COMMONWEALTH OF PENNSYLVANIA HOUSE OF REPRESENTATIVES COMMITTEE.ON APPROPRIATIONS

:n re: 2000-2001 Appropriations Hearings Tobacco Settleaient

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Stenographic report of hearing held in Majority Caucus Room, Main Capitol Harrisburg, Pennsylvania

Thursday March 16, 2000 9:00 a.m.

ION. JOHN E. BARLEY, CHAIRMAN [on. Gene DiGirolamo, Secretary [on. Patrick E. Fleagle, Subcommittee on Education [on. Jim Lynch, Subcommittee oti Capitol Budget Ion. Ron Raymond, Subcommitee on Health and Human Services Ion. Dwight Evans, Minority Chairman

MEMBERS OF APPROPRIATIONS COMMITTEE

Ion. William F. Adolph Hon. Steven R. Nickol [on. Matthew E. Baker Hon. Jane C. Orie [on. Lita I. Cohen Hon. Joseph Preston, Jr. Ion. Craig Dally Hon. William Russell Robinson Ion. Teresa E. Forcier Hon. Samuel E. Rohrer Ion. Dan Frankel. Hon. Stanley E. Saylor Ion. Babette Josephs Hon. Curt Schroder Ion. George Kenney Hon. Edward Staback Ion. Frank LaGrotta Hon. Jerry A. Stern Ion. John A. Lawless Hon. Stephen H. Stetler Ion. Kathy Manderino Hon. Jere L. Strittmatter Ion. Phyllis Mundy Hon. Leo J. Trich, Jr. [on. John Myers Hon. Peter J. Zug ilso Present: [on. Peter J. Daley, II lichael Rosenstein, Executive Director Reported by: Dorothy M. Malone, RPR

Dorotkq M- Malone Registered Professional Reporter 135 S- L*rJi* Street , Uummelstown, Pennsqlvcmia 17036 \^\ io Present: (Cont'd)

:hy Vranicar, Budget Analyst •y Soderberg, Minority Executive Director k Randolph, Budget Analyst

Dorotk4 M- M^lone |

Name Page Margeret J. Dierkers, Ph.D. Deputv Secretary- Medical Assistance Program 5

Arthur S,,Levine, M.D., Senior Vice Chancellor 40 For Health Services and Dean School of Medicine, University of Pittsburgh

Jeffrey S. Palmer, President/CEO Coordinated Care 57 Network

Robert B. Sklaroff, M.D. 66

Susan P. Byrnes, Founder/Chair - Susan P. Byrnes 93 Health Education Center

Testimony of Michele Lewis, Public Policy Analyst 108 AFSCME - AFL-CIO CHAIRMAN BARLEY: Good morning everyone.

I would like to call our hearing to order. This is

the third and final hearing that the Appropriations

Committee has scheduled on the issue of the Master Settlement

Agreement from the tobacco companies.

Many of you are well aware of the fact

that Pennsylvania will receive $11 billion over the next 25 years. And it will mean up to nearly $460 million per year. That will not necessarily be the exact amount each year. It will vary somewhat from year to year.

But the General Assembly and the Ridge administration,

the current administration, we have the responsibility

for developing the blueprint which will allow us to

invest this money and make it available for the citizens of Pennsylvania. We have an opportunity I think before

us to address the concerns and certainly hear the concerns of many of the organizaitons and the individuals that will be impacted and will be affected over the next

several years by this initiative.

Now in turn, we will, as I mentioned, be making the decisions on behalf Pennsylvanians on how we should be reinvesting this funding. So, that has really been the main reason why we have been holding

the hearings because we feel it is extremely important

to be able to get this feedback. I think much of what we do, I mentioned in the beginning, it is a blueprint we are going to be working on, but as you put a program in place initially, that really does set the pattern for what you will do over the next 25 years. It isn't something that will be totally inflexible but nevertheless it will certainly have a tremendous impact.

So today we have several witnesses that will be appearing before the Committee with some suggestions that they have. And again, I just want to welcome our first testifier, Peg Dierkers, who is Executive Secretary of Medical Assistance for the Department of Public Wel­ fare. Peg, we welcome you and we will provide you the opportunity now to deliver your testimony to the committee.

MS. DIERKERS: I am very pleased to be here to provide the Committee an overview of Governor

Ridge's Health Investment Plan and answer questions that you may have. Sitting beside me today is Pat Stromberg.

Pat is the Executive Director of the CHIP Program in the Department of Insurance and she will assist me in answering any questions on the basic coverage for uninsured adults that the Governor proposed under this plan.

Since, as you said, Representative, this is probably the third time you've heard from the administration about the Governor's plan. I will try to keep my remarks brief. In 1998, Pennsylvania Attorney General

Mike Fisher joined the Attorneys General of 46 states, five territories and Commonwealths and the District of Columbia, in finalizing the tobacco Master Settlement

Agreement with the five major tobacco manufacturers.

These manufacturers represent almost 99 percent of the entire tobacco industry's revenues.

The settlement agreement provides reimbursement to states for the costs they have incurred as a result of tobacco use. Pennsylvania's share, as you have said, is approximately $11.5 billion dollars, with maximum annual payments expected to range somewhere between

$397 million and $459 million from the year 2000 to the year 2025.

Governor Ridge has made it a point to note that these figures are just estimates--and they likely represent maximum allocations. Volume adjustments, based on future tobacco use and consumption, as well as the possibility of future litigation by entities other than states, may reduce Pennsylvania's projected annual allocation. The Administration plans to begin allocating the tobacco settlement revenues during the fiscal year beginning July 1, 2000.

The Tobacco Settlement does represent a historic opportunity to focus energy and resources on the health of Pennsylvanians. Governor Ridge committed himself and his administration to focusing every penny of the Settlement on "making Pennsylvanians healthier."

In doing so, he has positioned Pennsylvania as a national leader in this regard.

Again, the Governor's Health Investment

Plan was developed following almost nine months of research and a comprehensive public process and discussion during which Administration Officals heard from hundreds of

Pennsylvanians and met with every group who requested a meeting--all in the spirit of developing a plan that reflected the needs and concerns of Pennsylvanians.

The Governor's only request is that the public discussion be focused on the five principles which he believes should guide the Commonwealth's spending of the tobacco settlement.

These are:

1. The goal should be to make Pennsylvanians healthier;

2. A portion of the funds [should, be set aside for future generations;

3. The'settlement proceeds should be directed to programs and initiatives that can be adjusted easily given the likely fluctuation in payment amounts;

4. The focus should be on fulfilling or enhancing state government's existing service areas before creating new ones; and

5. The initiatives should not require

significant growth or expansion of government bureaucracies.

It was encouraging to me--both as a policy maker and as a Pennsylvania citizen--that there were striking similarities in the main themes gleaned from each public meeing. It didn't matter if the geographic location or the stakeholder group themes were very similar and they were.

Funds should be used to prevent tobacco-relatec diseases and fight tobacco addiction

Funds should be used to provide better access to health care

Funds should be used to support Pennsylvania hospitals that incur costs from uncompensated health care, and finally,

Funds should be used to support research by Pennsylvania researchers and institutions.

The Administration took these proposals that we heard from the public, analyzed them, brought work groups together to further develop them and the

Governor then seeks funds in the following allocation amounts:

First, we propose that 40 percent, on an annual basis, be used to pay for health insurance for

low-income uninsured adults. Our proposal would offer

basic health care coverage for the uninsured whose income

is under 200 percent of the Federal Poverty Level and who have no other coverage. This program will provide

uninsured adults with the improved health and peace

of mind that comes with access to health care. In addition,

our plan calls for a Medicaid "buy-in" plan for employed

persons with disabilities whose income is under 250

percent of the Federal Poverty Level., Often, persons with disabilities are forced to choose between work

and health care coverage - the income they would earn working would disqualify them from the comprehensive

benefits package they need to meet their special health

care needs. Under both the low-income adult and disabled

pieces of this particular component of Governor Ridge's

plan, individuals taking advantage of this opportunity will contribute a nominal co-payment to receive the

coverage.

Secondly, we believe that 10 percent annual­

ly ought to go toward broad-based health research. Under

our proposal, funding would be targeted to Pennsylvania-

based health researchers and health research institutions,

and wo uld largely be limited to proposals that have

been peer reviewed by nationally accepted entities. Often, many good proposals-developed by Pennsylvania research institutions, and for Pennsylvania health priorities- are graded very high in terms of the merits of their proposals, but simply are not funded due to limited

funding or given other national health care priorities.

We believe these projects should be given priority so

that Pennsylvania researchers, working on Pennsylvania priorities, receive the funding that they could not garner elsewhere.

Third, we believe a venture capital account should be created using five percent of the fund for three consecutive years. The venture capital account would use tobacco dollars to leverage private sector investment and encourage private sector business development that will translate health-related academic research into marketable products and services. It will help to create new Pennsylvania businesses and spur economic development, establishing Pennsylvania as a national leader in translational research and biotechnology, and perhaps most importantly - will improve the health of Pennsylvanians by making existing and new health-related products better - and getting them to market and to use faster.

Fourth. The Administration believes that 15 percent of the funds, on an annual basis, should be dedicated to combating tobacco addiciton by way of tobacco use prevention and cessation programs. We are proposing that these funds be used in and to support action at the community level, by community-based organizations that know and understand their communities. We will encourage new partnerships, combine their experience and knowledge of traditional health care providers with those organizations that have the most experience in attacking the tobacco use problems in their communities.

Most importantly, we intend to use the funds in a manner consistent with the Center For Disease Control Best

Practices which enumerate a number of components of effective tobacco use interention.

Fifth. Governor Ridge's plan calls for

10 percent of the tobacco settlement funds to be dedicated annually to make payments to hospitals and health systems for the uncompensated care they provide to indigent persons. This plan is broad based - any Pennsylvania hospital or health system providing uncompensated care and meeting their community obligations would be eligible

to receive payments. This plan will also target a portion of the funds to payments for high-cost individual cases on which hospitals and health systems incur catastrophic

losses.

Sixth. The Governor's plan proposes that 15 percent be used to support older Pennsylvanians

who are in need of long-term care in their own homes

or other community-based settings to help them avoid

entering a nursing home. Surveys constantly show that

our elderly population prefer (' aging in place in their

home and with their family rather than moving to an

institutional setting. Pennsylvania has made great

strides in providing that opportunity to more and more

long-term care consumers in recent years. However, we know we can do better. Governor Ridge believes this

plan will move the long-term care industry in the direction

that consumers want it to go. And, because our elderly

population is disproportionately affected by tobacco

use, the Governor believes it is only fitting to dedicate

a significant portion of the funds to them.

Lastly, we believe that the endowment

account ought to be created - a separate ; account - which can be used in the event that annual allocations

cease or decrease to a level that the Governor and the

General Assembly agree must be augmented. We believe

that five percent annually, plus the initial payment

of the $142 million, should be allocated to this special

fund. This will enable future generations to continue

to benefit from this settlement, and will allow needed

and effective programs that we begin now, to continue into the future without the risk of having funds taken from them.

Mr. Chairman, Members of the Committee,

I am pleased to share with you this bold Health Investment

Plan. On behalf of Governor Ridge and members of the

Administration, we look forward to working with you and other members of the General Assembly to take advantage of this historic opportunity to make Pennsylvanians healthier. And I will be happy to answer any questions.

CHAIRMAN BARLEY: Thank you very much for your testimony. We appreciate your kind remarks.

We do have members that have questions. Maybe what we should do before we entertain the questions is we will allow the members to introduce themselves so that you are familiar with who all is here and those that are viewing may also appreciate who is here today. To my left is Michael Rosenstein^ the Executive Director of the House Appropriations Committee. To my right is Mary Soderberg, the Executive Director for the Democrat members of the committee.

REPRESENTATIVE STABACK: Ed Staback,

Lackawanna, Wayne.

REPRESENTATIVE ROBINSON: Bill Robinson,

Allegheny County. REPRESENTATIVE STERN: Jerry Stern, Blair and Bedford County.

REPRESENTATIVE FLEAGLE: Pat Fleagle,

Franklin County.

REPRESENTATIVE STRITTMATTER: Jere Strittmatte:,

Lancaster County.

REPRESENTATIVE MANDERINO: Kathy Manderino,

Philadelphia County.

CHAIRMAN BARLEY: At this time I would recognize Representative Fleagle for purposes of questions.

REPRESENTATIVE FLEAGLE: Thank you, Mr.

Chairman. Are we still under the five minute rule here?

CHAIRMAN BARLEY: No, sir.

(Laughter.)

BY REPRESENTATIVE FLEAGLE:

Q Madam Secretary, I have been rather outspoken on the tobacco settlement in the private meetings. And

I really haven't had the newspapers or gone off the reser­ vation as far as making any public statement. But I have been trying to come to grips about how I personally feel where this money should go. Maybe I can get this off my chest now and you can comment on my thoughts. I see three areas that seem to have a consensus.where these funds should go. One is cancer research. The other is uncompensated care, to health care institutions and the third is tobacco use education or tobacco non-use education.

My biggest fear is that this funding

is going to be so diluted that in ten years we'll look

back and say we have not really made any inroads to

any of these ten problems that you have outlined. And

I see this happening. It is like sitting on a cliff

and watching two trains come together and there is not

a darn thing you can do about it. You just feel so

powerless. I am afraid that that is where this tobacco settlement-program is going. We are going to so dilute

it that no one area will really be helped significantly.

At least enough to make a difference.

