Congressional Record, Volume 145 Issue 42 (Wednesday, March 17, 1999)

[Congressional Record Volume 145, Number 42 (Wednesday, March 17, 1999)]
[Senate]
[Pages S2826-S2836]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

EMERGENCY SUPPLEMENTAL APPROPRIATIONS ACT FOR FISCAL YEAR 1999

Mr. STEVENS. Mr. President, is the supplemental bill before the
Senate?
The PRESIDING OFFICER. The clerk will report the bill.
The legislative clerk read as follows:

A bill (S. 544) making emergency supplemental
appropriations and rescissions for recovery from natural
disasters, and foreign assistance, for the fiscal year ending
September 30, 1999, and for other purposes.

The Senate proceeded to consider the bill.
Mr. STEVENS. Mr. President, this afternoon the Senate will consider a
supplemental appropriations bill that includes both emergency and
nonemergency spending for the fiscal year.
Over the past 3 months, the Office of Management and Budget has
transmitted to Congress several supplemental budget requests, totaling
$2 billion.

[[Page S2827]]

These requests seek funding for agricultural relief, implementation
of the Wye River Accords and recovery in Central America from the
damage caused by Hurricane Mitch.
Each of the subcommittees has examined the requests under their
jurisdiction, and closely reviewed other emergent agency needs.
In addition, the administration proposed deep cuts in defense funds
to offset additional foreign assistance sought for Jordan, Israel and
the Palestinian Authority.
This proposed offset re-opened issues settled in the omnibus bill in
October, and violated the spirit of the firewalls that govern
discretionary spending for fiscal year 1999.
In total, the bill reported by the committee provides $1.538 billion
in emergency appropriations and $332 million in non-emergency
appropriations.
These new appropriations are matched by $1.87 billion in rescissions
and program deferrals.
The recommendations made by the committee nearly double the
administration's request for agricultural relief, providing a total of
$285 million.
That bill proposes $100 million in funding this year for Jordan, to
provide additional support for a vital ally during a period of
transition and tension in the region.
The deferral of the remaining $800 million in funding to implement
the Wye agreements does not reflect opposition to that request.
After consultation with the administration, it was determined that
those amounts can await consideration later this year. This committee
has a long record of support for the Middle East Peace Process--our
friends in the region know they can count on us.
The amounts requested for Hurricane Mitch relief respond to the truly
desperate conditions facing our neighbors in Central America.
The Department of Defense, and the U.S. Southern Command, led by Gen.
Charles Wilhelm, deserve great credit for their efforts to respond to
the immediate crisis late last year.
We must backfill the amounts spent by the Department to ensure our
ability to respond to future crises is not diminished--especially in
respect to drawdown authorities and overseas humanitarian assistance.
In addition, we must address the needs of our friends in Honduras,
Guatemala, El Salvador, Nicaragua, and the Dominican Republic to
rebuild from this disaster. These funds provide a good first step in
that effort.
Recognizing the considerable amount of emergency spending provided in
the omnibus bill in October, I recommended that all new appropriations
in this bill be offset by rescissions of other available funds.
These rescissions include defense and non-defense discretionary
appropriations, mandatory appropriations, emergency appropriations and
funding deferrals.
There were very few good choices to consider. I'm sure every Member
here might have assembled a different mix of offsets.
These rescissions, totaling $1.868 billion, reflect an effort to
balance competing needs.
Only defense funds were rescinded to offset defense spending, and
only non-defense amounts to balance the non-defense spending.
Some of these will be controversial, but our intention is to reduce
only funds that are not likely to be obligated this year, or are of a
