Proposition 86			00.00 10/05
	Summary
	Submitted as: "The Tobacco Tax Act Of 2006"
	Type:  Amendments, to the California Constitution, Revenue and Taxation Code, Health and Safety Code, Insurance Code, and Welfare and Institutions Code
	Subject:  Special tax on cigarettes to support various medical projects.
	Submitters:  Paul Knepprath, for the Coalition for a Healthy California
	Supporting Organization:
		Name:	Coalition For A Healthy California 555 Capitol Mall #1425 Sacramento, CA 95814
		Email: info at healthycalifornia.com
		Web Site: www.yesonprop86.com
		Phone: 916.448.2720
	Opposing Organization:
		Name:	Californians Against Unaccountable Taxes 1415 L Street, Suite 1250 Sacramento, CA 95814
		Email: info at noprop86.org
		Web Site:  www.noprop86.org
		Phone: 916.708.6811
	Prop 86 puts an additional 13 cent tax, payable by every distributor of cigarettes, on each cigarette distributed, going into effect January 1, 2007.  Given 20 cigarettes to the standard pack, if the distributor passes on the tax, this raises the price of a pack of cigarettes by $2.60.  An equivalent tax is levied on all other tobacco products, such as cigars and snuff.
	Money raised by the new tax raised will be deposited into the Tobacco Tax of 2006 Trust Fund, created specifically by this measure, from which it will be "continuously appropriated".
	There is an awareness that this new tax will probably reduce the consumption of tobacco, and therefore reduce the tax that is being collected in support of various other special taxes on cigarettes.  The end goals of most of these other special taxes are also supported by Prop 86, which is expected to provide the same or increased funding to those special causes, and they are given no special attention.  An exception is Rob Reiner's Prop 10, passed in 1998, which supports the California Children and Families First Trust Fund.  The State Board of Equalization is required to determine what the amount of the reduction is, and make up for it from the revenues of Prop 86.  This has the effect of holding Prop 10 revenues steady at their 2006 levels regardless of what happens to the consumption of cigarettes.
	It is not clear what the consumption level of cigarettes will be following passage of this Measure, and therefore it is not possible to assign known dollar amounts of tax money to the various accounts and sub-accounts which are created by it.  For that reason, the Measure assigns percents of the total revenue, as shown in the tables below.  To make clearer what is going on, we have assumed an approximate total revenue of $2 billion per year for the bond, so that a corresponding dollar amount can be shown for each category.  Each account and sub-account listed is created by this Measure, except where otherwise stated.  Highlighted sub-accounts are not only created by the Measure, but also have their operation defined in great detail by other parts of the Measure.  The five sub-accounts getting the greatest allocated amounts are indicated in green, the five lowest in red.
	Health and Disease Research Account  5%  100.00                   Sub-account Name %  $M Source/Assigned Administrative Dept Broad Purpose Tobacco Control Research 34   34.00 Continuously Appropriated University of California Supplement the Tobacco Related Disease Research Program Cancer Registry 14.5   14.50 Continuously Appropriated Department of Health Services A statewide population-based cancer surveillance system Breast Cancer Research 25.75   25.75 Continuously Appropriated University of California Breast Cancer Research Program Cancer Research 14.75   14.75 Continuously Appropriated Department of Health Services Cancer Research Program. Lung Cancer and Lung Disease Research Account 11   11.00 Continuously Appropriated University of California To provide research grants to develop and advance the understanding of lung disease.             Health Maintenance and Disease Prevention Account 42.25  845.00                   Subaccount Name Percent  $M Source/Assigned Administrative Dept Broad Purpose Tobacco Control Media Campaign  6.75   57.04 Continuously Appropriated Department of Health Services Advertising and public relations programs to prevent and reduce the use of tobacco products Tobacco Control Competitive Grants  4.5   38.03 Continuously Appropriated Department of Health Services A competitive grants program directed at the prevention of tobacco-related diseases Local Health Department Tobacco Prevention  4.25   35.91 Continuously Appropriated Department of Health Services Local health department-based programs to prevent tobacco use. Tobacco Control Evaluation  0.5    4.23 Continuously Appropriated Department of Health Services Evaluation of tobacco control programs Tobacco Education  3.5   29.58 Continuously Appropriated Department of Education Programs to prevent or reduce the use of tobacco products. Tobacco Control Enforcement  2.25   19.01 Continuously Appropriated                       50    9.51 Continuously Appropriated Department of Health Services Grants to law enforcement for training to enforce tobacco laws at the retail level.     