Now, I feel personally that our generation,

and this is just about everybody sitting here maybe

here in this room is a part of my generation, a lot

of people are older me. But I feel that my generation

has one chance to use signifcant amounts of capital

to cure cancer. And if we are serious about it, that

is the only way that we are going do it. I'm telling

people I have a grandson on the way here. My biggest

fear in 15 or 20 years that he is going to look back

and say, Grandpa, you know, you had all this money and

you blew it. You didn't cure cancer. Your generation

did nothing for that.

So I guess I am of the personal opinion that the major, major portion of these monies should go into cancer research. I do have one fear about that

though is that, number one, that we cannot make these cancer research institutions accountable for all that money. What do you threaten them with if they don't come up with a cure or what kind of objectivity is there or how can you quantify success in that?

So I will be anxious to hear how you feel about it. And let me also preface that remark with the fact that I am very practical. I know our hospitals are in dire need. I have two hospitals in my own district of which I am very close to. I know they need monies to take care of these uncompensated constitutents that come into them. I will ask your opinion. I know I have given a whole lot of opinions of my own. But I remember, and I guess he is not the celebe au jur anymore. But Newt Gingrich told a story one time, not a story it was a policy statement actually.

That in the 50's when we were looking at polio, we had a great amount of technology at our hands to address the polio problem. Now we could have spent billions and billions of dollars on making the best iron lung that the world has ever seen or we could funnel our efforts towards a cure for that and it might take years to do that, but that's what they did and a cure was found for that.

So let me, after prefacing this question,

why not use these funds and the funds from other states,

I believe we get 11 billion and who knows how much the

rest of the country is getting. Why not funnel that

into finally saying we have the funds, we have the tech­

nology, let's cure cancer in this generation instead

of spreading those funds out.

A Health care issues are a concern and a priority for the majority of Americans including Pennsyl- vanians.. It consistently shows up as one of the top three of five issues that people are concerned about in their lives.

The Governor proposed a very broad based

approach to addressing a number of the priorities, but

not all of the priority health care concerns in the

Commonwealth. I think he shares your concern that the

money not be so fractured that we don't make significant

progress in any one area. But he did propose a few.

I would offer that I think a number of

the proposals are a multi-prong approach to the three

themes that you mention. In terms of cancer, we have

money in both the research and the venture capital components

of the Governor's plan. Often as you said, research

gets done but sometimes it doesn't get translated into use. So both the research and the venture capital proposals could help us not only fund primary research that isn't funded at a national level, but also work with medical technology, organizations, academic health care institu­ tions to get that research that is done into use in the clinical marketplace.

In terms of uncompensated care, there really are three proposals to address uncompensated care. The direct uncompensated care proposals, but also the proposal of the uninsured. I mean, obviously, when people are uninsured, if they are in dire need of health care coverage, their only place to go in their community might be the hospital and then the hospital incurs uncompensated care.

REPRESENTATIVE FLEAGLE: Not to interrupt you. I am fully aware of the areas that you are looking at. I am certainly sympathetic to them. My big concern is that this generation has one chance and will only have one chance to have this amount of funding available to cure cancer and that we will drop the ball. As I stated before, I don't know how to make research institu­ tions accountable for that. I have been through other meetings, not only with this committee but with our

Republican Policy Committee and the Education Committee that has looked at this. I guess I have used this forum here more to let you know how I feel about this than to ask you that question.

But I hope and I challenge all of my colleagues that 10 years from now we look back and say we have solved the problem. Not that we have diluted these funds so much that we have just continued to put a band aid on other problems.

Now, I kind of cut you off there because

I didn't think you were going in the direction of an answer for cancer research. But I hope that we will take that into account when we look at the division of these funds.

Thank you, Madam Secretary. Thank you,

Mr. Chairman.

CHAIRMAN BARLEY: I now recognize Representee{ tive Robinson.

REPRESENTATIVE ROBINSON: Thank you,

Mr. Chairman and thank you, Madam Secretary, for being here.

BY REPRESENTATIVE ROBINSON:

Q I would like to go to an area that was not touched upon in your testimony and that is the area of law enforcement. It would seem to me that if we are serious about addressing the issue of the effects of tobacco smoking, that not only do we have to encourage research and health care, but we also are going to have

to discourage people from smoking cigarettes. As painful as that might be for many people.

One of the areas in which we can be very helpful, particularly to our young people, is to interdict

those who are bringing cigarettes into this Commonwealth

illegally. It is a major problem. But I didn't hear anything mentioned in your testimony that relates to

the Governor's concern about the illegal cigarette trade

that flourishes in Pennsylvania. I was wondering if

there was something else that you might share with us

in that regard or would it be more appropriate for someone else in state government to address that issue?

A A number of agencies have been working on the law enforcement side of tobacco cessation, Departments of Health, State Police and so on. That is not addressed directly in the Governor's tobacco proposal. Although there is flexibility that if a local community found

that it did not have the supports it needed for a comprehensive approach for cessation on the law enforcement side,

that perhaps they could make a proposal. But we are

suggesting what research has shown is that the eight or nine prong approach that the Center For Disease Control has outlined is very effective when put totally and

comprehensively into place at a local level. Q I think given the fact that our Attorney

General took upon himself to sue on behalf of the citizens

of this Commonwealth, that we might want to look at

law enforcement as a vital part of this. It does us no good to do all the research and all the education

and then not only do our young people have access to

cigarettes legitmately, sold by legitimate business

people, but that we also are not addressing this issue

of illegal cigarettes coming into this Commonwealth.

There is not only health implications, but it is undermining

legitmate business people who are authorized to sell

tobacco products. I think if we are going to get to

the root of these problems, we are going to have to

look at all the aspects. I would think that this General

Assembly might provide to our Attorney General a more

generous portion of our tobacco settlement funds so

that he might interdict and stop this illegal flow of

cigarettes into Pennsylvania. It happens all the time.

Many of our business people have come to this General

Assembly asking us for relief. And while I'm sure the

State Police and the Attorney General's Office is working

on this, I think they send a strong message to those

people who are engaging in illegal activities. Yet

we see them as part of a problem. They are adversely

affecting the health of Pennsylvanians as well, people who make the cigarettes. I think we need to spend some time on that.

One other concern I have is, and that

is, how do we make sure that those groups of people

who are adversely affected by tobacco, the use of tobacco,

actually get the benefit of the monies^ Often times we set up programs where we use statistical data based on the plight of people who are victimized. People who are adversely affected. And when we do pur longitudinal studies, we find most of the money was spent on administra­ tion and other areas. As Representative Fleagle has suggested,the problem persists. Is there any way we can give assurances to the people in Pennsylvania that those portions of our populace that are most adversely affected as a result of cigarette smoking are going to see some results from us that are measurable?

A I think there are similarities in the demographics between the groups that you mentioned that are most adversely affected by tobacco use and the Governor's proposal in that he has targeted programs that serve lower income individuals. Perhaps disproportionately, minority communities which often are the same demographic profile that you see in terms of tobacco use. Women,

smoking use among women is greatly on the rise and they are also disproportionately represented in some of the programs that the Governor has proposed. So I think

there are similarities in demographics.

REPRESENTATIVE ROBINSON: Thank you,

Madam Secretary. Thank you, Mr. Chairman.

CHAIRMAN BARLEY: I now recognize Representative

Stern.

REPRESENTATIVE STERN: Good morning,

Madam Secretary.

BY REPRESENTATIVE STERN:

Q I have a question concerning the proposal about the 15 percent portion of the settlement that would support older Pennsylvanians who are in need of long term care and the issue about allowing them to age in place and allowing them to choose a place they want to age with dignity.

I know that the money has been earmarked and my understanding is the money would only go to those who are eligible for nursing home care and the Medicaid

Program.

My concern goes out to thousands of Pennsyl­ vanians who are now waiting for services and don't meet the criteria and they would be denied access to these funds. What could possibly happen their health could deteriorate and they would have to become impoverished under the guidelines before they could get services. I was wondering if there has been any discussion to allow for some of the portion of the 15 percent that has been set aside for this purpose for use by the Department of Aging to possibly look at helping some of the waiting lists for the middle class people that don't meet the other criteria or the other guidelines.

A In the public work group that was convened as well as in some of the public testimony at hearings, stakeholders were pretty adamant that the funds were limited and so they should be targeted to people who are most vulnerable and most in need. In the work group on the uninsured and uncompensated care to which the home community based care proposal was introduced, that group prioritized people under 200 percent of poverty as the priority group to address some of these proposals.

As you probably know, the Administration and the General Assembly fund Home and Community Based

Services for older Pennsylvanians in a variety of ways.

Both through the proposal in the tobacco settlement as well as the normal budget general fund process. The money is typically appropriated, a large portion of the money is typically appropriated to the Department of Public Welfare because we can draw down a dollar of federal funds for every dollar of state funds.

And the Department of Public Welfare works with the Department of Aging who actually administers that program.

That program also has waiting lists primarily in Philadelphia.

And we see this as a major step forward in addressing that waiting list in actually being able to build the capacity across the state to serve more and more Pennsylvanian3 as they age.

So, there is a limited amount of resources.

This group was prioritized. The funds can leverage additional federal funds if they serve Medicaid eligibles and we wanted to serve those most vulnerable being those at risk for. institutionalization in a nursing home.

REPRESENTATIVE STERN: Again, and I apprec­ iate that response and I understand, you know, the guide­ lines and the various proposals that you have set forth.

My concern there again lies with the fact that we are excluding a certain class of individuals here that in some cases worked their entire lives and may fall above or below certain income thresholds. And they would have to basically sell down or lose everything, become impoverished and then they qualify. So, they sell every­ thing or lose everything or have to leave. And the purpose, from looking at the testimony, looks like we want to try to maintain a semblance of keeping these people in their homes and allowing them to remain in the home setting. I am not just asking for additional monies or anything else. I am just looking at the way the

15 percent, in this particular segment, is allocated to look at possibly working allowing the Department of Aging who understand, who knows the health care issues of the aging population within every county in Pennsylvania to look into this and allow them some flexibility in treating some of those people that need dire help without them losing everything and having to go and then having the government therefore pick up more of the increased cost of care.

I think that would go with the initiatives of not requiring significant growth. What we are doing in this proposal is allowing for the continuation of the Medicaid and so forth allowance and the federal funds that can be drawn. We are allowing the continuation of a program already in place.

And I am asking a little flexibility for you to at least consider allowing the Department of Aging or the Area Agencies on Aging flexibility in looking at how we can best meet some of the needs within the community. Some of the people worked their entire lives, and I am talking middle class husband and wife who don't qualify, you know, the 200 percent poverty level guidelines. Thank you, Mr. Chairman. CHAIRMAN BARLEY: I now recognize Representative

Manderino.

REPRESENTATIVE MANDERINO: Thank you.

Good morning.

BY REPREi^HiPATEDVE MANDERINO:

Q First off, I really want to applaud the

Governor and your work groups. I have also been interested

in this and heard from so many interest groups, and quite frankly, I am very pleasantly surprised with the yeoman's job that you had to do with were you ended up. Overall I think that the goals are right on target

in what we need to be looking at.

I have one concern and then one comment

or suggestion. With regard to the broad based health

research, I have heard representatives from the Administration

say numerous times as you did today, that we want to

be able to help those good proposals developed by Pennsylvania

research institutions for Pennsylvania Health priorities

be able to get funded. And I am really kind of stuck

on the Pennsylvania Health Priorities. Part of me doesn't.

know how our health priorities are different from someone

else's and they may be. But I guess my comment or concern

would be I think that again to remain targeted and effective

that we ought to'define in advance through the Department

of Health what our Pennsylvania Health priorities against which we judge various proposals. Because I think if we don't do that, we're going to end up in a little bit of a shoving match that I see happening right now with all the institutions who want some research dollars.

And it is going to be whoever has the strongest arms or the loudest voice is going to get it and I am not quite sure that that will necessarily reflect Pennsylvania

Health Priorities.

So, if you have any comment about that,

I would like to know where your thinking is.

A The work group that Secretary Zimmerman convened on this subject, which was a very diverse group of people, so we were also surprised that there was consensus actually in terms of a government structure for this proposal and yet recognizing that while priorities could be named now, :hat would be priorities for the next few years. There needed to be some flexibility because this is such a long time funding proposal to let those priorities change. But they very much agreed that there needed to be an evaluation criteria and that there had to be a government structure and accoutability for the money.

Q My second suggestion, I have been most interested in the charity care, uncompensated care and health care for the uninsured issues. And I would like to suggest that you look at those two pieces as in synergy with each other. And that when we set out the details of the program, that we look at those two pieces and the 40 percent and the 10 percent and think of them as 50 percent of the pot to help with health care needs.

Because here is what I think is going to happen with the 40 percent. -I think we have structured -- to me that is the most important pieces, to get people coverage.

I think we have structures in a way conservatively, and I am not disagreeing with that, to try to take care of concerns about crowd out, concerns about not affecting the market, etcetera. Those are all very valid concerns.

But because of how we have structured it, my gut reaction tells me we are not willing to spend all of the money in that 40 percent line item. I hope I'm wrong. I just think that is what is going to happen there.

On the other hand, those people are still going to need coverage. And they are going to end up when they need that health care in the charity care item of our hospitals. I think there is a lot of flexibility, and I have sent to the Administration, Representative

Walko and my Charity Care Bill, but I think the piece of that Charity Care Bill that is so crucial is the parameters and kind of a quid pro quo it puts on health care institutions that would receive these charity care dollars.

And I think we can even look beyond what might have been in that proposal and say is there a way that when you get those charity care dollars, you can have, you an institution, can even have, I don't want to set up all these mini-clinics, I am just thinking, but you can have some sort of relationship with those people who live close to it, end up at your institution all the time so that you find a way to provide their health care coverage when needed.

I think there is a lot more creativity that we can do if we look at those two things in synergy with each other that would give people coverage and to help the institutions with the people who are walking in their doors. And I would like to help explore that more as the details of that particular proposal is developed.