low priority.
We are at or over the budget caps for 1999. We have no headroom or
flexibility to make any non-emergency appropriation unless it is fully
offset in both budget authority and outlays.
For that reason, any amendment to this bill must be accompanied by
offsets. I must insist that even emergency spending amendments be
accompanied by budget authority offsets.
Finally, many Members have raised various legislative amendments this
week.
I hope that controversial amendments can again be deferred. Every
Member has a right to propose amendments, but this is a supplemental
appropriations bill, and deals with some very real emergency needs.
In my judgment, we need to complete final action and try to send this
bill to the President before the Easter recess which commences a week
from tomorrow. I believe we must pass the bill in the Senate this week
to meet that schedule.
Mr. President, compared to previous emergency supplemental
appropriations bills presented to this body, this bill does not respond
to the kind of domestic disasters we faced in 1997 or 1998.
This is a modest bill, that is fully offset in terms of new budget
authority.
It extends an important hand of friendship and support to our
neighbors in Central America, and a closer partner in the Middle East
Peace Process, Jordan.
Mr. President, it is our goal to complete this bill by Friday, no
later than 11 a.m.
I yield for my good friend from West Virginia.
The PRESIDING OFFICER. The Senator from West Virginia.
Mr. BYRD. Mr. President, S. 544, the Emergency Supplemental
Appropriations and Rescissions Bill for Fiscal Year 1999, as reported
by the committee, recommends appropriations which total some $1.9
billion, of which approximately $1.6 billion is designated as emergency
spending pursuant to Section 251(b)(2)(A) of the Balanced Budget and
Emergency Deficit Control Act of 1985, as amended.
Very importantly, in Title I of the bill, the Committee unanimously
approved provisions that I included to establish the Emergency Steel
Loan Guarantee Program. This initiative is designed to respond to
record levels of foreign steel imports that have been illegally dumped
in U.S. markets. As a result of these imports, more than 10,000
American jobs have been lost, and the United Steelworkers of America
estimates that another 100,000 jobs are in peril nationwide. In my home
state of West Virginia, nearly 800 men and women have been laid off
from Weirton Steel. Three domestic producers have already filed for
bankruptcy, and others are in dire financial straits.
If the U.S. steel industry goes under, not only will there be lost
jobs, but there will also be lost communities; the domestic industrial
base that underpins our security will be irreparably weakened; and the
nation's defense readiness will be diminished.
This initiative, cosponsored in Committee by Senators Specter,
Durbin, Shelby, and Hollings, would create a revolving fund to give
domestic steelmakers a sorely needed infusion of capital. The program,
which is fully compliant with international trade laws, would give
cash-strapped companies access to the funding they may need to keep
their furnaces burning and keep workers on the job until proper trade
mechanisms can be implemented to end this crisis. The loan guarantees
would help to bolster the financial security of a threatened industry
that is critical to this nation's economic base and domestic security.
Specifically, the guaranteed loan program would provide qualified
U.S. steel producers with access to a two-year, $1 billion revolving
guaranteed loan fund. The minimum loan that would be guaranteed for a
single company at any one time would be $25 million, and the aggregate
amount of loans that would be guaranteed for a single company over the
duration of the program would be $250 million. A board, to be chaired
by the Secretary of Commerce, would oversee the program and would have
flexibility to determine the specific requirements for awarding the
guaranteed loans. The Act protects taxpayers by requiring that a
reasonable assurance for the repayment of the loans exists, and that
the loans would bear market interest rates.