25    4.75 Continuously Appropriated Attorney General Support enforcement of tobacco laws at the wholesale level.     25    4.75 Continuously Appropriated State Board of Equalization Support enforcement of laws regulating tobacco sales   Breast Cancer and Cervical Cancer Early Detection  8   67.60 Continuously Appropriated Department of Health Services Breast and cervical cancer prevention and early detection Heart Disease and Stroke Prevention  8.5   71.83 Continuously Appropriated Department of Health Services The California Heart Disease and Stroke Prevention Program. Obesity Prevention, Nutrition and Physical Activity Promotion  7.75   65.49                         70    45.84 Continuously Appropriated Department of Health Services Prevention of obesity and diabetes, community     30    19.65 Continuously Appropriated Department of Education Prevention of obesity and diabetes, children   Asthma Prevention and Control  4.25   35.91                         60    21.55 Continuously Appropriated Department of Health Services Develop public health programs and asthma policy     40    14.36 Continuously Appropriated Department of Education Management of asthma in schools   Colorectal Cancer  4.25   35.91 Continuously Appropriated Department of Health Services The Colorectal Cancer Prevention, Detection and Treatment Program California Healthy Kids 45.5  384.48 Continuously Appropriated Health and Human Services Agency                     90 min 346.03 Continuously Appropriated   Coverage under Healthy Families     10 max  38.45 Continuously Appropriated   Administration of Healthy Families             Health Treatment and Services Account 52.75 1055.00                   Sub-account Name Percent  $M Source/Assigned Administrative Dept Broad Purpose Tobacco Cessation Services  1.75   18.46 Continuously Appropriated Department of Health Services Provide tobacco cessation programs and services Prostate Cancer Treatment  1.75   18.46 Continuously Appropriated Department of Health Services Provide prostate cancer prevention and treatment for low income and uninsured men. Community Clinics Uninsured  5.75   60.66 Continuously Appropriated Department of Health Services Fund nonprofit clinic corporations providing vital health care service to the uninsured Emergency Care Physician Services  5.75   60.66 Continuously Appropriated Department of Health Services Administered and allocated for distribution through the California Healthcare for Indigents Program (CHIP). Rural Emergency Care Physician Services  0.75    7.91 Continuously Appropriated Department of Health Services Administered and allocated for distribution through the Rural Health Services Program (RHSP). Medically Underserved Account  0.75    7.91 Continuously Appropriated Medical Board of California Promote medical care to low-income patients in areas of the state underserved by doctors. Nursing Workforce Education  9   94.95 Continuously Appropriated Office of Statewide Health Planning and Development Expand nursing education opportunities and capabilities to meet nursing workforce demands                   86  81.66 shall be used   Support nurse education programs at UC and CSU     14  13.29 shall be used   Support nurse private education programs   Emergency and Trauma Hospital Services 74.5  785.98 Continuously Appropriated Department of Health Services Enhance  hospital and medical services to emergency patients.
	The amounts specified for each account are to remain in the account until spent, regardless of fiscal years.  The money raised by the tax is to be used in addition to existing funds, not to replace them.  Money in the Tobacco Trust Fund may not be borrowed by any other fund, unless it is for the purposes of the Initiative.  Because of the "urgency in adopting [the] Initiative", certain parts of the state Contract Code are waived, for a period of five years, for public contract work done to support the Initiative.
	Full public accountability will be achieved in three ways: the Department of Health Services will prepare a report of expenditures to be available on its website by March 31 of each year, and all programs and departments receiving money will be audited by the Bureau of State Audits, and the administrative costs for any Account or sub-account will be restricted to 5% or less.
	The Colorectal Cancer Prevention, Detection, and Treatment Program is established within the State Department of Health Services, to serve uninsured and underinsured people (a) 50 years of age and older with incomes at or below 200% of the federal poverty level, and (b) people below 50 years of age at high risk for colorectal cancer, who have incomes at or below two hundred percent (200%) of the federal poverty level.