I know that people point to different statistics and everyone--I think that the reason we are lower than the national average with regard to the number of uninsured in our state is because we have the second highest senior population. So a great portion of our population is covered by Medicare. But I do really think that that increased growth that we are experiencing is a phenomena that will continue with our young and working families. And so I would like to see us connect those things and be committed to 50 percent for those two things in combination.

If you have any comments on that or if your are going to invite me to participate. I would really like that.

A We very much see those two proposals in synergy, which I was commenting to Representative

Fleagle earlier. I think the Insurance Department's analysis showed that about 60 percent of every premium dollar spent on the uninsured actually would end up at the hospital or to hospital based providers. So, the hospitals should benefit and help us. I think they agreed to be partners as they have on the children's side to let people know about the coverage and make sure they enroll. Because that is always the concern.

You want to make sure that people take advantage of the opportunity there.

The other thing I would just offer, and

I think is again, a theme, a consensus point on the uncompensated care piece. Consumer advocates in our work group were very insistent, as the hospitals were themselves, about accountability for how the money is spent in that 10 percent. So, we didn't agree or get to a detailed conversation about that, but the Administration and the hospitals and the advocates all agree there has to be accountability measures for that money.

REPRESENTATIVE MANDERINO: Just one more

comment. The other reason I am suggesting that we combine

or somehow put some synergy between them in the actual

legislative proposal is because when some chunk of that

40 percent doesn't get spent, which is my suspicion

it is, I don't want-it to go over to one of the other

five categories. I want those two categories, that is

my personal advice, to be combined for that reason so

that the synergy is seen between the two of them.

Thank you very much, Mr. Chairman.

CHAIRMAN BARLEY: I now recognize Representative

Strittmatter.

REPRESENTATIVE STRITTMATTER: Thank you.

Thank you ladies very much for being with us this morning.

BY REPRESENTATIVE STRITTMATTER:

Q I would like to continue with, say a

few comments like the other members have done and then ask you to agree or disagree. What I am worried about

is the fact that the money we are talking about, we are not really sure how long that is going to last.

We are not sure if we are going to be able to pay for new programs that might be started. What I am worried about is that there are many things that the government has said that they are going to do that they don't do well now. And specifically, since you two ladies are hitting on a couple areas, you know, the Insurance Depart­ ment and Public Welfare is going to bring out a couple of those. Wouldn't it be better to do the things we are supposed to do correctly rather than proposing to get into new lines of programs. Getting people's expecta­ tions raised and then have them dashed once again when state government doesn't fulfill it?

One of those areas would be the CHIP

Program. We have many children that are still not covered.

Even though after many years of using tobacco money should be covered. What is being advocated by the Administration and what I would hope you would advocate on behalf of the Department is instead of going and trying to set up another insurance program for people like we did for the children, why don't we concentrate on making sure the one that works for the children works? For example, there is much money still being spent each year on advertising for this program. There is much money being wasted I believe by having children still go to hospitals after they should have been to a primary care physician for many months. And ending up with a lot of extra costs and-tHey have uncompensated care which then goes into raising the budgets once again for those hospitals. And what we have to do, and what you are advocating to do with some of these precious dollars to pay for uncompensated care when those children- should have been signed up years ago, should have been treated before they got to the level of leaving the hospital. Why is it that we don't allow, you know, the CHIP Program to work? That when those children come in contact with the health care industry in whatever way it might, be it hospitals, be it the doctors, be it social workers, be it faith based groups that would be -- that those payments would be paid for. And then you wouldn't worry about, it would be up to the health care providers to worry about getting the paperwork correct for these families.

Because what happens many times, because

I have been told by my consituents, the children don't get sick that often, but when they do it is a catastrophic event. They weren't signed up in time and so they don't pay so it goes uncompensated care.

Or I have a working family who now the parents are between jobs. They go to qualify for the

CHIP Program and they are told they don't qualify for the CHIP Program because they don't make enough money to qualify for the CHIP Program. That they should be qualified by Medical Assistance. They don't want to sign up for Medical Assistance, because they don't want to go on welfare.

There are a couple of problems that I think we could work on, you know, you could advocate with the Insurance Department and Public Welfare. Why don't we fix that? And make sure that all the children they we think that should be covered are covered and aren't so we can stop paying for uncompensated care.

That is too expensive treatment and also stop paying for the advertising for this. If we would have it that we would know that all children under 18 are covered.

Another area that comes up I believe

that we could correct would be,, one dealing with mentally

retarded. Right now there is great turnover in group

homes trying to provide care for the mentally retarded.

And what happens with low pay there is high turnover.

And that is not fair to those people. It is a charge

that we have in state government and with your departments

to make sure we take care of those people. Many of

those could be -- and I have asked the physicians could

smoking be attributable to mental retardation. They

say, yes, it certainly could be a contributing factor.

So I would say, well, here is another

area in state government that we should -- if we are

going to have limited funds, we want to make sure we

don't create programs, why don't we fund programs that we told everybody we're supposed to, we are supposed to take care of the people that are mentally retarded in group homes. And we don't because we have a turnover rate of like six times a year. Someone will be coming into that person's life. That would be like us being at home, you know, sitting at dinner and every two months having somebody new come in we have to get to know again.

And so I point that out as another area

I think that your departments could be advocating to use these monies to solve a problem that we now have.

Another area that I think would be good for your departments to advocate would be in the form of catastrophic health occurrences. Many of the famil­ ies, when you look at, or you with your proposal for providing low income uninsured adults, what happens to the working families? The people that are paying taxes every day and all of a sudden they end up with a catastrophic health occurrence. All of a sudden you are going to make them be really wiped out. Impover­ ish themselves in order to gain the help that they need.

So instead what is happening, because these people don't get help from us, they get help from other good programs;

Kelly Gold Program, that supplies these extra monies to try to get these families through those times. Why don't you advocate on behalf of all the families that are out there now that do have insurance, but they can't pay for this extraordinary occurrence without losing their home and impoverishing themselves until they get on Medical Assistance. I think that would be a wiser use of the funds rather than competing with the insurance companies to try to set up another subsidized insurance program, which just like the subsidized insurance program you have for children isn't working. Why would we want to expand and start another program that might not work unitl we get the one fixed that we do advocate?

These are a few of the points that I would like you to comment on or maybe take back and think about and get back to the chairman about better ways that we could use these funds. I think it is very commendable we are talking about health care. I think it is very commendable in our state that the Governor and your departments are advocating that we use the money for tobacco related problems rather than other states that are using it for things that have nothing to do with the problems that are caused by tobacco.

But do you think and agree with me that we could do a better job of advocating the use of these funds to solve some of the problems that we are already taking charge of and that we are not doing well with?

A Representative Strittmatter, if I could, JO

money is not necessarily the issue that would fix some

of the difficulties in the areas you defined. There

is efforts underway to make improvements in all the

areas you mentioned. So I would like, in order to do

a thorough job, to provide information to you through

the chair.

Q Thank you. The other, area I would like

to touch on to see if you agree or disagree. Do you

believe that the departments should be advocating to

make the use of tobacco illegal by children? For instance,

our alcohol laws show that there is a problem with drug addiction and alcoholism and that a gateway drug is the

legal alcohol, you know, we sell in the state stores

or the beer distributors sell or taverns sell. We made

it illegal for minors to possess and use, in addition

to criminalizing those that sell it to them. When it

comes to tobacco, as my constituents are pointing out

and they have been listening to this debate, more and

more of them are coming to me and. asking me to push

to have the children know that it is not a double stand­

ard. That it should be illegal to use tobacco and to

possess tobacco just like it is to use or possess alcohol.

Do you agree that the department should be advocating

to make this change?

A I don't think I am qualified or -aoi "the .right person to comment on that. I am not familiar with the most recent research on drug and alcohol addiction.

When I was familiar with it, tobacco was not the gateway drug. Marijuana was. So I think I-would leave that

to the Secretary of Health.

REPRESENTATIVE STRITTMATTER: The one

thing I would point out is leading experts with drug addiction say that the way every heroin addict got started was a puff on a cigarette and a drink of beer. Not every one that does that becomes a heroin addict. But every heroin addict started that way and it was just a matter their choice of drug, their choice of high.

And when we are looking at the uptick now of the use, again by our children, I just ask you to look into those areas and see if that isn't true. And if it is true

if you could join me on behalf of my consitutents that are pushing me to do something about it. Thank you.

CHAIRMAN BARLEY: Thank you, Madam Secretary.

Appreciate your being here and we look forward to continuing to work with you as we pursue the final portions of the allocations of money. Thank you very much.

Our next testifier this morning will be Dr. Arthur Levine who is the Sr. Vice Chancellor

for Health Services at the University of Pittsburgh and he is also the Dean of the School of Medicine at the University of Pittsburgh. Dr. Levine, welcome,

and we note that you are on a rather tight timeframe.

I know you are anticipating catching a flight. So if

you would provide your testimony and members could, out

of respect for your? time, keep their questions in a bit tighter frame, we would appreciate that. I had

the opportunity to Visit with you when I was in Pittsburgh

last time. I was extremely impressed with some of the work that you are doing. I look forward to your testimony.

You have the floor.

DR. LEVINE: Thank you, Mr. Chairman

and Committee members. I .am Art Levine, Senior Vice

Chancelllor for the Health Sciences and Dean of the

School of Medicine at the University of Pittsburgh.

Before joining the University in 1998, I had spent the

entirety of my career at the National Institutes of

Health, where I had 31 years of experience as a pediatrician,

an oncologist and a molecular biologist. I bring that

experience to this testimony. As a pediatrician, I have seen a consequence of tobacco use that may be less

familiar to you than the scourge of cancer, and that

is the e:f;"£e.c;t on the developing fetus in a mother who

smokes during pregnancy. Such babies are commonly born with low birth weight; they have experienced growth

retardation during development in the womb since nicotine reaches every cell in their bodies and acts as a toxin.

They are likely to carry with them throughout life the

stigmata of maternal nicotine exposure. As an oncologist,

I have mourned countless patients dying from a wide

array of tobacco-related malignancies. Finally, as

a researcher, my career has evolved in the age of molec­

ular medicine. The structure of DNA was first described

by Watson and Crick when I was a medical student and

years later, this discovery has culminated in an unprece­

dented scientific opportunity in the wake of the Human

Genome Project. The awesome results of this project

stand ready to revolutionize our ability to predict

and prevent illness of virtually every description,

and to treat patients with equisite specificity when

illness has not been prevented. This statement, of

course, applies to the generality of medicine, but

given that tobacco-related disease kills almost as many

each year as AIDS, alcohol, drug abuse, car crashes, murders, suicides and fires combined, clearly a major

focus of all biomedical research must be on tobacco

related disease.

Ideally, we should prevent tobacco use

before it ever occurs. We have the best example of

the efficacy of prevention versus that of treatment

at my own University. As Representative Fleagle noted, The Salk vaccine, developed at the University of Pittsburgh,

cost pennies and is 100 percent effective; the "iron

lung," the only treatment available once polio had occurred,

cost thousands of dollars and was only minimally effective.

Sadly, despite our effort to prevent the first use of

tobacco, the incidence of teenage smoking has increased

73 percent since 1988. Notably, a study published this month reveals that .12 year-olds exposed to anti-smoking

advertisements on television are significantly less

likely to progress to established smoking than 12 year-

olds who are not exposed to these ads. However, exposure

to the same advertisements has had no effect on progres­

sion to established smoking among 15 year-olds. These

data suggest that once social and peer pressure emerge, prevention programs are less effective. About 35 percent

of adult smokers wish they had never started, but the

fact is that the social and peer pressure of adolescence,

the stress reduction that smokers experience, and the

effects on weight control perceived especially by young women, rule the day. We do not know why some kids are able to resist these pressures and others are not, but

I suspect that the answer lies in fundamental aspects

of personality and brain biology. Here, the Human Genome

Project, by finally separating nature from nurture, holds great promise. In fact, the Genome Project will tell us who is likely to become addicted to nicotine on the basis of genetic susceptibility; who is likely

to develop cancer or other tobacco-related diseases

--again, on the basis of individual genetic susceptibility;

and who is likely to respond •,. if already sick, to one

form of therapy as opposed to another -- again, on the basis of individual genetic factors.

Why should funds from the Tobacco Settlement be spent on pursuing the implications of the Human Genome

Project and other relevant biomedical research? After all, researchers in Pennsylvania have already achieved remarkable success in obtaining federal funding. In fact, Pennsylvania is the only state with two medical

schools -- the University of Pennsylvania and the University of Pittsburgh -- in the top ten with respect to NIH grants. Nonetheless, the NIH only supports established researchers. There are at best minimal federal funds to construct the space in which new research is to be done, to provide the state-of-the-art equipment necessary to conduct new reseach, and to develop the new talent necessary to launch cutting-edge investigations. Thus, we must continue to invest the large amounts of institutional money required to position any new investigator to apply successfully for federal funding. In a word, leverage is critical. Pennsylvania institutions are beginning to lose ground with respect to adequate space for cuttin- edge research. Many of you will have seen the report that the University of Chicago is building a new $130 million laboratory complex in which the results of the Genome Project will be exploited, and Yale has announced last week that it will begin construction of a similar multi-million dollar biomedical research building. Virtually every research- intensive university, and the states that host such universities, are recognizing that every field of medicine, as well as the economy, will be transformed by research that follows up on the Genome Project.