Finally, in Title I, the committee increased FEMA's emergency
disaster assistance funding by $313.6 million, while at the same time
reducing a like amount from HUD's Community Development Block Grant
emergency funding. The VA/HUD Subcommittee was concerned over HUD's
failure to implement an effective emergency disaster relief program.
The committee felt that FEMA could more appropriately respond to unmet
disaster needs throughout the nation.
Title II of the bill contains a number of appropriations for regular
supplemental budget requests of the administration, including: NOAA
operations research and facilities activities, $3,900,000; Salaries and
Expenses of the

[[Page S2828]]

Supreme Court, $921,000; Bureau of Indian Affairs, $1,136,000; Office
of the Special Trustee for American Indians, $6,800,000; Corporation
for Public Broadcasting, $18,000,000; and Military Construction for the
Army National Guard, $11,300,000.
For each of these regular supplementals, offsets have been included
in the bill.
Title II also provides non-emergency supplemental appropriations of
$210 million for the Department of Defense to reimburse the DOD for its
assistance in Central America, as well as $80 million in non-emergency
appropriations for the salaries and expenses of the Immigration and
Naturalization Service to cover increased costs of handling the large
influx of aliens from Central American countries. Both of these items
have been requested by the administration as emergency spending, but
the Defense and Commerce/Justice/State Subcommittees chose to fully
offset these appropriations and to include them in Title II as non-
emergency spending.
I note that Title II also contains a number of general provisions,
one of which, Section 2008, extends the Airport Improvement Program
which under present law, would expire on March 31, 1999. Additionally,
section 2011, is a general provision which prohibits the Federal
Government from recouping any of the savings to the Medicaid program
achieved by the States as a result of their tobacco settlements.
Title III of the bill contains rescissions sufficient to offset all
of the emergency appropriations contained in the bill. It is my
personal view that emergency spending for natural disasters and for
unanticipated military spending, such as the operations in Desert Fox
and Kosovo, as well as the military's assistance to the disaster
victims in Central America need not be offset. In fact, I participated
in the creation of the provisions in the Balanced Budget and Emergency
Deficit Control Act, which allow emergency spending to be provided in
order to respond to natural disasters and other types of emergencies
without having to come up with offsets to pay for those unpredictable
events. The emergency designation was negotiated as part of the Budget
Enforcement Act of 1990, in large part because the discretionary budget
caps established there, and which have remained in place each year
since, are very tight. I have never felt that the American people
should be required to pay for spending which appropriately qualifies as
emergency relief under that Budget Enforcement Act. If that is to be
the case, we need not have gone to the trouble of adopting the
emergency provisions I have just described.

Regarding the specific rescissions proposed in Title III of the bill
now before the Senate, I know that a number of Senators have concerns
about one or the other of those rescissions. I am certain that the
concerns of those Senators will be expressed as the Senate progresses
with this bill.
I urge my colleagues to help the managers of the bill, the
distinguished chairman, Senator Stevens, and myself, in expediting
completion of Senate action in time to meet with the other body and
complete conference action on the bill prior to the upcoming Easter
recess.
I especially commend the work of the distinguished chairman of the
Appropriations Committee, Mr. Stevens. For many years, I have worked
with the Senator from Alaska. I have always found him to be evenhanded,
courteous, congenial, cooperative, and very able in handling the
difficult legislation on the floor, in committee and in conference. He
is my friend, has been my friend through the years, and will always be
my friend. I consider it a great privilege and a honor, indeed, to be
able to stand by his side and express support for this legislation. I
count it a privilege to work with him. He is one of the finest Senators
with whom I have ever had the pleasure of serving. I have served with
almost 300 Senators in my time here. I say that without any
reservations. I salute him, believe in him, trust him, and can count
him not only as my friend but as a very fine Senator. The people of
Alaska are to be commended for sending him here and sending him back
repeatedly.
The assistance provided in this bill to the people of this country,
as well as those in Central America, is desperately needed.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. STEVENS. Mr. President, I say to my friend, I was looking around
to see who he was talking about when he was talking about that kind,
benevolent and calm fellow, but I do thank you for your courtesy and
kindness. It is a pleasure to work with you. Mr. President, I studied
under Senator Byrd so long I think I imitate his ways. I have tried to
anyway.
Mr. President, it is now time to have an amendment offered by the
Senator from Pennsylvania, Mr. Specter. It is my hope, and I want to
announce to the Senate it is my hope, we will get an agreement tomorrow
that will require amendments to this bill to be filed no later than 5
o'clock. We don't have that agreement yet. It has not been cleared. But
if we are to finish this bill and get it ready to go immediately to the
House after the House passes their bill on Monday, it will be necessary
to complete this bill on Friday. I am hopeful we will complete it in
time to allow those people who have to catch planes to go West, so they
can make their schedules.
I yield to the Senator from Pennsylvania. There is a time agreement
for tomorrow on this amendment, is my understanding, but there is no
time limit this evening. Is that correct?
The PRESIDING OFFICER. The Senator is correct.
The Senator from Pennsylvania.

