[Congressional Record Volume 142, Number 91 (Wednesday, June 19, 1996)]
[Senate]
[Pages S6530-S6531]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LAUTENBERG (for himself and Mr. Wellstone):
  S. 1892. A bill to reward States for collecting Medicaid funds 
expended on tobacco-related illnesses, and for other purposes; to the 
Committee on Finance.


               the tobacco medicaid recovery act of 1996

  Mr. LAUTENBERG. Mr. President, I rise to introduce the Tobacco 
Medicaid Recovery Act, along with Senator Wellstone.
  This bill will create a new Federal/State partnership to help recover 
Medicaid costs associated with tobacco use.
  Mr. President, for years, the tobacco industry has hooked Americans 
on products that cause death and disease. They've made billions of 
dollars in the process. But they've never been held accountable.
  When big tobacco sells it's deadly products, all Americans pay the 
price. Not only through the mothers and fathers, sisters and brothers 
who are lost to lung cancer and other diseases. But through the higher 
taxes that must be paid to support programs like Medicaid.
  Mr. President, 10 courageous states are suing the tobacco industry 
for the large Medicaid costs associated with tobacco use. There are two 
other states, including New Jersey, that will soon file suit and 10 
others that may file before the summer is out. These suits enjoy 
bipartisan support from Democratic and Republican governors and 
Democratic and Republican state attorney generals. In fact, I was 
pleased to be joined this morning in unveiling this legislation with 
Mike Moore, attorney general from Mississippi, Hubert ``Skip'' 
Humphrey, attorney general from Minnesota, and Bob Butterworth, 
attorney general from Florida. They are all leaders in suing the 
tobacco industry for Medicaid costs and strongly support this 
legislation. The Minnesota suit is being supported by its Republican 
Governor, Arne Carlson, and the Florida suit is being supported by its 
Democratic Governor, our former colleague Lawton Chiles.
  Mr. President, the tobacco industry is fighting hard to avoid being 
held accountable. It doesn't just use every hardball legal tactic in 
the book. It has even sent its hired guns into state attorney generals' 
offices to intimidate them.
  In one case, a state official was warned not to sue the industry--and 
if the state did, the industry would force the state to pay enormous 
sums--including the possible deposition of every single Medicaid 
recipient in that state.
  Mr. President, the courageous states, like Mississippi, Minnesota and 
Florida, who have taken on the tobacco companies deserve more Federal 
support--because they are doing the Federal taxpayers' bidding. If they 
are successful in their litigation, they must return the Federal 
portion of Medicaid funds to Washington. The Federal government should 
be helping them get this money, not sitting on its hands.
  This legislation would allow the states to keep a third of the 
Federal

[[Page S6531]]

portion to better serve the needs of their Medicaid recipients--their 
seniors, disabled, poor children and pregnant women.
  Another third of the Federal share would go to the National 
Institutes of Health to conduct research on the diseases caused by 
tobacco products, like lung cancer and heart disease.
  Finally, the balance would go into the Federal Treasury to help 
reduce the deficit.
  Currently, many states are sitting on the fence, thinking how 
difficult and expensive it will be to sue the tobacco industry. This 
bill may get them off the fence, and into battle with the industry.
  Mr. President, it is time for the Federal government to help states 
get the taxpayers' money back. It is time to reward the states for 
trying to hold the tobacco companies accountable, and provide an 
incentive for those considering entering the fray.
  This bill could provide states with millions in much needed Medicaid 
funds. It could increase funding for the National Institutes of Health. 
And it will not increase the deficit.
  I urge my colleagues on both sides of the aisle to support this 
common sense legislation that will help our state taxpayers.
  Mr. President, I ask unanimous consent the text of the legislation 
and a summary of it be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1892

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Tobacco Medicaid Recovery 
     Act of 1996''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--The Congress finds the following:
       (1) Federal taxpayers pay for approximately $20,000,000,000 
     each year in Federal health expenditures to treat tobacco-
     related illnesses, including expenditures incurred under the 
     medicare and medicaid programs operated under titles XVIII 
     and XIX of the Social Security Act, health care programs 
     carried out by the Secretary of Veterans Affairs under 
     chapter 17 of title 38, United States Code, and other Federal 
     health care programs. These expenditures often contribute to 
     an increase in the Federal budget deficit.
       (2) According to the Centers for Disease Control and 
     Prevention, tobacco-related illnesses cost the medicaid 
     program under title XIX of the Social Security Act 
     $5,100,000,000 each year.
       (3) The efforts of several States that are attempting under 
     Federal law, including in some cases, under the Federal anti-
     racketeering statutes, or under State law, to recover the 
     health care costs incurred under the medicaid program for the 
     treatment of individuals with diseases attributable to the 
     use of tobacco products from the manufacturers of such 
     products, are to be commended.
       (b) Purpose.--The purpose of this Act is to reward States 
     that successfully recover the Federal and State health care 
     costs incurred under the medicaid program for the treatment 
     of individuals with diseases attributable to the use of 
     tobacco products by providing increased funding for their 
     medicaid programs and to provide increased resources to the 
     National Institutes of Health.