Paradoxically, in a time of unprecedented economic growth and NIH largess, the number of physcians embarking on dual careers as scientists and doctors is declining dramatically across the country. Physician- scientists are trained to ask clinically relevant questions that lead to the development of research projects linking basic and clinical science. Physician-scientists are also a vital force in translating research findings into medical advances. Finally, physician-scientists are a critical resource for assuring excellence in medical education since they teach students that the basis of medicine is science, and that scientific rigor should apply to patient care as well as to research.

The major explanation for medical students electing not to pursue a career in research is the tremendous debt that they incur during medical school. At the University of

Pittsburgh this past June, 80 percent of our graduates were indebted -- most in excess of $100,000; and 20 percent of the class had a debt in excess of $150,000. Clearly, with debt Of that magnitude, very few young physicians will embark on careers as researchers.

Thus, new NIH dollars are unobtainable if we do not first have new labs, equipment and researchers in place. Here is where Settlement funds are vital.

How many Settlement dollars should go to research?

As Talluah Bankhead said, "Too much is never enough!":

Every dollar invested will be leveraged many times over.

In this regard, we should recall that health care, biomedical research, and the biotechnology industry -- together with the pharmaceutical companies -- constitute a sizable component of this Commonwealth's economy -- many billions of dollars yearly.

Although it is my obligation to campaign for as many Settlement dollars as possible in support of biomedical and behavioral research, it is up to the collective wisdom of the General Assembly and the Administraticn to determine the final allocation of the Settlement funds. However, it does seem clear tome that at least a portion of the funds devoted to smoking prevention and cessation should be used for continuing research in the hope that good programs can be even better.

With respect to the portion of the Settlement focused exclusively on biomedical research, I recommend strongly that research funds be allocated to the Commonwealth institution in proportion to the total NIH funding already awarded to those institutions. The NIH peer review system is admired and emulated throughout the world.

There is no better system for allocating precious dollars in support of the most innovative ideas and to the investigators and institutions best positioned to use these dollars productively. An article appearing very recently demonstrates that in the past decade, the ten medical schools receiving the largest number of NIH dollars were virtually unchanged during that decade, with only two exceptions -- one of which was the University of Pittsburgh. We displaced

UCLA and Stanford in achieving this extraordinary rank, only because in the 1980's a decision was made to invest large amounts of institutional funds, primarily derived from clinical earnings, into building new research buildings and recruiting the best young research talent imaginable to Pittsburgh from throughout the world. There could be no better example of leverage, and while good ideas can emerge anywhere, it is most likely that those ideas will be brought to fruition in centers with up-to-date research space, state-of-the-art equipment, and a critical mass of investigators representing many different disciplines

of science and working collaboratively with one another.

I have recommended that Settlement funds be awarded in proportion to total NIH funding because breakthroughs relevant to tobacco-related diseases may

come from any area of research, often quite unexpectedly.

For example, a recent and critical finding related

to the cause of cancer was supported by the National

Institute on Aging, and not by the National Cancer Institute.

I also recommend that research funds not be aligned with any one disease permanently, or we shall miss out on emerging opportunities and particular institutional

strengths that may change with time. Although deploying

60 percent of the research funds to the Cancer Centers

seems wise at the start, it is possible that we may be finally successful in curing tobacco-related cancer, and the focus may then shift to emphysema or to the effects on the developing fetus of a mother who smokes.

Thus, my recommendation is that every three to four years the funds assigned to research on any one tobacco-related disease be reconsidered, and that the investigators and their institutions themselves be reconsidered. This

is how the NIH deploys its money; grants rarely endure

for more than three or four years without the need for a competitive renewal.

Finally, let me summarize by noting that advocates for everyone of the programs included in the

Governor's proposal have right on their sides. Nonetheless, the benefits of biomedical and behaviorial research are clear, with unprecedented promise for preventing or treating tobacco-related illness. For decades, academic health centers have devoted a significant portion of their revenues to supporting the biomedical research enterprise, but now, great financial stress on these centers is weakening their critical link to the support of research. Thus, alternative funding sources are essential, and biomedical research is so integral to

the quality of health care and to our economic well-being

that the implications are vastly beyond academic interest.

This being so, I might suggest in closing that we need not limit our thinking to the Tobacco Settlement. After all, Pennsylvania now enjoys a large budget surplus, and the needs that I have described this morning go

far beyond tobacco-related disease and the Tobacco Settlement.

Thank you for the opportunity to offer my views. I would be happy to respond to any questions that you may have.

CHAIRMAN BARLEY: Thank you very much,

Dr. Levine, and as I have indicated, you always certainly prompt some deep thinking and some good thoughts and we appreciate that again here today.

Representative Schroder has asked for the opportunity to ask some questions.

REPRESENTATIVE SCHRODER: Thank you,

Mr. Chairman.

BY REPRESENTATIVE SCHRODER:

Q Thank you, Dr. Levine, for your testimony.

On page 2 of your testimony, doctor, you mention a study that will be published this month. Talking about the effects of prevention campaigns on 12 and 15 year olds. Can you tell us who did the study?

A It is in the American Journal of Public

Health in the March issue.

Q March issue of the American Journal of

Public Health?

A Yes.

REPRESENTATIVE SCHRODER: I would, I guess, Mr. Chairman, make a request to staff or,to you that we be provided with that study. I would be very interested in seeing it.

DR. LEVINE: I will be happy to do that.

BY REPRESENTATIVE SCHRODER:

Q Secretary Hoffman, when he was before us, he and I had a question and answer colloquy on issues about prevention. And he cited studies that seemed to indicate that certain states have had success with programs for tobacco prevention citing decreased use among different age groups in different states. Are you familiar with any studies? Do you have any comments on the accuracy of those studies?

A I am. The programs that have been most effective have had to do with cessation of smoking in adult smokers. The studies that have been most preventative,

I think we've left in the study that I described this morning are those that try to keep adolescents from smoking in the first place. Some states have been more successful than others. The more aggressive the cam­ paign, the more effective it is. But if in fact the incidence of first-time smoking in teenagers has increased

73 percent in the last decade when these programs were already in force. We obviously have a ways to go.

We need to figure out how to make those programs more effective.

REPRESENTATIVE SCHRODER: I appreciate your comments. I think you very articulately, more so than I could do I guess, stated what some of my real fears are about this part of the tobacco settlement.

The last thing I want to see is have us throw a lot of money away on what are my fears, essentially feel good type of prevention programs, glorified poster contests for school rJcids and that sort of thing which may have initial impact, but as you stated, once the kids enter the teen years and other forces start shaking their lives, it may really have no effect at all. So I will be very interested to read that study and I thank you for bringing it to my attention.

CHAIRMAN BARLEY: Representative Fleagle.

REPRESENTATIVE FLEAGLE: Thank you, Mr.

Chairman.

BY REPRESENTATIVE FLEAGLE:

Q Dr. Levine, I guess you were here when

I went through my little tirade on cancer research and putting more money into that. But one of the things

I did, one of the concerns I put forth even at that was the accountability of research programs. I know, and I've heard this in other hearings, not necessarily this committe, well we have peer review. And no disrespect, but peers have a tendency on the surface to be hard on each other, but then they are peers and then there is what you call collegiality that has a tendency to dampen criticism.

If we put a significantly more amount of money into research from this program, what accountability standards would there be, because NIH would not be involved in it and how would you work with other institutions

in sharing this information? The reason I ask this

I don't care if a cure for cancer is found at UCLA or

Pitt or Juniata College or Harrisburg Area Community

College. Why would I care about that? I would like

to see them work together more because states are getting

a lot of money and we should coordinate those efforts.

A I think it is important to point out

that there is a great momentum now in biomedical research

to have people collaborate widely and across many disciplines

and that momentum arises from the very nature of science

itself. There is almost nothing that one can do now

at the cutting edge of biological research that doesn't

involve scientists of many different stripes. Including

physicists, chemists and mathemeticians as well as biol­

ogists. And ordinarily teams are assembled across several

or even many institutions.

The NIH in particular supports studies

that involve multiple investigators and multiple institutions recognizing the synergistic and collaborative nature

of contemporary research.

A second point is that no one keeps research

data to himself or herself. All researchers want to

see their names in lights. And so at the earliest possible

time they will hit the internet and get the data out really across the world. So there is nothing covert about research findings.

As far as accountability goes, I do in fact, on the basis of my three decades at the NIH, value greatly the concept of peer review. I think it is one of the triumphs of American Government. I think if peer review didn't work, the NIH would be funding 100 percent of its grants instead of the 25 percent that it funds. And I think that if each institution in the

Commonwealth were to set up an internal peer review committee comprising not internal advisors but external advisors, then we would be in fine shape. I would have no problem having the University of Pennsylvania scientists judge how the University of Pittsburgh proposed to spend its money and vice versa. I think that would build in a fail safe.

Q How would you come back to the legislature though? I know you justify yourself to your peers with that money or would. How would you come back to a committee like this and say, this is what we have done with your money? This is what we have accomplished.

A Well, I think at the very least this committee and the legislature as a whole deserves an annual report from every institution receiving funding as to how exactly they spent their money with an explicit and transparent budget' and a detailed summary of findings

that met the test of peer review.

I also think that each institution awarded

funds under this proposal should establish the kind

of advisory committee that I've described and send it

to the legislature and to the administration. I think

that probably would address the problem.

REPRESENTATIVE FLEAGLE: Thank you, doctor.

Thank you, Mr. Chairman.

CHAIRMAN BARLEY: I now recognize Representa­

tive Stern.

REPRESENTATIVE STERN: Thanks, Dr. Levine.

BY REPRESENTATIVE STERN:.:

Q I'll be brief. Representative Schroder bascially touched on some of the comments and concerns

that I had. I was curious as to the smoking cessation programs and some of the advertising that are targeted

towards young adults. And I'll be interested in looking at the study that you brought forth in your testimony

on page 2. I have a question, and this is more to you,

as far as you seem to look at the part of the settlement monies that have been set aside for the prevention and

cessation aspects of the tobacco settlement and trans­

ferring some of that money or allocating some of that money for research; is that correct? •J J

A No, I have no interest in transferring

the money from one pot, to another. I don't think that

we should rob Peter to pay Paul. I do think that whatever

money is allocated for cessation and prevention, should

be invested in behavioral research and biological research

to try to make those programs more effective than they

are.

Q Moving on and adding to that could you

explain for me, for my own personal information what

project, what the Genome Project actually entails?

A Sure.

Q I mean that sounds very interesting and

I think it sounds like it is a great thing that you

are into here.

A Well, the Genome Project seeks to identify every one of our 100,000 genes to tell us what the alphabet

soup is that describes the function of that gene and

where it is located on the chromosones within our cells.

That is just a start. It is a little like having the

Manhattan Telephone Directory. It tells where everybody

lives and how to spell their names, but it doesn't tell

us who is having relations with whom. To address the

latter point, we need to embark now on the much more

daunting assemblage of data from chemistry, physics,

computational modeling, cell biology and so forth, so that we finally understand how the products of genes, which are proteins, interact with each other. And how they provide unprecedented therapeutic targets. Right now we have available perhaps 300 to 500 targets for drugs in the pharmacy. But the human genome project promises 5,000 to 10,000 therapeutic targets.

Q How up to date are you with your equipment that you need to use for your research projects?

A Equipment is evolving at an extraordinary rate because of the advances of high technology and the influence of computers on the design of equipment.

As with the computer itself, a very expensive piece of equipment may endure for four and five years, but no longer. So there is a constant need to replenish state-of-the-art equipment. Even more important, however, is the space in which to put the equipment, and that is where we and other institutions/are falling very far behind.

The NIH estimates that we have, about

30 percent less space present in the country in which to do research than would be warranted by the 15 percent increase in the NIH appropriation that we have seen over the last two years.

REPRESENTATIVE STERN: Thanks, Dr. Levine.

CHAIRMAN BARLEY: Thank you very much, Dr. Levine for being here. I know you have a plane

to catch and we again appreciate your comments very

much and look f.orwtaxrd to continuing to work with

you.

DR. LEVINE: Thank you so much.

CHAIRMAN BARLEY: The next presenter

will be Jeffrey Palmer who is President and CEO of the

Coordinated Care,Network. Mr. Palmer, welcome and you

may begin to make a presentation.

MR. PALMEtR: Mr • Chairman, members of the Committee, thank you for this opportunity. It is truly a privilege to be here. I would like to introduce to my left Mr. Henry Fiumelli, who is the Executive

Director of the Pennsylvania Forum for Primary Health

Care,along with Mr. Michael Stone, who is the Executive

Director of Community Integrated Services Network of

Pennsylvania. They will be here to assist me in answering any questions you might have.

Again, I am Jeff Palmer. I am the President and CEO of the Coordinated Care Network which is over in Pittsburgh in Allegheny County. And I am representing today a coalition of ambulatory safety-net providers that collectively care for approximately 109,000 uninsured individuals throughout the Commonwealth of Pennsylvania.

This coalition includes: The Coordinated Care Network, of course,

that I mentioned that I represent.

The Pennsylvania Forum for Primary Health

Care

Community Integrated Services Network

of Pennsylvania

Community Health Network

The Pennsylvania Forum is a Commonwealth

wide association as is Community Integrated Services

Network of Pennsylvania and Community Health Network

operated primarily in Philadelphia and Montgomery Counties.

Our purpose today importantly is to support

and strengthen the Administration's plan for distribution

of tobacco settlement monies importantly be expanding, we recommend expanding, the Uncompensated Care and the

Uninsured components to include independent non-profit

primary care, social service and behavorial health ambulatory

safety-net providers and their community-based networks.

There are several issues that have been mentioned this morning that we would like to address.