Amendment No. 77

(Purpose: To permit the Secretary of Health and Human Services to waive
recoupment of Federal government medicaid claims to tobacco-related
State settlements if a State uses a portion of those funds for programs
to reduce the use of tobacco products, to improve the public health,
and to assist in the economic diversification of tobacco farming
communities)

Mr. SPECTER. Mr. President, I send an amendment to the desk on behalf
of myself, Senator Harkin, Senator Jeffords, and Senator Kennedy, and
ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Pennsylvania [Mr. Specter], for himself,
Mr. Harkin, Mr. Jeffords, and Mr. Kennedy, proposes an
amendment numbered 77.

Mr. SPECTER. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

Beginning on page 35, strike line 13 and all that follows
through line 24 on page 36 and insert the following:
Sec. 2011. Waiver of Recoupment of Medicaid Tobacco-Related
Recoveries If Recoveries Used To Reduce Smoking and Assist in
Economic Diversification of Tobacco Farming Communities. (a)
Findings.--Congress makes the following findings:
(1) Tobacco products are the foremost preventable health
problem facing America today. More than 400,000 individuals
die each year as a result of tobacco-induced illness and
conditions.
(2) Each day 3,000 young individuals become regular
smokers. Of these children, 1,000 will die prematurely from a
tobacco-related disease.
(3) Medicaid is a joint Federal-State partnership designed
to provide to provide health care to citizens with low-
income.
(4) On average, the Federal Government pays 57 percent of
the costs of the medicaid program and no State must pay more
than 50 percent of the cost of the program in that State.
(5) The comprehensive settlement of November 1998 between
manufacturers of tobacco products and States, and the
individual State settlements reached with such manufacturers,
include claims arising out of the medicaid program.
(6) As a matter of law, the Federal Government is not
permitted to act as a plaintiff in medicaid recoupment cases.
(7) Section 1903(d) of the Social Security Act (42 U.S.C.
1396b(d)) specifically requires that the State reimburse the
Federal Government for its pro rata share of medicaid-related
expenses that are recovered from liability cases involving
third parties.
(8) In the comprehensive tobacco settlement, the tobacco
companies were released from all relevant claims that can be
made against them subsequently by the States, thereby
effectively precluding the Federal Government from recovering
its share of medicaid claims in the future through the
established statutory mechanism.
(9) The Federal Government has both the right and
responsibility to ensure that the Federal share of the
comprehensive tobacco settlement is used to reduce youth
smoking, to improve the public health, and to assist in the
economic diversification of tobacco farming communities.

[[Page S2829]]

(b) Amendment to Social Security Act.--Section 1903(d)(3)
of the Social Security Act (42 U.S.C. 1396b(d)(3)) is
amended--
(1) by inserting ``(A)'' before ``The''; and
(2) by adding at the end the following:
``(B) Subparagraph (A) and paragraph (2)(B) shall not apply
to any amount recovered or paid to a State as part of the
comprehensive settlement of November 1998 between
manufacturers of tobacco products (as defined in section
5702(d) of the Internal Revenue Code of 1986) and States, or
as part of any individual State settlement or judgment
reached in litigation initiated or pursued by a State against
one or more such manufacturers, if (and to the extent that)
the Secretary finds that following conditions are met:
``(i) The Governor or Chief Executive Officer of the State
has filed with the Secretary a plan which specifically
outlines how--
``(I) at least 20 percent of such amounts recovered or paid
in any fiscal year will be spent on programs to reduce the
use of tobacco products using methods that have been shown to
be effective, such as tobacco use cessation programs,
enforcement of laws relating to tobacco products, community-
based programs to discourage the use of tobacco products,
school-based and child-oriented education programs to
discourage the use of tobacco products, and State-wide
awareness and counter-marketing advertising efforts to
educate people about the dangers of using tobacco products,
and for ongoing evaluations of these programs; and
``(II) at least 30 percent of such amounts recovered or
paid in any fiscal year will be spent--
``(aa) on Federally or State funded health or public health
programs; or
``(bb) to assist in economic development efforts designed
to aid tobacco farmers and tobacco-producing communities as
they transition to a more broadly diversified economy.
``(ii) All programs conducted under clause (i) take into
account the needs of minority populations and other high risk
groups who have a greater threat of exposure to tobacco
products and advertising.
``(iii) All amounts spent under clause (i) are spent only
in a manner that supplements (and does not supplant) funds
previously being spent by the State (or local governments in
the State) for such or similar programs or activities.
``(iv) Before the beginning of each fiscal year, the
Governor or Chief Executive Officer of the State files with
the Secretary a report which details how the amounts so
recovered or paid have been spent consistent with the plan
described in clause (i) and the requirements of clauses (ii)
and (iii).''.
(c) Effective Date.--The amendments made by subsection (a)
apply to amounts recovered or paid to a State before, on, or
after the date of enactment of this Act.

