Auditor General Jack Wagner has a novel idea for restoring health insurance for thousands of low-income Pennsylvanians who lost it when a state program went broke this week: return to the original funding source, tobacco settlement fund.

At a news conference today Wagner pointed out $1.3 billion in funds once set aside for health-related uses was diverted by Gov. Rendell to cover general budget holes and support other programs over the last five years.

More than 40,000 low-income workers in Pennsylvania - two-thirds of them women - lost their coverage on Tuesday when the adultBasic program ran out of money.

Wagner says redirecting hundreds of millions back to health care would enable the state to cover 100,000 until 2014 when federal health care act kicks in.

Gov. Corbett said there was no money in the budget to cover even the $51 million needed to keep the program solvent until July 1, but Wagner says the money is there if the governor and legislature agree to put it back.

The adultBasic program to cover those working Pennsylvanians who made too much for Medicaid but who could not afford health insurance, was created as a result of the 1998  settlement with tobacco companies, the result of a lawsuit over the costs of tobacco-related disease.

Under the 2001 Tobacco Settlement Act, entered into by 46 states, all of the Pennsylvania's share was supposed to go to health-related programs such as the newly-created adultBasic insurance plan, medical research, Medicaid and smoking cessation programs.

But Gov. Rendell began siphoning off money for other purposes in 2005, about the same time private insurers Blue Cross and Blue Shield came under scrutiny for the size of their surpluses. The companies, known collectively as "the Blues" agreed to help finance adultBasic through Dec. 31, 2010.

Pennsylvania has received $4 billion in payments so far under the program which expires in 2015.

In addition to the losses for adultBasic, funding for smoking cessation and prevention programs as well as cancer research has been slashed, the report said.

Wagner urged Corbett to restore tobacco settlement funding for adultBasic and open talks with the Blues, as well as private foundations, to reach a stopgap solution until the federal health care reform act takes effect in 2014.

"There is still hope for Pennsylvanians to get health insurance through adultBasic if we put forth the effort and are innovative in the process," Wagner said.

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