     SEC. 3. INCENTIVE PAYMENTS FOR COLLECTION OF MEDICAID FUNDS 
                   EXPENDED ON TOBACCO-RELATED ILLNESSES.

       (a) Financial Reward for Successful Recoveries.--Section 
     1903(d) of the Social Security Act (42 U.S.C. 1396b(d)) is 
     amended by adding at the end the following new paragraph:
       ``(7)(A) Notwithstanding any other provision of law, if a 
     State recovers, by judgment in, or settlement of, any suit 
     arising under Federal or State law, amounts expended as 
     medical assistance under the State plan for the treatment of 
     individuals with diseases attributable to the use of tobacco 
     products, from a manufacturer of tobacco products, the State 
     shall notify the Secretary of the amount of such recovery. 
     Upon receipt of such a notice, the Secretary shall determine 
     the amount of Federal expenditures under this title that are 
     attributable to the amounts recovered, based on the Federal 
     medical assistance percentage, as defined in section 1905(b), 
     for such State. The Secretary shall treat the amount so 
     determined as an overpayment under this section, in 
     accordance with paragraph (2)(A), and with respect to such 
     amount shall do the following:
       ``(i) Provide that the State shall retain \1/3\ of such 
     amount, for the purpose of using such funds to meet the non-
     Federal share of expenditures under the State plan with 
     respect to which payments may be made under this title.
       ``(ii) Pay \1/3\ of such amount to the Director of the 
     National Institutes of Health, for the purpose of conducting 
     disease research.
       ``(B) Any amount of new budget authority or outlays 
     resulting from the provisions of this paragraph shall not be 
     counted for any purpose under section 251 or 252 of the 
     Balanced Budget and Emergency Deficit Control Act of 1985.
       ``(C) For purposes of this paragraph--
       ``(i) the term `manufacturer of tobacco products' has the 
     meaning given such term by section 5702(d) of the Internal 
     Revenue Code of 1986; and
       ``(ii) the term `tobacco products' has the meaning given 
     such term by section 5702(c) of such Code.''.
       (b) Conforming Amendment.--Section 1902(a) (42 U.S.C. 
     1396a(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (61);
       (2) by striking the period at the end of paragraph (62) and 
     inserting ``; and''; and
       (3) by inserting after paragraph (62) the following new 
     paragraph:
       ``(63) provide that the State shall provide prompt notice 
     to the Secretary of the amount of any recovery from a 
     manufacturer of tobacco products, as defined in section 
     1903(d)(7)(C)(i), of expenditures for medical assistance 
     provided under such plan for the treatment of individuals 
     with diseases attributable to the use of tobacco products, as 
     defined in section 1903(d)(7)(C)(ii).''.
       (c) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to amounts recovered on and after the 
     date of the enactment of this Act.
                                                                    ____


 Lautenberg Bill to Reward States for Recouping Medicaid Expenditures 
                     for Tobacco-Related Illnesses

       This legislation recognizes the following:
       States who sue the tobacco industry for Medicaid costs face 
     tremendous expenses, intimidation and extraordinary legal 
     tactics from the tobacco industry.
       Pursuant to the Medicaid statute and other legal 
     interpretations, states must return the Federal Medicaid 
     share of any award to the Federal government.
       States should be rewarded for their efforts to recoup 
     Federal tax dollars.
       This bill will do the following:
       Upon a settlement or a jury award between a state and a 
     tobacco company, the Federal government shall return 33 
     percent of the Federal share of the award to the states to be 
     used in their Medicaid programs.
       Another 33 percent of the Federal share shall be placed in 
     an NIH Trust Fund to be used for research on lung cancer, 
     heart disease and other illnesses.
       The final 34 percent of the Federal share shall be used for 
     deficit reduction.
                                 ______