Mr. SPECTER. Mr. President, parliamentary inquiry. It is my
understanding that the unanimous consent agreement provides for
argument, debate this afternoon, and then 90 minutes equally divided
tomorrow morning, between 9:30 and 11?
The PRESIDING OFFICER. That is correct.
Mr. SPECTER. So, whatever time is used this afternoon does not count
against the 90 minutes which will be equally divided tomorrow?
The PRESIDING OFFICER. There are 90 minutes tomorrow.
Mr. SPECTER. Mr. President, this amendment seeks to require that the
States allocate a portion of the funds recovered under the tobacco
settlement for purposes relating to tobacco--smoking cessation
education for children, 20 percent; and some 30 percent to be allocated
for public health matters.
The origin of this issue arose when there was a settlement in
November of last year where 46 States agreed to accept $206 billion
over 25 years. The settlement grew out of lawsuits that primarily
sought the recovery of Medicaid costs, although there is a contention
that there were some other allegations in the cause of action. The
current law requires the States to share Medicaid recoveries from third
parties with the Federal Government. The Federal Government's share of
Medicaid costs is generally 57 percent, but varies from State to State.
Under the existing law, only the States have the authority to bring
suits for the recoveries. During the course of the litigation, the
States, as I understand the legal documents, released all of the claims
which the Federal Government would have for these Medicaid funds. An
amendment to the appropriations bill was offered by the distinguished
Senator from Texas, Senator Hutchison, to provide that all of the funds
would be paid over to the States, specifically prohibiting the Federal
Government's recoupment of funds recovered by States from the tobacco
companies.
At the appropriations markup, some concerns were expressed by this
Senator and by others. On Monday of this week, March 15, we held a
hearing, participated in by Senator Hutchison and myself, where we
heard from the Governor of Kentucky and the attorneys general of
Pennsylvania, Texas, and Iowa. At that time, the assertion was made by
the Governor and the three attorneys general that all of these funds
should be retained by the States, and a representation made that there
were other claims involved in the settlement besides Medicaid funds.
Senator Harkin and I worked together to craft the amendment which is
now before the Senate, joined, as I noted, by Senator Jeffords and
Senator Kennedy; Senator Harkin and I taking the lead because of our
positions as chairman and ranking member of the appropriations
subcommittee having jurisdiction over the Department of Health and
Human Services.
It is a fact that we are very limited in the funding which is
available for health care. Our subcommittee has a budget which has to
be divided among education matters and also the Department of Labor,
which implicates many issues of worker safety, so that every dollar is
of vital importance and we must make an application to purposes of
health care.
The problem of tobacco in America is well recognized and the
statistics are really very, very stark. Some 400,000 people die each
year from tobacco-related illnesses. Approximately 5 million Americans
under 18 are projected to die from smoking if the current trend
continues. Some $72 billion a year constitute the health care
expenditures in the United States on tobacco-related illnesses; some
$7.3 billion annually total Medicaid payments directly related to
tobacco, and between $1.4 and $4 billion constitute expenditures for
infant health and developmental problems caused by mothers who smoke.
It is a matter of overwhelming importance.
There is a very pervasive mantra in America today that the Federal
Government should not dictate to the States how the funds are to be
used. In accordance with the principles of federalism, I believe in
leaving as much control as is possible to the State governments and
also to local governments, as they carry out their responsibilities.
But when you have a very major settlement involving $206 billion and
where the Federal Government has a very strong claim to 57 percent of
those monies and the existing law provides that an allocation shall be
determined by the discretion of the Secretary of Health and Human
Services, it is my view that it is preeminently reasonable to ask
States to make a commitment to spend at least a portion of these
funds--50 percent, I think, would be a reasonable sum--on matters which
are related to tobacco. The cause of the damages involves tobacco, and
that is why we are asking that 50 percent be allocated, as we have
said--20 percent for smokers cessation and education; and 30 percent
for public health programs.
We do not propose an elaborate series of regulations, we do not
propose micromanaging in any way what the States will be doing, but
require only a certification from the States. We have already seen
announcements from officials in a number of States on plans to spend
these monies for other purposes; for example, for highways. Highways
are very important. States would have latitude to spend part of the
money for highways, but certainly should not have unfettered discretion
to spend the total sum of the money on highways. Other funds are
proposed to be spent for mental health services--here again, a very,
very important item. Perhaps some of the mental health services are
reasonably related to tobacco causes. That contention can be made and
may well be honored.
Another State official is talking about eliminating the State debt,
which is certainly a worthwhile matter. Again, 100 percent of the funds
ought not be used for that purpose, nonrelated to tobacco. Other
proposals are to increase teacher pay. Perhaps some of that is
allocable for drug education. In another State, the officials propose
using the funds to finance tax relief. That, again, is a worthwhile
objective, but there ought to be some assurance that on a matter like
this, some of the funds ought to be used for tobacco-related purposes.

