Tennessee Debates Using Tobacco Settlement Money Into TennCare

Tennessee lawmakers may decide to use part of the state's share of the national tobacco settlement to fund TennCare, the Chattanooga Times & Free Press reports. Some state legislators believe that the state should use part of the $368 million it has already received from the settlement toward a proposed $170 million funding increase for TennCare, pointing out that the program covers the cost of medical care for beneficiaries with smoking-related illnesses. State Senate Democratic Caucus Chair Joe Haynes (D) said, "The tenor of the lawsuit was for damages caused by the use of tobacco. ... A certain portion of [TennCare expenditures are] tobacco-related." However, state Senate Finance Committee Chair Doug Henry (D) suggested that the state should place the settlement money in a "rainy day reserve fund" where lawmakers could draw only on its interest, which would total about $16 million annually on the existing funds. Tennessee is due to receive $4.6 billion over the next 25 years in tobacco settlement funds. Although the state's yearly allocation totals about $160 million, State Treasurer Steve Adams "warned" lawmakers that the money is "unstable" because of an anticipated decline in smoking, which would lead to reduced settlement funds since the deal reached between tobacco companies and the state is tied in part to cigarette sales. Adams said that the state could expect about $104 million as "'recurring' money that they could expect to use every year'" (Commins, Chattanooga Times & Free Press, 5/31).