A little background on the coalition. The Coordinated

Care Network is a non-profit, as are all the other members

of the coalition, and we operate a total of 130 medical,

social and behavorial health programs that also include

faith based programs in Allegheny County. We have a patient population of approximately 57,000 there, 18 percent or 10,000 of which are uninsured. CCN was organ­ ized as a regional collaborative to finance, and this is very important, to both finance and deliver health care to the uninsured. So this is a subject that we have been very interested in following from a social entrepreneur perspective, a community collaborative perspective, and of course, trying to follow the prin­ ciples of managed care.

The Pennsylvania Forum for Primary Health

Care that we refer to as the PA Forum, which I am sure you are familiar with, is also a non-profit association of Federally Qualified Health Centers and independent

Rural Health Centers. They are operating in many major and urban and rural areas throughout the Commonwealth and operate 133 facilities and care for a combined total of 319,000 patients, 104,000 of which are uninsured.

That is 38 percent. 120,000 of which are Medicaid receipients.

So you are looking at a very large underinsured or uninsured population within the PA forum.

Community Health Network that I mentioned is operating in Philadelphia in Montgomery County, operates a total of 14 facilities, cares for about 50,000 folks,

17,000 of which are uninsured.

And Community Integrated Services Network DU of Pennsylvania is also a non-profit network of Federally

Qualified Health Centers and independent Rural Health

Centers. They operate 81 facilities across the Commonwealth.

They have 114 physicians and they are caring for about

283,000 folks, 34 percent of which are 96,000 people who are uninsured. It is a very large population out there of uninsured folks that as a coalition we are caring for.

Because several of the members that I mentioned, the Federally Qualified and Independent Rural

Health Centers are members of two or more elements of this coalition, we thought it appropriate to define the non-duplicated statistics for the coalition as a whole. Those non-duplicated statistics are very simple, and that is we have 175 facilities across the Commonwealth.

We care for 346,000 patients and almost 110,000 of them or 32 percent are uninsured.

Our suggestions for expansion in support

of the tobacco plan really are intended to focus on

the uninsured, uncompensated care components. Our collective

experience in caring for the uninsured and providing

uncompensated care for the last 25 years gives us a

unique perspective to evaluate the centralized insurer

driven nature of the uninsured initiative as it currently

stands. In addition, we feel that the uncompensated care component would be better served if it were expanded

to include other safety net providers such as members

of this coalition. But importantly we realize the balance that mustib.eachieved when completing the yeoman's work

associated with this plan, and again, we are very excited

about it. We certainly support it and we understand

that this balance needs to incorporate a diverse base

of views on matters such as these. The recommendations

that I am about to give you are made with the intent

to add to a very positive plan that has been offered

by the Administration.

First, I would like to address the uninsured

component, and we believe that this should be expanded

to include a three-pronged approach. And we think that

this would significantly strenghten the goal of effectively

and efficiently "insuring" the uninsured population

across the Commonwealth.

The first of three prongs that we would

recommend is a modification to the current plan that,

in our opinion, is utilizing something like the CHIP

Program but an adult version of it. We would suggest

incorporating J a two percent annual set-aside, which

would be about $3.6 million to engage our coalition's

safety net, the medical, social and ambulatory care

providers that are out there in urban and rural communties along with the faith based organizations to proactively

enroll individuals. To do the best job we can in getting

them in the programs that have been set forth. Not

only for the adult uninsured component, but also for

the children's uninsured component. And we would really

proactively enroll individuals in these programs in

terms of not only their eligibility, but also programs

that we might be able to offer there outside of the

traditional funding streams. If we were able to acheive

this annual set-aside of a modest two percent, this would allow us to enroll, we believe, about 100,000

folks per year, and of course, enrollment changes based

on life changes. So this would be an annual piece.

Secondly, we suggest allocating a little

over five and a half percent or $10 million of the Uninsur­

ed Component budget per annum to our coalition members

for the direct reimbursement of the primary care, the

social service and behavorial health services we provide

to uninsured folks. I told you that right now we are caring

for almost 110,000 of them, and that is a very, very

challenging thing to do day to day. I was formerly

the Executive Director of a Community Health Center

in Pittsburgh, and it was not uncommon to know how you were going to make payroll the next week and folks live

like that for weeks on end. So this would be a piece that would provide reimbursement for uninsured patients who remain ineligible for the programs that we are talk­

ing about today and who also require services that are outside of categorical funding. And in many cases, we

see that the social service and the behavioral health

services that are needed really do fall outside the

traditional disease and diagnosis mode.

The third problem is to capitalize on the

successful development, and this is very important, an

implementation of regional collaborative initiatives that are able to both finance and deliver health care services

to the uninsured, most importantly in an ongoing sustain­ able manner. We have talked about what happens when

these funds are depleted or what happens in the event of a rainy day. This fund would establish sustainable community collaboratives that could carry the bulk forward

for generations. Coordinated Care Network is one example of this and we would be happy to provide more information through the Chair about the types of programs that we have seen be affected both here nationally, but recommend establishing an annual matching grant fund of $10 million per year for ten years which would allow, on an average of two million dollars per county, development for regional collaboratives in 50 counties across the Commonwe;alth in a ten year period.

Moving to the uncompensated care component, we would suggest that that would also be expanded to include the non-profit medical, social and behavioral health providers who are out there in the community providing care for folks that are uninsured whereby bad debt and charity costs are incurred. At this point we do not have a budget figure to provide for you because we are assessing across the Commonwealth of the 133 sites that are out there exactly what the charity care and debt piece would be. But we certainly would recommend that you give consideration to establishing an Independent

Safety-Net Fund for this purpose.

And last, and a miscellaneous recommendation, because of our coalition's significantly high number of Medicaid recipients, which is a little over 133,000 folks, we would suggest that the Appropriations Committee, respectfully, the Department of Public Welfare respectfully, and the General Assembly overall would consider the adequacy of rates provided by the Commonwealth to Physical

Health Medicaid HMO's. If those rates are not adequate, it has tremendous impact on us as safety-net providers who are really out there day to day in the basement of churches, other places of worship providing care for Medicaid recipients. So the next steps that we have identified as a coalition, based on the suggestions that we made today, again with the intent of supporting and strengthening the Administration's plan, is that we would like to present to you a detailed plan, a business plan, an operations plan and a proposal, that would further address the establishment of these initiatives, how the funds would be used, including eligibility criteria, but most importantly, how the coalition would be accountable for three things. That is accountability for caring for the uninsured, accountability for the number of uninsured that we enroll and care for, and most importantly, and something that we are very familiar with as health care providers, being accountable for the overall health outcomes of the folks that are enrolled in these programs.

So there is a business plan that will be coming forth to you if that is okay towards the end of April of this year.

So I would like to thank you, Mr. Chairman and members of the Committee for your consideration of these matters. And the most important thing that we can say is that we look forward to making Pennsylvania, along with you, the leading state in addressing the needs of the uninsured. We would be happy to answer any questions. Thank you. CHAIRMAN BARLEY: Thank you very much,

Mr. Palmer. Do any members have any questions for Mr.

Palmer? Representative Manderino.

BY REPRESENTATIVE MANDERINO:

Q Just one quick question. In the handout

you gave us there is a map of Pennsylvania. Is this--are

these the locations of the various members of your coalition?

Like all four of them put together, equal 1 through

31 on this map?

A Of the physical health providers that would be the Federally Qualified Health Centers and

the Independent Rural Health Centers.

REPRESENTATIVE MANDERIO: Thank you.

CHAIRMAN BARLEY: Thank you very much,

Mr. Palmer. We appreciate you being here and we thank

you for your testimony.

MR. PALMER: Thank you.

CHAIRMAN BARLEY: We now have before us appearing next Dr. Robert Sklaroff. Doctor, welcome and we look forward to your presentation this morning.

DR. SKLAROFF: Thank you. I am Robert

B. Sklaroff, MD and I am testifying as an individual.

I have various roles in organizations that have provided

and will provide input with regard to this wonderful

and difficult task presently before you but, to preclude confusion regarding these comments, they will not formally be identified. I will cite my pending litigation, legally and morally, and an effort will be made to provide context regarding how you will need to prioritize the overlapping, conflicting interests presented by the "stakeholders" who have emerged.

I greatly appreciate the privilege to testify. I would like to thank your staff for facilitating this task and, in particular, Ms. Kathryn Vranicar, who provided input regarding what you might want to hear emphasized in today's testimony. Therefore, I will discuss the rationale for my litigation; what I feel should be the purpose for expending the monies obtained from the Tobacco Industry as part of the Master

Settlement Agreement; comments on the Gubernatorial proposal for appropriating these funds; and how I think the funds should be targeted and why.

Currently, I have three separate active suits regarding the MSA. One constitutes an effort to gain standing to eliminate two onerous clauses therein, and I plan to file my Petition for a Writ of Certiorari on Monday with the United States Supreme Court. Another is directed at Philip Morris, inasmuch as it has funded third-party billboard advertising that the MSA had banned, and I plan to file a brief on Monday with the PA Superior Court. The third is intended to compel the Attorney General to enforce tenets of the MSA, and he is to file his brief within a few weeks with the PA Commonwealth Court. These data are readily available on my web-site. The essential problem?h"ere is that the MSA threatens to immunize the Tobacco Industry if it engages in onerous future conduct, as long as it is performed within the normal course of business This constitutes a legal "black hole," inasmuch as anything Big Tobacco does can be portrayed as commercial. Thus, two phrases that the Attorney General states are super- flous must be deleted from the MSA inasmuch as they would protect the Tobacco Industry against the only weapon that has worked to protect public health, the threat of lawsuits. This is my cancer control strategy.

Specifically, I do not want the Attorney General to be able to stop me from trying to get Big Tobacco to comply with the MSA: this is the immunity clause. And I do not want the Tobacco Industry to be able to deduct fines levied against it from the money

it pays annually to the states (as has been attempted

in Oregon); this is the offset clause. Last May, » Philip Morris financed placement of billboard ads by Wawa Food Markets, initiating a

"Manufacturer Sponsored Promotion" for Marlboro cigarettes.

Anti-tobacco activists complained in the media, and the Attoreny General got Wawa to remove them. Nothing was generated--such as an injunction—to stop them from posting them again. Therefore, I .sued, but the Court of Common pleas considered my effort "moot" because the signs had been removed. As predicted, however, they were re-posted, but the Court refused to recognize that its acquiescence established a precedent that another retailer, Sheetz, was then to emulate* The latter organization has pointedly refused to desist. Thus, my legal effort is directed at the cause of the problem, namely; the national program initiated by Philip Morris to finance these billboard advertisments for Marlboros.

That is why I sued the Attorney General, for his inattention to enforcing the MSA may be explained by the Offset Provision; any successful litigation filed by the Commonwealth would merely generate a dollar-for-

dollar deduction from anticipated payments and that includes payments through the Appropriation Committee's aegis. Thus, both individually and in the aggregate,

I am trying to warn the public that Big Tobacco has tried to gain respectability and predictability through the MSA, escaping potential future liability. As was noted in the Minority Opinion filed by Commonwealth

Court Judge James Kelley, the rights of "youth" have been sacrificed without consulting them.

These monies should be expended in ways that would be determined by the Complaint, inasmuch as the litigation was intended to recover Medicaid-associated health costs and inasmuch as the litigation was filed in parens patria, on behalf of Pennsylvania's youth.

When I testified thrice last year (before the House,

Senate and Administration), I advised compliance with the "Best Practices" Guidelines issued by the Centers for Disease Control and Prevention. In doing so, Pennsylvania would create societal structures that would "detoxify" the populace from tobacco and "detaxify" government from tobacco.

This theme has consistently been endorsed by legislators and testifiers. For example, Representative

Dennis O'Brien, a year ago, said the goal here should be to support health-related activities such as: health care services for the uninsured, medical research, health promotion, preventive health and smoking cessation programs, and improvement in health care delivery. And the Pennsylvania

Academy of Family Practice advised that "the funds should be used to help eliminate the need for future payments," emphasizing behavioral research, interventions, and applied research rather than construction projects.

The Pennsylvania Medical Society advised long-term funding be provided to cessation and treatment services for tobacco-related illnesses as a priority over disbursement for services unrelated to treatment. These ideas have resonated with the public, according to a recently-published poll published in the Pottsville Republican on March

3rd; 75 percent of those questioned said they favor devoting 25 percent of the settlement money.to prevention and cessation programs. This 25 percent figure is central to the CDA Guidelines, and this particular goal has been endorsed by the Coalition for a Tobacco Free Pennsylvania.

Thus far, I have discussed the rationale

for my litigation and what I feel should be the purpose for expending the monies obtained from the Tobacco Industry as part of the Master Settlement Agreement. Please understand that I am thrilled that these monies have been provided, despite the projected pendancy of my litigation before the U.S.Supreme Court; and I have no illusions as to my chances, my focus has consistently been on maintaining due process rights, not on seeking monetary gain. I will now comment on the Gubernatorial proposal for appropriating these funds, and I will discuss how and why the funds should be targeted.

The Gubernatorial proposal is a national model, for it complies with the CDC Guidelines and accommodates overlapping interests while creating a cohesive anti-

tobacco program. This considerably simplifies your

task, for you need only corroborate this analysis and

then proceed to ensure key legislative details are enacted

that ensure public health.

I have compared Govenor Ridge's proposal to a Venn Diagram, a concept we all learned in high

school (and is probably now being taught in elementary

school). Imagine a group of overlapping circles enclosed within one large circle; you will then be imagining what Secretary of Administration, Tom Paese has helped to craft. Various methods of funding legitimate health-related activities have been accommodated in a fashion that allows each participant to perceive that his/her desires are depicted within larger contexts that encompass other

"players." In fashioning this plan, he properly ignored

"pet-projects."

And I love people who don't allow "grass

to grow under their feet." On March 7, 2000, the Health

Department pledged to fund "local lead agencies" as part of a comprehensive statewide tobacco control program.