[[Page S2830]]

Other States propose scholarships, which may be related, if the
educational portion is to be assigned to tobacco-related education. We
see that in the very short term, there are a great many purposes where
the States have a need for funds where they would like to have
unfettered discretion. In a perfect world, we would like to see them
have $206 billion. But with a very, very substantial Federal claim,
there ought to be at least some allocation for public health, which we
are proposing in this amendment.
If this legislation is not enacted, it is possible that there could
be very bitter, protracted, and expensive litigation, with the Federal
Government asserting its claim under existing law, which could take a
great deal of time. The Governor of Kentucky and three attorneys
general who testified on Monday at the hearing and I agreed that we
ought to try to resolve the matter so they would know what is going to
happen and their planning would be firm. This, we think, is a
preeminently reasonable approach to a very, very difficult issue.
I am joining with my colleagues, Senator Tom Harkin, Senator Jim
Jeffords, and Senator Kennedy in introducing an amendment to the fiscal
year 1999 supplemental appropriations bill concerning the State tobacco
settlements. In November 1998, 46 States agreed to a settlement with
the tobacco industry that totals $206 billion over 25 years. If focused
in the right direction, these settlement funds could serve as a
significant resource for improving the quality of life in the 21st
century.
Each year, the total health care expenditures in the USA directly
related to smoking is $72 billion. $7.3 billion is spent by Medicaid
for smoking-related illnesses. Smoking-related diseases claim an
estimated 430,700 American lives each year. Despite all of what we know
about the consequences of smoking, it is estimated that every day 3,000
young people become regular smokers and it is believed that
approximately 89 percent of smokers begin to smoke by or at the age of
18. And finally, it is reported that cigarette smoking kills more
Americans than AIDS, alcohol, car accidents, violence, illegal drug
use, and fires combined.
On March 15, 1999, the Labor, Health and Human Services, and
Education Subcommittee, which I chair, held a hearing to discuss the
State tobacco settlements. We heard from the National Governors'
Association, States' Attorneys General, a teen smoking prevention
advocacy group, and the Deputy Administrator of the Health Care
Financing Administration to review the policy implications of how the
tobacco settlement funds will be used and whether the Federal
Government should receive a share of these funds for programs to reduce
the use of tobacco products as well as programs for the public health.
Michael Hash, Deputy Director of the HCFA, testified that the
comprehensive settlement of November 1998 between manufacturers of
tobacco products and States, and the individual State settlements
reached with these manufacturers, included claims arising out of the
Medicaid program. Mr. Hash explained that as a matter of law, the
Federal Government is not permitted to act as a plaintiff in Medicaid
recoupment cases. 42 U.S.C. section 1396a provides that ``the State or
local agency administering such plan will take all responsible measures
to ascertain the legal liability of third parties . . . to pay for care
and services available under the plan. . . .'' The statute further
gives the State the authority to ``pursue claims against such third
parties.'' The Department of Justice, in interpreting this statute, has
determined that the State has the sole power to take action against
third parties, and that the Federal Government has no authority to take
this action. During his testimony, Deputy Director Hash further
explained that Section 1903(d) of the Social Security Act specifically
requires that the State reimburse the Federal Government for its pro
rata share of Medicaid-related expenses that is recovered from
liability cases involving third parties.
In a letter addressed to me dated March 15, 1999, Secretary Shalala
expressed the Administration's strong opposition to the provision
approved by the Senate Appropriations Committee as part of the FY 1999
supplemental appropriations bill that would prohibit the Federal
Government from recouping its share of the Medicaid funds from the
settlement with the tobacco companies. She noted that ``by releasing
the tobacco companies from all relevant claims that can be made against
them subsequently by the states, the settlement effectively precludes
the federal government from recovering its share of Medicaid claims in
the future through the established statutory mechanism.'' Specifically,
in section XII of the Master Settlement Agreement, the States and
tobacco companies agreed to the following:

Under the occurrence of State-Specific Finality in a
Settling State, such Settling State shall absolutely and
unconditionally release and forever discharge all Released
Parties from all Released Claims that the Releasing Parties
directly, indirectly, derivatively or in any other capacity
ever had, now have, or hereafter can, shall or may have.

During the hearing, we also heard from representatives of the states.
Governor Paul Patton of Kentucky and Attorney Generals' Mike Fisher of
Pennsylvania, John Cornyn of Texas and Tom Miller of Iowa argued that
because the states took the risk and burden of the tobacco lawsuits on
their own, they are entitled to all of the tobacco funds.
While I agree with the Governor and Attorney Generals' that the
Federal Government should not micromanage the use of the funds, I am
not prepared to turn all of this money over to the states carte blanche
to use on matters unrelated to tobacco. Several of my colleagues have
proposed creating a bureaucratic system that would strictly dictate how
the states must spend the tobacco funds. I do not think this is a wise
approach. However, I think it is entirely appropriate for the Federal
Government to set general standards to ensure that the federal share of
the tobacco funds is spent to advance the public health.
Medicaid is a joint Federal-State partnership designed to provide
health care to citizens with low-income. On average, the Federal
Government pays 57 percent of the costs of the Medicaid program, and no
State must pay more than 50 percent of the cost of the program in that
State. The Federal government has both the right and the responsibility
to ensure that the federal share of the comprehensive tobacco
settlement is used to reduce youth smoking, to improve the public
health and to assist in the economic diversification of tobacco farming
communities.
The amendment that I am introducing today would require states to use
at least 20% of the total funds received in the settlement for tobacco
reduction and education programs. Further, my amendment would require
states to use at least 30% of the total funds received in the
settlement for public health programs or to assist tobacco farmers. The
amendment contains a provision that these funds must supplement and not
supplant funds already being spent on similar activities in the State.
Finally, in order to ensure that we do not create an unnecessary
bureaucracy to implement this program, each Governor would merely have
to certify to the Secretary of HHS each year how the funds have been
used.
It is vital that we act now to ensure that these funds are used to
protect public health. During the discussion which is currently
occurring in the states on how to use the tobacco funds, a wide variety
of uses have been proposed. Specifically, I understand that states have
plans to spend funds on roads, mental health services, to assist
tobacco farmers, and to eliminate the State debt, increase teacher pay,
other proposed uses include financing tax relief, and using these
revenues to fund a new Merit Award Trust Fund. While all of these goals
may be noble, I am convinced that states, who sued tobacco companies to
reimburse state health costs as a result of smoking, have a fiduciary
duty to use these funds to reduce smoking and to support public health.
The Federal Government has both the right and the responsibility to
ensure that the federal share of the comprehensive tobacco settlement
is used to reduce youth smoking, to improve the public health and to
assist in the economic diversification of tobacco farming communities.
I urge my colleagues to support this amendment.