	At a minimum, the services provided will be screening of men and women for colorectal cancer, and medical referral and services necessary for a definitive diagnosis. If the diagnosis is positive, then the necessary treatment will also be provided.  Outreach and health education activities will also be done, to ensure that people are aware of and use the program.  The Department will award contracts for screening and treatment to nonprofit organizations.
	The California Heart Disease and Stroke Prevention Program (CHDSP) is established in the State Department of Health Services, to conduct programs to prevent and reduce risk factors for cardio vascular disease, support programs to improve disease treatment and management, and educate the public on cardio vascular disease.
	Money from Measure 86 is provided to the California Healthy Families Program, and families may enroll their children in Healthy Families, disregarding some current requirements for enrollees to meet certain citizenship and immigration status conditions.  These limits are specifically rejected; all children under 19 now become eligible for Healthy Families coverage, if their families have household income at or under 300% of the federal poverty level, are not covered by other insurance, and meet the other residency requirements of Healthy Families.
	Families who enroll their children per this Measure, must pay the standard premium for coverage, unless one of the following applies, in which case no premium is required: the child is 18 or less, and the household income is less than 100% of the federal poverty level, or the child is 1 or less, and the household income is less than 200% of the federal poverty level, or the child is 6 or less, and the household income is less than 133% of the federal poverty level.
	The administering agencies are required to streamline the current system to improve application, enrollment and retention procedures under Health Families and Medical, including the creation of "an electronic gateway system" to process enrollment.
	To assist in accomplishing this, the Healthy Kids Oversight and Accountability Commission is established.  The Commission will have 15 members, 5 each appointed by the Speaker of the Assembly, the Senate President Pro Tempore, and the Governor.  Members serve 3 year terms, without compensation.
	Money raised for Healthy Kids by this Measure may be used only for its purposes, and may not be used to replace other income.
	The state may not increase a county's share of costs for children's health services unless the state includes adequate funding to fully compensate the increased costs.
	Money from Measure 86 may be used for the Support of Community Clinics, solely to non-profit clinic corporations.
	Each August 1 beginning with 2007, the Department will give each "eligible non-profit clinic corporation" a percentage of the balance present in the Community Clinics Uninsured Sub-Account as of July 1, based on the ratio of that clinic's "uninsured patient encounters" to the total "uninsured patient encounters" for eligible clinics statewide.  No corporation will get less than $25,000, and no corporation will get more than 2% of the total.  The Department will be reimbursed for its actual cost of administration, up to 1% of the amount credited to the Sub-Account during the fiscal year.
	An "eligible non-profit clinic corporation" meets both of these requirements:
		(A) The corporation consists of licensed non-profit free and community clinics, or of clinics operated by a federally recognized Indian tribe or organization.
		(B)  The corporation had at least 1,000 uninsured patient encounters based on data submitted to the Office of Statewide Health Planning and Development for the year the allocations are made, as reported up to February 15.
	With some exceptions, "uninsured patient encounter" is defined as an encounter for which the patient has no public or private third party coverage.  Coverage of indigents is specifically included under this definition.  An uninsured patient encounter must consist of a primary and preventive health care service and specialty care services traditionally provided by comprehensive primary care providers.  The exceptions are under outpatient services, Family Planning, and early identification of handicapping conditions, which count as .15 encounter.
	Money from Measure 86 may be used to subsidize education of Nurses, under the management of the California Healthcare Workforce Policy Commission.  The Commission is charged with developing a state nursing contract program to create, expand and improve programs to educate students to become practicing registered nurses, nurses with advanced clinical skills, nurse managers, and faculty for schools of nursing.  The Commission and the Office of Statewide Planning and Health Development may be reimbursed for administrative costs, up to 1% of the amount credited to the Sub-Account during the fiscal year.
	Money from Measure 86 may be used to pay for Emergency and Trauma Hospital Services, under the management of the Department of Health.  The Department is tasked with providing a percentage of the money in the Emergency and Trauma Hospital Services Sub-Account to each qualifying hospital.  The measure language is unclear, but it appears that the percentage is based upon the scope of the hospital's emergency services compared to the total for all qualifying hospitals across the state.