It is anticipated that budgeted efforts will include those advised in the CDA Guidelines and they include:

Community and School Programs; Partnership Grants and

Law Enforcement; Counter-Marketing and Tobacco Cessation

Programs; Tobacco Control Research; Surveillance and

Education; and Administration.

How should these principles be applied?

You must redouble your efforts to be careful to devote

these monies to the purpose intended, diagnosis and

treatment of the raging tobacco epidemic. You must

ensure every Pennsylvanian knows that his or health

will benefit greatly as soon as he or she stops smoking.

Not just years or decades into the future, not just

for some diseases, and not just for some types of cigarette

smokers. For example, the Delaware Valley Health and

Healthcare Council (a subset of HAP) showed that hospitaliz­

ations for lung infection (bronchitis/pneumonia) drop

within a year after smokers had stopped using tobacco.

We will empty our hospitals if we help people to stop

smoking. In the absence of a "safe" cigarette, we can

do no less for our patients.

I have not read the specific bill that

serves as your "working hypothesis" today, but I can

only note that the speakers on the agenda encompass

the key stakeholders who have testified throughout the year:. Funding Medical Assistance was the core concern legally, thus the input of Dr. Dierkers. Funding hospitals and academic medical centers has become necessary--due to the state-wide monopoly/monopsony enjoyed by the

Blues--thus the input of Dr. Levine. Funding targeted

insurance programs has become attractive, thus the input of Mr. Palmer. And funding health education is central to tobacco control, thus the input of Ms. Byrnes. I will therefore provide input regarding each cost-center.

Medical Assistance

When fashioning programs that accommodate the underserved, you should maximize the capacity to obtain federal matching funds. This may be easier to accomplish, presently, by expansion of Medicaid rather than by creation of CHIP-program variants, as attractive as the latter concept may be, although federal legislation could alter the landscape.

Such monies should be supplemented by a steep increase in the tax on tobacco products. This has proven successful in California, as evidenced both by research demonstrating decreased tobacco use among youth during recent years and by the failed effort to repeal its two cent-per pack tax by a 3-1 ratio during

its recent primary election (Proposition 28).

Although your focus today is trained on the MSA-dollars, you may wish to envision concomitant enactment of a higher cigarette tax, if for no other reason than to ensure your programmatic initiatives are adequately funded. This would serve two purposes.

First, smokers would be financing the anticipated health-relat2d costs of self-inflicted illnesses. Second, higher taxes consistently discourage youth smoking rates, they key goal, here. This concept is embodied, for example, in the recent "PACT" Proposal by Senator Vincent Hughes, and it may be wise to address this concept within the overall context of how these new MSA-dollars will affect health care financing. Consider it a "user fee."

Hospitals.

In 1999, I critiqued efforts promulgated by the Hospital and Health Systems Association of Pennsylvania

(HAP) to denigrate€essential Public Health goals. HAP thereafter softened its attack on funding tobacco control programs, although it continued to assert the view that hospitals need supplemental funding, if nothing else, for supplying unreimbursed care.

In 2000, it has become necessary to refocus this analysis upon input provided recently through the

Pennsylvania Cancer Alliance, eight cancer research and treatment centers. This self-serving effort threatens the aforementioned "balance" of the gubernatorial plan.

I parsed its "opening paragraph" in my Written Testimony by advising that the legislature should not cut the proposed allocation for tobacco control and prevention.

(This was erroneously cited as being 10 percent rather than 15 percent.) You were advised to redirect these monies towards unrestricted cancer research, but I noted that the CDC goal of 25 percent would be met were 10 percent of the total available money--some of the money budgeted for cancer research--be exclusively directed at tobacco prevention efforts. This is another example of how the "Venn Diagram" approach to appropriation can solve problems. Academicians get money that is exclusively earmarked for tobacco control research, and the 15 percent allocation for tobacco control is raised to the 25 percent level, maximizing its effect.

I must say I've read the testimony from

Dr. Levine, whom I tried to meet outside and I was unable to cross-examine him. But I have to tell you my problem with this, and it is a vigorous one, and that is in

1970 when President Nixon came out with the program to try to cure cancer, I was at Penn State. And everyone reorganized their applications so that, for example,

Howard and Rosemary Schrayer (phonetic) reorganized their effort to discuss how there is calcification of the eggshell by making sure that they were discussing within the context of metastatic calcification, i.e., how cancer causes changes in calcimetabolism; totally removed. When he suggested that the Human Genome Program: is going to help you figure out who is addictive to nicotine, I consider that a bit of a reach.

Insurers.

As noted previously, how you decide the optimal method to expand access to care is left "to the experts." What must not be ignored, however, is the need to fund legitimate tobacco cessation efforts, both the professional aspects thereof and the pharmacological aids that are needed to supplement such programs, such as nicotine substitutes (gum -& patch) and centrally-acting medications. Because nicotine addiction is a disease state, such outpatient medications not customarily reimbursed are needed, for all patients (including medicaid) regardless of their insurer and specific health plan characteristics.

This would be a "funded mandate," directly supported by the tobacco-windfall money.

Insurers that would administer any CHIP-related programs have requested relaxed limitations on potential administration/profit margins, from - 7 percent to 14 percent, efforts that must be resisted; such large-scale programs have been successfully conducted elsewhere with the intermediaries having earned as little as a three percent profit. Monopolistic insurers should not be able to obtain obscene profits merely by doling out MSA-related monies.

Tobacco Control.

Comprehensive tobacco control programs have reduced smoking by 35 percent in California and in Massachusetts during the past decade, an achievement that contrasts with the Pennsylvania experience. During the past decade, California lowered its cancer rate due to tobacco use by 14.4 percent compared to a four percent decline experienced in the rest of the country, and over $3,026 billion have been saved in medical costs by the program. And while teenage smoking has been on the rise nationwide, Florida's aggressive anti-smoking campaign has produced an unprecedented 54 percent decline in middle school tobacco use over the past two decades and a 24 percent drop among high school students. These numbers also compare much more "g> o_s iJtli.jvL.eJl_.y_ .with those that were cited by Dr. Levine, which were much more negative.

Listen to the Institute of Medicine:

"The best evidence for the effectiveness of state tobacco control programs comes from comparing states with different intensities of tobacco control, as measured by funding levels and "aggressiveness." For example, when California and Massachusetts mounted programs that were more "intense" than those of other states, they showed greater decreases in tobacco use compared to states that were part of

ASSIST, which is the American Stop Smoking Prevention

Study funded by the National Cancer Institute. From

1989 to 1993, when the Massachusetts program began,

California had the largest and most aggressive tobacco control program in the nation, and it showed a singular decline in cigarette consumption that was over 50 percent faster than the national average. A recent evaluation of the Massachusetts tobacco control program showed a 15 percent decline in adult smoking-compared to very little change nationally-thus reducing the number of smokers there by 153,000 between 1993 and 1999. States that were part of the ASSIST program in turn devoted more resources to tobacco control than did other states except Massachusetts and California, and they showed an aggregate seven percent reduction in tobacco consumption per capita from 1993 to 1996 compared to non-ASSIST states. Such a "dose-response" effect is strong evidence that state programs have an impact, that more tobacco control correlates with less tobacco use, and the reduction coincides with the intensification of tobacco control efforts."

This is why public health leaders throughout

America recoiled at the testimony provided on February 18th by Ronald B. Herberman, MD. The Univeristy of

Pittsburgh Cancer Institute has reportedly found cancer control activities--such as anti-tobacco billboards and commercials--to be failures, according to articles published by the Associated Press (by Jeffrey Bair) and the Pittsburgh Post-Gazette (by Christopher Snowbeck).

Clearly, these data must be published or the assertions rescinded, for the scientific method provides for subjecting such assertions to the scrutiny inherent in the peer review process.

Dr. Herberman also averred that major efforts of the national entity funded by the MSA, the

American Legacy Foundation should suffice. It is my understanding that matching funds will be made available, so state-level programs will have to be funded as well.

Furthermore, the ALF recently complied with Big tobacco's demand that pungent advertising—the kind that works--be killed. It is vital that Pennsylvania not be subject to constraints imposed overtly or covertly by Big Tobacco, for it would want to blunt our impact on the public health. This is why tobacco industry agents must not be permitted to be involved in the planning, implementation or oversight of tobacco control programs.

This is also why, a week ago, via FAX,

I requested the leaders of each Cancer Alliance institution to confirm adherence to Dr. Herberman's views. Only

RodriguezMortel, MD (Penn State) responded (via e-mail);

he wrote he concurred with his written testimony. Noting

of the controversy surrounding those remarks, and their

profound implications, you may wish to acquire specfic

comments thereupon from the other six organizations.

Finally, proper utilization of these monies during the next quarter century must be guided

by those who have demonstrated a long-term commitment

to ending our cultural dependence on tobacco. If nothing

else, the Herberman Controversy illustrates why an advis­

ory board must not be controlled by the voluntaries,

academics, politicians and "Johnny-come-lately" individ­

uals and organizations who migrate to the allure of

dollars. And if, indeed, it is necessary to anticipate

funding shortfalls during upcoming years, it is vital

that aggessive Public Health measures be implemented

as soon as possible.

Appended model legislation is intended

to provide a conceptual framework for how these monies might be expended; it is admittedly limited, both in

scope and in legal language. Indeed, it does not include

specific language that would implement expanded home

care for the elderly (15 percent of the monies), broad-based

health research and health-care-related venture capital (15 percent), and the endowment (5 percent). It does, however, establish the two key advisory boards that would be needed, one focused upon tobacco control and one on health care recipients (particularly those with

Medicaid). Furthermore, it covers the conceptual fashion by which half of the money would be expended to all providers, rather than just to hospitals: the uninsured

(40 percent) and uncompensated care payments (10 percent).

Additional language would be needed to ensure the insurance coverage of cessation efforts (professional and pharmacologic*1) were fully covered. Concepts embodied in this proposal were drawn from various previously-introduced bills.

Additional boiler-plate language related to the roles of the Auditor General and Treasurer could be inserted

(plus whatever might be needed to link with Act 68 implementa­ tion) , as could clauses anticipating Congressional enactment of refinements of Medicaid law. Other models for the size/composition of the Advisory Boards can be accommodated, such as expansion to 25 members, direct membership of those empowered to appoint, etc. The goal was to ensure their creation. I want to emphasize one thing in this legislation, that is, what I tried to do is avoid the capacity of the monies to be diverted from what should be funded in the Medicaid world. And that means that

I am using the concept of DiSh to suggest that not only my hospitals complied if ordered to receive these monies, but also other providers. And in that fashion, people would be encouraged to be Medicaid providers and therefore increase access to care.

To summarize, you must maintain the discipline of placing these monies into a fund that will support tobacco-related projects, maintaining the CDC's 25 percent tobacco control goal. An Advisory Board should be empowered to advise annual expenditure recommendations—contingent upon the quality of grant requests issued by therapy and research entities—while maintaining the possibility that unspent dollars could be reinvested for future use. Expanding Medicaid may yield more fiscal resources than creation of a new CHIP entity. Consider, also, the appended legislation intended to increase "DiSh" money recipients. It is urgent that cessation efforts be maximized, funding both professionals and drugs.

Concerns regarding present and future funding limits may be alleviated by prompt enactment of legislation that would increase the tobacco "user-fee" by 50 cents-per-pacc.

Throughout this process, it must be emphasized that tobacco control programs are cost-effective, particularly when calculated "per year of lifesaved," when compared with the desire to focus solely on current expenditure needs. If you have any further questions regarding my suggestions and my activities, please do not hesitate to call me. Keep in mind, however, how we got here, and you will do the right thing. Pending review of additional proposals and study of testimony that you are now receiving, these ideas are succintly codified on the following page. Thank you for your attention.

And I have a summary, which I will spare you because I paraphrased already. Thank you.

CHAIRMAN BARLEY: Thank you very much for your presentation. I recognize Representative Manderino for a question.

BY REPRESENTATIVE MANDERINO:

Q Thank you and good morning, Dr. Sklaroff.

Just if you can supply me with some information after the fact. On the bottom of page 5 of your testimony when you talk about insurers and you say that they requested relaxed limitation on potential administration on profit margins and then you cite other plans. If you can just give me some back up on this. I never heard that before.

A Okay, I will tell you specifically. Number one, Niles Shure (phonetic) was the resource of information at a meeting with Senator Hughes for the seven to 14 percent change. I then did research and I have an e-mail which describes the three percent margin in a large program and I will forward that to you.

REPRESENTATIVE MANDERINO: Thank you.

CHAIRMAN BARLEY: I now recognize Representative

Schroder.

REPRESENTATIVE SCHRODER: Thank you,

Mr. Chairman. Good morning, Dr. Sklaroff.

BY REPRESENTATIVE SCHRODER:

Q A couple of questions. The statistics that you were citing in your testimony regarding some of the success rate of prevention in the various states.

I heard those statistics from previous testifiers at our hearings. Who was doing the quantifying of those statistics? In other words, who is doing the evaluation; the state Departments of Health or outside independent auditors or providers themselves?

A It varies. For example, Pennsylvania there is unreleased study from 1994 which was conducted by the Department of Health. Sometime later we can discuss why it sits somewhere in some factory warehouse.

On the other hand, in California, the

Department of Health has worked very closely with a man named Stanton Glance (phonetic) who also has been making himself available to other states to help codify their data. So I would say mostly the Departments of

Health but also interested public citizens such as the voluntary:;, groups that have been formed such as, for example,

the Coalition For Tobacco Free Pennsylvania type entitiy.

Q So you are saying these statistics come from

the various state Departments of Health?

