Who are the real winners and losers in the Pa. Lottery’s jackpots? | Opinion

January 23, 2020 6:30 am

Scratch-off games such as those above bring in millions of dollars for the Pa. Lottery. Here’s a look at how that money is spent (Photo via The Pennsylvania Lottery)

By Ray E. Landis

What story is in the top ten must-put-on-the-air list of every local television news director in Pennsylvania?  “Area couple wins million-dollar lottery prize!”

But a more important report for older Pennsylvanians and their families could be entitled “Formula for distribution of lottery revenues is altered.” Because Pennsylvania is the only state in the US which uses its lottery revenues exclusively to help senior citizens and on-going changes in how the Commonwealth distributes this money will impact where older Pennsylvanians live and the kind of care they receive.

It’s not only older Pennsylvanians who have a stake in this issue. State lotteries are a big business – Pennsylvania had more than $4.5 billion in lottery sales in fiscal year 2018-19 and used more than $1.1 billion of that revenue to fund services.  The impact on the state budget is huge.

The restriction on the use of lottery funds theoretically means programs for older Pennsylvanians have a dedicated source of money and don’t have to weather the annual appropriations fight. But while the law establishing the lottery specifies the segment of the population who benefit from lottery sales it doesn’t specify what programs will receive this funding.

The use of lottery revenues reflects the on-going tug-of-war in state government over planning for the future versus instant gratification (which is ironic given whether to purchase lottery tickets reflects a similar conflict for individuals).

Since the Pennsylvania Lottery was created in the 1970s, four key assistance programs (property tax/rent rebate, pharmaceutical, transportation, and home-and-community based care) paid for with lottery revenues have been established. The hope is older Pennsylvanians who meet the qualifications for these programs, which critically do not require either poverty-level income or the spending down of assets, will be much more likely to remain in their homes and communities as a result of receiving this assistance.

Why is this important?

It allows seniors to stay out of high-cost institutional care which is paid by Medicaid after individuals have exhausted their resources. With the older population growing, it’s the planning-for-the-future crowd’s ideal vision. But as rapidly increasing costs of institutional care drive Medicaid expenses up, the instant-gratification side sees a better use for those lottery revenues – to help pay for these Medicaid long-term care costs so elected officials can avoid asking taxpayers to cover them.

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Since 2005, Pennsylvania elected officials have been tapping into lottery revenues to cover Medicaid costs, taking advantage of a boost in lottery sales fueled by the high jackpots of the multi-state lottery games plus innovations in the Pennsylvania lottery.

Last year, the state budget utilized $400 million in lottery revenues to help pay for Community Health Choices, Pennsylvania’s managed long-term care system, while basically flat-funding the other programs supported by the lottery.

Using these funds in this way technically doesn’t violate the principle that the lottery benefits older Pennsylvanians as seniors are the primary users of Medicaid long-term care services. But it does threaten the amount of assistance the other established programs can provide as costs for those services and the number of individuals eligible increase.

But a day of reckoning is coming, as the pressure of a growing senior population is beginning to strain the lottery fund. The skirmish between the plan-for-the-future and instant-gratification camps is likely to heat up, with the fundamental question whether lottery-funded services for older Pennsylvanians should become more focused on those living at or below the poverty line.

Ultimately it must be the responsibility of all Pennsylvanians, not just those who purchase lottery tickets, to help those who have used all their resources and can no longer live independently.

The Medicaid program has been funded out of the Pennsylvania General Fund to meet that principle. Revenues from the lottery have served a different purpose – extra help to allow older Pennsylvanians to remain independent.

Changing the purpose of lottery revenues to substitute for general fund revenues not only means that extra help is threatened, it exacerbates the basic problem.

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Fewer people getting help to remain independent means more people exhausting their assets and needing Medicaid long-term care services, which means more funding is needed for these high cost services.

In the end, everyone loses – except the instant-gratification stalwarts, who once again will boast about keeping the state budget numbers balanced. But the board on which this balance rests is starting to crack. And there aren’t enough scratch-off tickets and billion-dollar Powerball drawings to repair it.

Ray E. Landis, the former advocacy director of AARP-Pennsylvania, is a Capital-Star opinion contributor. His work appears biweekly. 

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