	The scope of the hospital's emergency services is measured by several parameters: (1) The number of emergency department encounters; (2) the total amount of charity care costs of the hospital; (3) the total amount of bad-debt costs of the hospital; and (4) the total amount of county indigent program effort costs of the hospital
	Hospitals that wish to be declared eligible for funding must provide the above data to the Department by February 15 of each year.  The Department must create a standard form to be used for reporting, though use of this form is not required.  (A method of reporting electronically must be available no later than April 30, 2008.)  The Department must confirm by April 30 of each year that the data is sufficient; if the data is not sufficient, the hospital has 30 days to resubmit.  Each eligible hospital shall be notified of its proposed funding percentage no later than June 15 of each calendar year.  Eligibility is conditioned upon establishing Hospital Charity Care and Financial Assistance Policies as discussed below.
	Payment will be made to each eligible hospital each quarter, starting with June 30 of 2007.  Hospitals "that receive a preponderance of their revenue from the same associated comprehensive group practice prepayment health care service plan" (Kaiser, for example) are limited to a total annual allocation of $40 million.  This maximum will be adjusted, year to year, proportionate to the increase or decrease of the total funds paid into the Emergency and Trauma Hospital Services Sub-Account, and the increase or decrease in the amounts paid to eligible hospitals.
	Each year, data submitted by 20% of the hospitals will be selected for audit, and the Department  may conduct a field audit of the use of funds or information submitted by any hospital.  If funds were improperly used, a fine of 25% of the amount may be imposed.  If inaccurate data was reported, and was the result of gross negligence or intentional misconduct, a fine of 200% of the amount may be imposed.  Hospitals have the right to appeal the fines.  Hospitals committing either of these errors will not be eligible for that round of funding, even if the errors are corrected.  The amount of the fine goes back to the Emergency and Trauma Hospital Services Sub-account.
	The Department will be reimbursed for its administrative costs, up to 0.5% of the annual total deposited to the the Emergency and Trauma Hospital Services Sub-account.
	Hospitals that receive funds have obligations.  First of course, to maintain an operational emergency department.  Further, they must: participate in at least two disaster-training exercises annually; provide training in the identification and management of emergency medical conditions; and cooperate with state and regional public health authorities in the creation of a disaster plan.
	Hospitals must also maintain a written record of the use of all such funds, available to the Department and the public upon request.  Money not used within one year for the eligible purposes must be returned to the Department.
	In order to be considered for eligibility, each hospital must establish an understandable, written charity care policy and discount payment policy for low-income patients with no or inadequate insurance, which must be applied consistently.  The policy must clearly state eligibility criteria based upon the income and monetary assets of the patient, and state the process used by the hospital to determine whether a patient is eligible for charity care or discounted payment.  "Monetary assets" must not include qualified retirement plans, the first $10,000 of those assets, or half of the assets over $10,000.  The income ceiling in order to be eligible to participate is set at 350% of the federal poverty level.  Patients applying for charity care or discounted payment must give the hospital information about health benefits coverage, financial status and other information sufficient to allow the hospital to determine if the patient is eligible under the hospital's policy.  The amount that the hospital may consider to be the expected payment for the service rendered is limited to the amount that Medicare would pay.
	The hospital must post notices declaring the availability of its discount payment and charity care policies.  The notice must contain brief instructions on how to apply for charity care or a discounted payment.  Copies of the policy must be given to local organizations that assist low-income patients.  Bills sent to patients must inform the patient that financial assistance is available, and provide a contact number to call for information about it.
	Each hospital must have a written policy regarding its debt collection procedures, and must use its best efforts to ensure that patient accounts are processed fairly and consistently. Agencies doing debt collection for the hospital must agree to follow the same policy.
	Certain existing funding obligations must be maintained.  This is accomplished by withdrawing $20.227 million from the Hospital Services Account and $4.576 million from the Physician Services Account, then paying $22.324 million to the California Healthcare for Indigents Program (CHIP) and $2.479 million to the Rural Health Services Program.  The transfer is to be done June 30 of 2007 and each fiscal year thereafter.  The money re-allocated in this way must be used to reimburse physicians for losses incurred in providing uncompensated emergency services in general acute-care hospitals providing emergency services.
	This Act may only be amended by the people, except: the Legislature may amend the sections covering Nursing Workforce Education and Emergency and Trauma Hospital Services by a 4/5 vote; the Legislature may amend Hospital Charity Care and Financial Assistance Policies by a 2/3 vote; and the Legislature may amend the Children's Health and Community Clinics sections by a majority vote.
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