related programs. A report from the Campaign for Tobacco-Free Kids determined that many states used the settlement money – which came with no restrictions – for nearly any purpose they saw fit, including covering budget shortfalls.
Our worry isn’t about the nature of the programs the fund supports; compulsive gambling aid, children’s health insurance, public health centers and the like are worthwhile investments for Nebraskans. But they must be paid for in a way that doesn’t jeopardize this fund’s future.
Doing so will require either spending cuts elsewhere or revenue increases – both of which mobilize resistance among different wings within the Nebraska Legislature. But that body’s job requires making tough decisions of this nature.
Whichever path is chosen must not be made to placate short-term interests. Given legitimate apprehension about how the fund will be replenished in the future makes its long-term stability the prime focus.