A These are validated statistics. In other

words, these are not people's whim. This is not people

trying to sell a pig in a poke. These are data that

have been validated constantly and were constantly monitored.

Q If you have any information to pass along

I would just be interested to see, you know, who did

the report.

A If you give me your e-mail address, you

will be deluged.

Q I don't want to be deluged.

A Because every day the data are being generated.

Q Well, for the specific figures that you

A Well, the Institute of Medicine Study

I believe is part of a packet that is being provided

to every member of the House and the Senate. If you

haven't received it you will.

Q My question, doctor, one of my real concerns

that whatever we put towards prevention that it be not

money just goes down the drain and has no effect.

A Absolutely. Q I worked with Drug and Alcohol Advisory

Boards in my county before becoming a State Representa­ tive. We always struggled with the issue of prevention; what works, what doesn't. Even in that, there is a

small difference than tobacco, but I'm not sure it is a lot different. No one, even the experts really seem

to know is my recollection. That is why I have such a concern about this. In your opinion, specifically, what kinds of prevention activities work?

A Let me give you some thoughts that corroborate your point and then answer it. I came of age as an oncologist, I am a medical oncologist, in the early

1970's and I went to a couple of national meetings and

I saw how a lot of cancer control monies were being poured into another black hole. People would, let's

say, have a cooperative group study and they would do

some phsyco-socio research, put the money into someone's funding, never publish the data and therefore skim a certain amount of money out from what could or should have been directed towards good clinical research. That ended on a national level when Peter Greenwald became

the head of that division of the National Cancer Institute.

He instituted a six level phase type program to which the funding people have adhered. So now you no longer have demonstration projects for mammography or whatever which existed in the 60's and early 70's. Now you have people forced to feed back and document what they have achieved. So your experience is not dissimilar

to my older experience, but now I think people recognize

that and they have cut off that problem.

Now, to answer your question more specifically, there is no question that nicotine supplements, whether

the patch, pills, nasal sprays or whatever, these work as adjuncts. In fact, there was some litigation regarding whether or not there were some claims made by manufacturers

that had to be scaled down.

So there is no question that these pharmacologic: aids work, but they are expensive and they are very often not covered by the insurer. So that is to me basic.

In addition, you have other drugs that are coming out, Zyban in particular, where a physician may or may not have to cheat because the insurer will not cover Zyban, but they will cover a comparable drug as anti-depressant. So therefore we may or may not prescribe a comparable drug saying the patient is depressed and therefore get a drug in that might help the patient

stop smoking. So those are the pharmacologic answers.

In terms of the behavioral approach, may whole attitude has been more than half the patients who stop smoking stop after more than three attempts to try. So therefore the first thing you teach the patient, if you have tried and you failed, you have got to keep plugging at it. You have to adopt a behavioral approach, you have to have a soap note, subjective, objective plan on this as well as every other medical issue you face as a clinician. We still have the problem in surveying patients where they say their doctors didn't tell them to stop. Now probably that is partially denial and there you have a problem with data. But nevertheless it should be almost automatic at each visit, that if a patient who is smoking is advised regarding how to stop in a behavioral problem solving fashion.

So, I would not necessarily limit that to physicians, psychologists, and so forth. Whether you are going to start funding acupuncture, there you have a problem. But on the other hand, I think there is a lot of funding that could or should occur without having to manufacture a diagnosis in the process. Like

I see a patient for a blood pressure check for two seconds and then for the next 15 minutes I am updating him on the tobacco issues. But I have to code it for the blood pressure visit or it will not be funded — reimbursed, things like that. Now I may or may not be doing that.

I'm not sure. But you get the idea. Clincians do that. Answer your question?

Q To an extent, yeah. I think I am more interested in, not so much what the pharmacological and other techniques work as far as prevention, but what kind of programs and types in other states that have worked to prevent people from smoking.

A Well the prevention is different from cessation. Prevention you get into the whole business of what kind of ads are working. And it is clear that when you ridicule the tobacco industry, it works. And

I have copies of the tapes that you can download from the internet which were banned by the Legacy Foundation which showed basically people being delivered in body bags, and that is what works. That is what gets kids to laugh at the tobacco industry and recognize they are going to get duped socially as well as physically if they smoke. The other one was a truth campaign, where again, basically a tobacco industry executive was lying through his teeth. That is the kind of stuff that works and that is the kind of stuff the tobacco industry does not want to see funded and therefore that is the kind of stuff that we have to fund in Pennsylvania if we are going to make a difference.

REPRESENTATIVE SCHRODER: Okay. Thank you. CHAIRMAN BARLEY: Thank you very much, doctor, and we appreciate your testimony and your participation here today.

DR. SKLAROFF: Thank you.

CHAIRMAN BARLEY: We have a group of

Fourth Grade students from the McKinley Elementary School that have been very patiently waiting and I appreciate their attentiveness. They have been very good. So they must be well disciplined. You guys and girls are doing a great job here.

The next testifier will be Susan Byrnes,. who is Founder and Chair of the Susan P. Byrnes Health

Education Center in York, Pennsylvania. So as they are taking their places, I would just like to draw attention to some additional members who have joined us. Representative

Raymond, Representative Saylor, and I also want to draw your attention to Representative Daley, who is here, not a member of the Committee, but someone who has significant; interest in this subject, spent many, many years in

Health Care. So, Representative Daley, welcome to our

Committee hearing here this morning.

I would also like to acknowledge the fact that almost a year ago I had an opportunity to visit the Susan Byrnes Health Education Center in York and I was extremely impressed. This is a center that its mission is to deal with elementary--well, it is not only elementary students. There is a variety of ages through adults actually. But it is based around educating, particularly young people, on the need for better health. Certainly educating them on the negative aspects of smoking and alcohol, but it goes beyond that.

It includes diet and many, many other areas. So, I was just extremely impressed with the job that they are doing. And I may add they are doing this without an y type of government money. This is a labor of love and it is sustained by contributions.

And as we are reviewing the Tobacco Settlement money, it just came to mind for me that the type of work that is being done here really does fit in with the whole prevention component of the budget that we are looking at. So I felt it was important to have

Ms. Byrnes here today to give us a presentation. But she will also be including some of the students from

McKinley Elementary School. So, we are glad to have you here and your arrival on Pennsylvania Cable Network and some other television stations that are here today.

So, welcome, and Susan, you now have the microphone to make your presentation. Sorry that we are few minutes on behind, but again I commend the students for their patience and for their behavior. MS. BYRNES: Thank you very much, and thank you, Representative. I am thrilled to be here and I think Representative Schroder, I think you are going to get an answer to your question. The answer is in prevention and the answer is with these students that are with me today.

About 11 years ago I began to devote my time, energy and financial resources to investigate a Health Education Center. This is a nonprofit. It is an independent facility. And what we do is we use a million dollars'worth of high tech exhibits. We use our own teachers and what we do is we motivate these students to choose healthy lifestyles.

Over the past 11 years many people have said to me why do you continue to do that, and the answer is here with these students. I would like the students to answer some questions for me. Why they think it is so exciting to come to the Health Education Center in York?

This is Charisa. Why do you think it is exciting to come to the center?

CHARISA: Well, I think it is exciting because if whoever smokes, what happens on the inside happens on the outside, it will probably make people stop. MS. BYRNES: Very good. Thank you. And

Ashley has a response too.

ASHLEY: I think it is good because if you smoke it could cause brain damage and heart disease and cancer and you could die.

MS. BYRNES: And how many years have you been coming to the Health Education Center?

ASHLEY: Four.

MS. BYRNES: Four years; since you have been in first grade and have you learned a lot at the center?

ASHLEY: Yes.

MS. BYRNES: Thank you, Ashley.

Recently these students took part in one of our Huffing and Puffing programs and it is specifically targeted on tobacco and the harmful effects that tobacco does to your body. And Frances is going to make a comment.

FRANCES: I learned that you shouldn't smoke even if your friends want you to, because it could damage your health and your body forever.

MS. BYRNES: Thank you, Frances. And

I think Edwin also has something to say.

EDWIN: There are more than 4,000 chemicals

in one cigarette. MS. BYRNES: Can you say that again? How many chemicals?

EDWIN: Four thousand.

MS. BRYNES: Four thousand; do you think

these people believe that?

CHAIRMAN BARLEY: Sounds like a lot to me, Edwin.

MS. BYRNES: And Dwayne has brought a

special exhibit with him.

DWAYNE: If you smoke one pack of cigarettes

every day of one year, this is how much tartar you have

in your lungs.

MS. BYRNES: This is how much tartar you pour into your lungs. And where did you lean that?

DWAYNE: At the health center.

MS. BYRNES: Does anyone else have anything

they would like to share?

AMARIS: I think the Health center is a nice place to go so you could learn about your body more and stop smoking. And I have been trying to stop my mom from smoking for a long, long time, but she's

starting to get used to it.

CHAIRMAN BARLEY: You know what? I bet when she watches you on TV tonight and now everyone

in the world will know that you want her to stop smoking,

I bet she will stop. What do you think? AMARIS: Yes.

MS. BYRNES: And where is Wilfay? What do you have to say?

WILFAY: Ms. Byrnes, I think that smoking

is very bad for you because I caught asthma from secondhand

smoking.

MS. BYRNES: I am sorry to hear that.

I think we have two other young ladies. We have Lauren.

LAUREN: I think the Health Center is wonderful and It keeps you in good health.

KATY: We have come here today to ask

you to put Helalth Centers around Pennsylvania so that

each and every1 boy and girl can learn about their health.

MS. BYRNES: Thank you all very much.

Now I am going.to speak for a little longer. Will you

stay here with me?

(Chours of yes.)

Our most important role as leaders is

to give these children, our children, the best possible

chance of living healthy, rewarding lives. Funds from

the tobacco settlement present a unique opportunity

for the Commonwealth to invest in the future health

of Pennsylvania's children.

I believe the most promising approach

is to invest in prevention efforts aimed at enhancing and encouraging our children to make healthy lifestyle

choices including the choice not to use tobacco products.

This approach needs to be a concrete and sustainable

strategy that will, over the long term, impact decision making by our children enabling them to make the right

choices when it comes to their health. A strategy that will stand the test of time and remain in place and

productive long after the tobacco funds have disappeared.

The vision that I would like to share with you today is to make the Commonwealth of Pennsylvania

the healthiest state in the nation--a model for dynamic,

interactive and effective health education.

At the Byrnes Health Education Center,

children like those here with me today, experience the wonders of the human body. They touch, feel, see and

Hear the concepts of health promotion in a uniquely

impressive way. At the Byrnes Health Education Center,

the children of South Central Pennsylvania learn about

the miracle of life and how their choices impact their

health and the quality of their lives.

Through the use of larger-than-life high-tech

exhibits, fun and engaging curriculum design, student

interacting and exceptional enthusiastic health educators,

students are guided through unforgettable lessons of

hea.lthy living. These lessons cover a wide array of health education topics, including tobacco-free living.

Pre and post visit curriculum materials are provided to teachers for in-class preparation and follow-up as part of a comprehensive health education experience to reinforce the learning that occurs at the Health

Education Center.

The Health Education Center concept is a unique and innovative approach to teaching health, which positively impacts the behaviors of these children who are given the opportunity to participate. When

I first started this over 11 years ago, there were only eight centers in the United States. Today there are over 30 centers. We opened our bright red doors five years ago and since that time nearly 200,000 children, children like the children you see here today, have come from 50 miles. They come from Harrisburg, Lancaster,

Hershey. They come to our center to learn about their bodies and how to take good care of them.

WateMjnji in partnership with Penn State

University, the Barnes Health Education Center has recently completed a pilot study of the impact of our tobacco curriculum on fourth grade students. In fact, these students might be taking part in that survey. The preliminary results are impressive, showing statistically significant knowledge gains. Our vision is a public-private partnership to create a network of Health education Centers in strategically accessible locations throughout the Commonwealth. Through the tobacco settlement funds, we can provide access to dynamic health education experiences to every child in the Commonwealth of Pennsylvania. Using a small portion of these funds to build a network of Health

Education Centers will give Pennsylvania's children a dynamic place to learn the importance of healthy living.

This network of health education centers will provide a powerful means to deliver the message of hValthy tobacco-free living to over a million Pennsylvania f"™'1 *ao *-»->-•'° year, every year.

Our vision is to make Pennsylvania a national model of dynamic, interactive and effective health education — to make Pennsylvania the healthiest

State in the Nation.

I encourage, my fourth grade friends, encourage to invest in the "power of prevention." Prevention does work. These children, our children, the children of Pennsylvania are depending on you. Thank you.

CHAIRMAN BARLEY: Thank you very much,

Ms. Byrnes. You certainly have the most valuable asset that we have in the Commonwealth with you there today surrounding you. And so again, we applaud the young people for not only having the courage to be here today, but there is many, many adults wouldn't have the courage

to step up before the microphone and give testimony

like you all did today. And so I want to commend you and congratulate you. Again, I just want to commend

the Susan Byrnes Health Education Center for the work

that they are doing. The old addage an "ounce of prevention

is worth a pound of cure."

We listened to other presenters today

talk about cessation. Now that is a pretty big word maybe for fourth graders. But cessation means really

trying to help people stop smoking. And that's very difficult. It is very difficult to be able to stop

smoking and they use all kinds of drugs. The young man, is it Dwayne, that had the bottle of tar. You know, it is virtually impossible to be able to reverse

the damage that is caused by ingesting all that type of substance, the tar that you mentioned.

So, the aspects of trying to stop smoking;

they are expensive, they are difficult and really, in

some cases, almost impossible for people.

So to prevent, to educate young people

and to help you all understand so you can help to educate

your friends and how important it -is to never pick up

that first cigarette. Never light that first cigarette. If you do, by the way, you'll probably get sick anyhow.

