Several Minnesota legislators want to use money an insurer won in the legal war against tobacco companies to help hospitals prepare for bioterrorism and other mass emergencies.

It could be the latest snag in the attempt by Blue Cross and Blue Shield of Minnesota to spend its $469 million in tobacco lawsuit settlement funds. Legislative leaders have their eye on the Blue Cross money partly because the state is facing an estimated budget shortfall of nearly $2 billion. The Legislature has no control over the Blue Cross settlement funds, but the state Commerce Department must approve the insurer's plan to spend the money. "The hundreds of millions of dollars that Blue Cross proposes spending are the only readily available resources in the state," said Sen. Dallas Sams, DFL-Staples, in a letter to state Commerce Commissioner James Bernstein this month. Sams, chairman of the Senate Health and Family Security committee, recommended that some of the funds be used for new equipment, supplies and training needed by hospitals and ambulance services. Supporting that idea were House Speaker Steve Sviggum, R-Kenyon, Sen. Dick Day, R-Owatonna and Sen. Don Samuelson. They were among the legislators who also wrote to Bernstein, who has the power to approve or reject how Blue Cross spends the money. The Eagan-based insurer submitted a proposal to Bernstein in November that would direct $30 million to community clinics, $60 million to subscriber rebates and $70 million to support the state's high-risk insurance program, the Minnesota Comprehensive Health Association. Another $252 million would be used by the company to pay for smoking-cessation and health improvement programs. The November proposal was the second attempt by Blue Cross to lay out a plan for spending the money. The first proposal was struck down in 1999 by Dave Jennings, then the commerce commissioner, who said the company was not doing enough to help subscribers who paid higher premiums because of tobacco-related health costs. Blue Cross must seek approval from state regulators because the large monetary settlement put its reserve accounts above limits prescribed by state law. But Bernstein only has the power to approve or deny the Blue Cross proposal in full. He cannot order the company to modify a section of its spending plan. Bernstein was not available to comment Wednesday. Blue Cross officials said that they shaped their proposal to focus on areas that could affect the health of Minnesotans. "Clearly there are a lot of competing interests and unlimited needs in the state, but we have finite funds and we had to make tough choices on how to spend the tobacco proceeds," said Dr. Marc Manley, head of the Center for Tobacco Reduction at Blue Cross. Manley said the company was talking to state and private officials about terrorism preparedness, but he said it was too early for Blue Cross to commit funds to that purpose. "We will be open to hearing other suggestions as time goes on," he said. "It is hard to say what we will do because we really don't know what the Commerce Department will do yet." Some legislators also are eyeing money from the state's separate $6.1 billion settlement with the tobacco industry to help with the projected budget shortfall. Although nearly $1 billion of that money has been set aside in health and medical education endowments, the Legislature has discretion to redirect the funds for other purposes. The hospital industry has not put a dollar figure on the cost of emergency-response improvements, but the local trade group said the need is great. "If we have mass casualties in greater than perhaps two dozen, the system can't deal with it," said Dave Feinwachs, general counsel for the Minnesota Hospital and Healthcare Partnership. "Blue Cross has a good plan; it is just that there is so much money that there are additional things that can be done," Feinwachs said. "There doesn't appear to be a lot of other options particularly with the current [state budget] deficit." The public will have an opportunity to comment on the Blue Cross proposal next month. A public hearing will be held from 6 to 11 p.m. on Jan. 8 at the Minnesota History Center in St. Paul. In the written public comment period that ended earlier this month, more than 100 letters were sent to the Commerce Department. About 70 of the letters supported the Blue Cross proposal, including a letter from Jennings. Some letters, however, called on the company to rebate more funds to policy-holders.

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