DHFAC Meeting Minutes
January 24, 2000
Attending:
- Patricia Blevins
- Deborah Capano
- Thomas Grabowski
- Joseph Lieberman
- David McBride
- Charles Reinhardt
- Charles Simpson
- Gregg Sylvester
- Calvin Wilson.
Absent:
- Joseph DiPinto
- Vivian Longo
- Dennis Rochford
Welcome and Introductions
Gregg Sylvester welcomed the committee members and the public. The committee members introduced themselves to the members of the public attending.
Discussion: HFAC Recommendations - Progress and Process
Dr. Sylvester reminded the Committee that the goal of today's meeting was to decide upon a process by which the HFAC could make recommendations to the Governor and General Assembly. Prior to discussing his proposal for such a process, Dr. Sylvester presented a summary of the Committee's activities to date. He noted that in the past four months the Committee has done a great deal of work - educating itself on pressing health and health care issues, holding public hearings, and identifying broad health issues and specific funding needs. These issues, he reminded the Committee, are prevention/education, services, uninsured, one-time costs and endowment/investment. Specific funding needs have been identified as prevention, AED's, prescription drug payment assistance, and investment/endowment.
Dr. Sylvester then presented to the Committee a proposal of how the committee could develop recommendations for the establishment of a strategic reserve and a spending plan for FY00/01. At the outset of his presentation, he reminded the Committee that the goal of the HFAC has been to fit their recommendations into the existing state budget process and explained that his suggested process is proposed with this in mind. Given that, Dr. Sylvester proposed the following process, using "prevention" as an example:
- Define "issues" or categories for funding (e.g. prevention)
- Identify sub-categories within larger issues (e.g. youth tobacco prevention, adult smoking cessation, etc.)
- Attach dollar figure or percentage of funds to each category and subcategory - Develop criteria for funded programs/services (e.g. Best Practices, leveraging additional funds, building on existing programs, evaluation, etc.).
- Determine appropriate state agency for assignment of administrative oversight of funds
Through this process, the HFAC would then make recommendations to the Office of the Governor, the Budget Office and the Joint Finance Committee that certain amounts be spent on specific issues and that the designated state agency employ the recommended criteria to, through its own RFP process, determine programs funded and funding recipients.
In the discussion that followed, all committee members agreed to use the model proposed by Dr. Sylvester. Deborah Capano stated that the process appropriately worked within existing systems. Concerns regarding accountability were raised by Charles Reinhardt and Tom Grabowski. These members asked how can the HFAC assure, given broad spending recommendations, that funds were meeting the HFAC's intended goals and purposes. It was agreed upon that evaluations will be required for each program funded and that oversight agencies shall be asked to provide annual reports on spending and program performance. Senators David McBride and Patricia Blevins and Rep. Capano discussed the possibility of HFAC meeting with the JFC.
Old Business
Dr. Sylvester revisited the issue of an endowment or "strategic reserve." First, Dr. Sylvester informed the committee that the Delaware Health Care Commission has suggested that investments be looked upon as a "strategic reserve" rather than as an "endowment," given that future spending needs may require a deviation from endowment principles. That is, the HFAC may in the future desire to or need to pull funds from the principle, rather than only from earned investment income. With that in mind, Dr. Sylvester reviewed with the HFAC the requested models of the Delaware Health Fund's growth potential, given different inflation and expenditure scenarios. From the various models the Committee agreed that investing 66% of the tobacco settlement payments was a prudent and responsible approach.
Debra VonKoch, Director of Bond Finance for the State and a member of the HFAC's Investment Work Group, updated the HFAC on the Work Group's recommendations. These recommendations include the investment of at least 66% and that the committee is examining the possibility of securitization, wherein an up-front amount of money would be received as opposed to annual settlement payments. Questions were raised as to the fraction of the total amount that would be received. Ms. VonKoch explained that the figure would be based on present value over a period of 25 years with 8% to 10% of the total removed.
A copy of the report "Delaware Health Fund Revenue, Expenditures and Investments," dated January 11, 2000 was distributed to Committee and public.
Delaware Health Care Commission
Paula Roy presented the Delaware Health Care Commission's recommendations for use of tobacco revenues. First, as stated above, the Commission recommends that investments be envisioned as a "strategic reserve," rather than as an endowment. Regarding recommendations for funding, short term areas recommended are: strategic reserve, prescription drug assistance program, automatic external defibrillators, programs for youth tobacco prevention and programs for adult tobacco cessation. The Commission also recommends that tobacco expenditures contain an evaluation component to allow the measurement of their effectiveness. Finally, they have recommended that longer term funding areas include the uninsured, testing regimens and chronic diseases. The Commission is working on developing approaches to each.
Additional Discussion
Given the approval of a recommendations process, the Investment Work Group's update and the Commission's recommendations, the Committee discussed its recommendation on strategic reserves vs. spending. Agreement was reached that 2/3 of the funds this year will be invested in strategic reserves. $5.4 million is committed already to the Pill Bill. The balance will be used for other recommendations using the approved process. Joseph Lieberman suggested that DHCC could bring draft recommendations, to which the HFAC can react. Youth tobacco prevention, adult cessation and the AED's would be considered.
Tobacco Issues - Update
Deb Brown from Tobacco Free Delaware reminded HFAC members that Tobacco Free Delaware, the Kick Butts Generation and the Office of the Governor were holding anittobacco conferences on February 4 - 5.
Dr. Sylvester notified HFAC members and members of the public that DHSS has placed an advertisement to prevent retailers selling tobacco products to children. Citizens can report underage tobacco sales by calling 1-800-eyesears.
Public Comments
Rob Simmons, Christiana Care Health System: Questioned funding bulk of programs through state agencies. Mr. Simmons noted that a number of states are developing broader public-private partnerships and suggested that the HFAC involve private agencies in the process. Dr. Sylvester asked Mr. Simmons to provide his recommendations on this issue to Stephanie McClellan, HFAC Project Coordinator.
Leonard Young, Stand for Children: Expressed concern about the amount that would be received if it is received "up front," less than 50% or more than 50%. It was noted that these questions would need to be answered if the state were to move forward with securitization.
Praveen Mital, University of Delaware, stated that while he understands the purpose of a strategic reserve, the many health care problems facing individuals and families demand that more money be made available now.
Meeting was adjourned.
Next HFAC Meeting
Friday, 2/11/2000, noon to 2 PM
University of Delaware Goodstay Center
Ballroom
Wilmington, Delaware