So don't even go there.

So again, I just want to commend you

for, again Ms. Byrnes, for her work and the appreciation.

I certainly understand the power of prevention that

you spoke of and I can pledge that I will be doing everything

I can to involve your center and the other centers such

as you are advocating for as being able to participate

in this tobacco settlement money. I think it is again

a very, very important component of what we all want

to be able to accomplish.

I would now like to recognize Representative

Schroder who has some questions for you.

REPRESENTATIVE SCHRODER: Thank you,

Mr. Chairman. Ms. Byrnes, good morning.

MS. BYRNES: Good morning. Good morning

to all the students as well.

BY REPRESENTATIVE SCHRODER:

Q Just a couple of questions. I am not

sure that I know, what age or grades I guess visit your

center you have contact with? What age?

A Our Age Appropriate Programs begin actually

with pre-schoolers, four and five year olds and go all

the way up through high school. We also do adult programs.

So we like to say we do programs for anyone that is four to 104.

Q Does the Health Education Center have any methods that you use as far as keeping statisics on the progress of kids, say, from early elementary school into late high school? They go through your program. As far as those that stay tobacco free versus those who may, you know, eventually use tobacco. Do yowhave any statisics that you could share with us or perhaps forward to us at some point?

A Keep in mind we have only been open for five years, but what we do do, there is several methods that we use to evaluate our programs. Every teacher that comes to the center evaluates the program. We had a 98 percent rate of excellence on the teachers.

The students actually write thank you letters to us and in the thank you letters they share with us what they have learned. The other method was that we did recently do a study with fourth graders who have been to our Huffing and Puffing Program. And I can get those statistics to you. I don't have that with me. Penn

State just is compiling them right now.

Q I would appreciate that. I guess I didn't realize you had only been there for five years. I guess your ability to track is somewhat limited at this point?

A Yes. Q I would just be interested in knowing the students who go through the Huffing and Puffing

Program, how many, what percentage of them would stay tobacco free versus, you know, students who might not go through that program? I would be interested to see the comparisons.

A Yes, and we hopefully will be able to do that. I can share a story with you. Recently a fifth grade student came back to the center on a weekend.

We had a Family Health Festival. And she came up to one of our teachers in our substance abuse teaching theatre. She had just transferred schools from a city school to a school that hadn't been to the center. And her friends, her fourth and fifth grade girlfriends all were smoking. And she said to our teacher, I don't want to smoke because of what I learned here. How can

I not smoke?

So, we have, I guess you would call that personal anecdotes.

REPRESENTATIVES; S&HRODER: That is wonderful.

I commend you for the work that you are doing. Thank you.

MS. BYRNES: Thank you.

CHAIRMAN BARLEY: I would like to recognize

Representative Saylor, a fellow York Countian. MS. BYRNES: Yes. Helilo, Stan.

CHAIRMAN BARLEY: I mean your fellow York

Countian.

REPRESENTATIVE SAYLOR: Mr. Chairman, I had the pleasure, actually Susan is one of my constituents. And our delegation in York County has numerous times visited the center and been there a number of times. I just want the Committee members to know how valuable an asset and what a treasure it is for us all that we have Ms. Byrnes as a York County resident. And her efforts and energies that have gone into the center have meant so much to the children of York County. It has just been tremendous to see the impact and talk to children who have been to the center.

And I, myself, and I think the legislators that have visited and sat in on some of the classes, the amazement that we have found as legislators, how much energy and enthusiasm and charismatic the teachers that she has at the center. No wonder it is such a success story. Susan has put great effort, time and energy into building the center. I have never seen anything like it.

I just want the Committee to know how proud we are of her in York County. And particularly that we would love to see this Committee and the Governor and the legislature to expand these centers across the whole state. I have had a chance to talk with a lot

of children and the basic thing I hear from children

talk about education of smoking and everything else

is, they don't like it. They don't think that some of

the things that we are doing such as the billboards

and some of those kinds of things are effective as what

they have seen at the health center. So I say it would

do us very well to spend our tobacco money on things

that Susan has talked abowS: here today. I think it would

be far more effective in our educational process.

Thank you, Susan.

MS. BYRNES: Thank you. Could I comment

on that for just a minute? I just want to let you know

that because of people such as yourself, Stan, and Representative

Barley, we have had many people come from the House

of Representatives and from the Senate come down to

the center. And most recently Secretary Paese was there

this past Friday, and I think even he learned a few

things about health as he said. We also had, Mr. Zimmer­ man has been there as well as Mike Fisher was there

last week as well as many other representatives. I

appreciate everything that you are doing. It would

be a real honor for me if we could really make this

unique opportunity happen.

CHAIRMAN BARLEY: Are there any additional members have any questions or seeking recognition?

(No respones.)

If not, I would like to give you an oppor­

tunity, Susan, to maybe do a promotional if you choose, because we are on PCN and other television stations

are here.

And you are located in York and you did make reference earlier to the fact that you serve a

constituency much larger than York County; Lancaster

County, Dauphin County and areas beyond. Maybe you would just want to explain what areas you cover and

schools or school teachers or principals or parents who think this would be a great opportunity for their

school classes. If you could just explain the geographic

area, maybe give your phone number, how someone would

go about contacting you.

MS. BYRNES: Thank you. We are located

at 515 S. York Street in York with easy access on the

south of York as well as the north of York. And we actually service a 50-mile radius. We have had students

from Chambersburg and as far away as an hour and half;

Lebanon, Hershey, Harrisburg, of course, and some students

actually go on the bus for an hour and 20 minutes not

too long ago to come to the center. All you have to

do is call us. The number is 848-3064 A.C. 717. All you have to do is call and we would be glad to arrange oturr program for you or your students.

One thing is I wouldn't wait too long

though. We are really booked. We |a"re almost looked to

capacity for the spring. So, if you would like to register

for a program, please do so shortly.

CHAIRMAN BARLEY: Your number again was

848?

MS. BYRNES: 3064.

CHAIRMAN BARLEY: 848-3064, so again,

I am promoting the center as well because I know the

good work it is doing.

Again, I want to commend the students

that are here this morning. One more plug for McKinley

Elementary School. And I think that members of the

Committee need to applaud you for being here and we

will do that. And I have one last thing when we close.

We just want to applaud you quickly for being here.

(Applause.)

We have a little gift, it is really more

of a token, but it is a small gift that we would like

each of the students to have. It is a little tag.

It is like a luggage tag, but I know some of you probably

have backpacks and all kinds of little bookbags and

whatever. Now this is a neat little advertisement. Mine happens to be a horse. Whoever heard of a horse smoking a cigarette. When I was your age we had horses on TV that could talk. But this is pretty dumb. So we have some luggage tags like this and we want to make sure each of you get one.

Again, thank you very much for being here and participating and you have a nice trip back to McKinley. I am sure you are having more fun here than you do in the classroom. All right, guys. Thank you very much for being here. That concludes the testifiers for today and that concludes the hearing. So we now stand adjourned.

(Whereupon at 11:25 a.m. the hearing

was concluded.)

JL. JL. J- /v /* /v

(Prepared Testimony of Michele Lewis,

Public Policy Analyst for American Federation of State,

County and Municipal Employees, AFL-CIO (AFSCME) was as follows:)

"Thank you, Mr. Chairman and members of the committee for affording me this opportunity to speak on this important issue. My name is Michele Lewis.

I am a public policy analyst for the American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME). I am here today on behalf of Henry Nicholas, President for the National Union of Hospital and Health Care Employees/

AFSCME, District 1199 C in Philadelphia. As you well know, the issue of the uninsured continues to be a problem even in our booming economy and those of us who work in the health care arena, particularly in hospitals serving large populations of uninsured patients, are acutely aware of the need to address this pressing problem.

We believe we have a unique opportunity to improve access to the health care delivery system for these individuals by funding programs with the proceeds from the tobacco settlement.

"As you know, Pennsylvania is anticipating the receipt of roughly $400-$450 million per year from the tobacco settlement agreement. A widespread consensus has emerged that these funds should be spent on health care. However, we are concerned that the money will not be directed where it is needed most, and where it can have the greatest impact: (1) to expand coverage to as many uninsured adults as possible and (2) to provide

Pennsylvania's safety net hospitals, which provide over

$700 million per year in uncompensated care, with some much-needed support.

THE PROBLEM

" An estimated 1.2 million Pennsylvanians--one j_ J- vy out of every ten residents—lack health insurance coverage to meet their most basic health needs. According to the U.S. Census Bureau, the percentage of uninsured

Pennsylvanians under 65 has increased 34 percent between

1991 and 1998. This is more than twice the national rate for the same period. In fact, more Pennsylvanians are uninsured now than were during the recession of the early 1900s.

"This trend had continued in recent years despite the booming economy and primarily affects hardworking

Pennsylvanians between the ages of 18 and 6.4. Indeed,

56 percent of the uninsured work full or part-time throughout the entire year. Nearly 80 percent work at least part of the year.

"Because the uninsured have few or no alternatives when they become sick, they generally seek treatment in hospital emergency rooms. As a result, the amount of uncompensated care provided by hospitals has also increased. In 1998, according to the Pennsylvania

Health Care Cost Containment Council, uncompensated care grew by almost nine percent to about $704 million statewide. As a result of this increased burden, hospitals are faced with closures. The majority of these hospitals on the brink of closure are in neighborhoods that dispro­ portionately serve low-income people, most of whom do not have In s u r a n c e/' without a viable funding

alternative, hospital closure will further strain the

delivery system if solutions are not forthcoming.

THE SOLUTION

AFSCME believes that the logical way

to utilize Pennsylvania's $400 million annual share

of the national tobacco settlement is to expand health

insurance coverage to uninsured adults and to provide

relief to the safety net hospitals that bear the brunt

of the uninsured burden.

Governor Ridge has proposed a new health

program to expand coverage for uninsured adults based

on the Pennsylvania CHIP program. While we applaud

Governor Ridge's recognition of the need to expand coverage,

we are convinced his is the wrong approach. The Governor's

proposal would provide only bare-bone benefits to a mere 100,000 Pennsylvanians, only one in ten of those

in need. Further, the Governor's plan imposes a $250

per month premium on eligible adults. This is less

generous than the existing CHIP program and would make

coverage out of reach for many of those working people

the program was designed to cover further increasing

the burden on safety net hospitals.

Finally, Governor Ridge's proposal foregoes

federal matching funds available under the Medicaid program. Rather than establishing a new adult health care program, the State should draw down matching federal dollars under the Medicaid program, more than doubling available funding for the uninsured. In this way, more adults could be provided with far more comprehensive benefits. There is precedent for this in the Governor's own budget, which currently proposes to appropriate a portion of the tobacco funds to leverage federal dollars

for a Medicaid expansion for persons with disabilities

in the workforce with incomes up to 250 percent of the

federal poverty level. Why are disabled workers treated differently than other uninsured workers?

"Medicaid expansion for all the uninsured must occur hand-in-hand with the adoption of presumptive

eligibility. This ensures that people will not be denied care on the basis that they cannot prove they are eligible

for indigent care.

"Providing insurance for more adults will also provide hospitals with a more reliable revenue

stream and will ease the financial burden of systems

that are already stretched to the limit. In Pennsylvania,

the burden of the medically indigent is carried by private

(mostly not-for-profit) hospitals. In addition to public hospitals, some states (Connecticut, Massachusetts,

New Jersey, New York and Virginia) have adopted uncompensated care pools to partially relieve the uncompensated care burden of health care providers, while others have expanded

Medicaid eligibility. All of the states surrounding

Pennsylvania have developed mechanisms to spread the burden of uncompensated care. New Jersey and New York have partially funded this program by increasing their cigarette taxes, a proposal thatwouid provide, increased funding for safety net hospitals and that Pennsylvania should adopt.

" Recent trends indicate that the ranks of the uninsured will continue to swell, even as policymakers continue to attempt to expand coverage through existing programs. The number of employers offering insurance has declined, and those that still do are increasingly shifting cost to their employees, rendering coverage unaffordable for many. In addition to the decline in employer provided health insurance, the managed care penetration rate has significantly impaired hospitals' ability to retain financial solvency. According to the Pennsylvania Department of Health, Bureau of Managed

Care, since 1993, Pennsylvania's managed care penetration rate has exceeded the national average of HMO enrollment.

When managed care grows in a market, reimbursements to hospitals decline.

" Therefore, until there is universal health care coverage in Pennsylvania, it will still be necessary to set aside funds to compensate hospitals that provide high levels of uncompensated care. Currently, hospitals receiving di&p"ropbrti~ana;te share payments (DSH) only receive enough to covers slightly more han half of their uncompensated care burqen. Various legislative proposals have discussed setting aside a significant protion of the tobacco settlement funds for this purpose. We believe to adequately address this problem 75 percent of the proceeds from the tobacco sJefttttlemewt should be appropriated for uncompensated care. This would ensure that ;these ,... hospitals could remain viable and continue to provide services to the uninsured. If expanding coverage is successful in reducing the burden of uncompensated care, this amount could be reduced.

"We believe that distribution of these funds should be specifically targeted to hospitals that are actually providing charity care. The State should allocate these funds based on the current DSH criteria.

11 1 thank youi again for this opportunity to share our union's thoughts on this important health care issue. We welcome the opportunity to share our expertise as you move legislative proposals forward.

I would be happy to answer any questions you may have" at this time. I hereby certify that the evidence and proceedings are contained fully and accurately in the notes taken by me during the hearing of the within cause, and that this is a true and correct transcript of the same.

Dorothy if. Malone, RPR

The foregoing certification of this transcript does not apply to any reproduction of the same by any means unless under the direct control and/or supervision of the certifying reporter. 1EIVED

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