[[Page S2831]]

I ask unanimous consent to print a March 15, 1999, letter from
Secretary Shalala.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

The Secretary of Health

And Human Services,

Washington, DC, March 15, 1999.
Hon. Arlen Specter,
Chairman, Appropriations Subcommittee on Labor, HHS,
Education and Related Agencies, U.S. Senate, Washington,
DC.
Dear Senator Specter: I am writing to express the
Administration's strong opposition to the provision approved
by the Senate Appropriations Committee as part of the FY 1999
supplemental appropriations bill that would prohibit the
federal government from recouping its share of Medicaid funds
included in the states' recent settlement with the tobacco
companies. The Administration is eager to work with the
Congress and the states on an alternative approach that
ensures that these funds are used to reduce youth smoking and
for other shared state and national priorities.
Under the amendment approved by the committee, states would
not have to spend a single penny of tobacco settlement funds
to reduce youth smoking. The amendment also would have the
practical effect of foreclosing any effort by the federal
government to recoup tobacco-related Medicaid expenditures in
the future, without any significant review and scrutiny of
this important matter by the appropriate congressional
authorizing committees.
Section 1903 (d) of the Social Security Act specifically
requires that the states reimburse the federal government for
its pro-rata share of Medicaid-related expenses that are
recovered from liability cases involving third parties. The
federal share of Medicaid expenses ranges from 50 percent to
77 percent, depending on the state. States routinely report
third-party liability recoveries as required by law. In 1998,
for example, states recovered some $642 million from third-
party claims; the federal share of these recoveries was $400
million. Over the last five years, federal taxpayers recouped
over $1.5 billion from such third-party recoveries.
Despite recent arguments by those who would cede the
federal share, there is considerable evidence that the state
suits and their recoveries were very much based in Medicaid.
In fact, in 1997, the states of Florida, Louisiana and
Massachusetts reported the settlement with the Liggett
Corporation as a third-party Medicaid recovery, and a portion
of that settlement was recouped as the federal share.
Some also have argued that the states are entitled to reap
all the rewards of their litigation against the tobacco
industry and that the federal government can always sue in
the future to recover its share of Medicaid claims. This
argument contradicts the law and the terms of the recent
state settlement. As a matter of law, the federal government
is not permitted to act as a plaintiff in Medicaid recoupment
cases and was bound by law to await the states' recovery of
both the state and federal shares of Medicaid claims.
Further, by releasing the tobacco companies from all relevant
claims that can be made against them subsequently by the
states, the settlement effectively precludes the federal
government from recovering its share of Medicaid claims in
the future through the established statutory mechanism. The
amendment included in the Senate supplemental appropriations
bill will foreclose the one opportunity we have under current
law to recover a portion of the billions of dollars that
federal taxpayers have paid to treat tobacco-related illness
through the Medicaid program.
The President has made very clear the Administration's
desire to work with Congress and the states to enact
legislation that resolves the federal claim in exchange for a
commitment by the states to use that portion of the
settlement for shared priorities which reduce youth smoking,
protect tobacco farmers, assist children and promote public
health. I would urge you to oppose efforts to relinquish the
legitimate federal claim to settlement funds until this
important goal has been achieved.
Sincerely,
Donna E. Shalala.

Mr. SPECTER. Mr. President, I note the presence of my distinguished
colleague, the Senator from Iowa, on the floor. I yield the floor, Mr.
President.
The PRESIDING OFFICER (Mr. Allard). The Senator from Iowa.
Mr. HARKIN. Mr. President, first of all, I want to commend and
congratulate Senator Specter, my chairman, for taking the lead on this
issue, for holding the hearings, doing all the work that is necessary
to get the information that we need to come up with this amendment.
Senator Specter has certainly been the lead in addressing this very
vital issue of health in the United States, medical research, and all
that goes along with making our people healthier citizens.
He has always taken a lead on this one issue of how we get tobacco
use down among teenagers, which is one of the most serious health risks
in our society today. I want to thank Senator Specter for taking the
lead on this amendment. It is a very, very, very important amendment.
The repercussions of this single amendment alone could do more to
enhance the health of our young people in the future than perhaps
anything we are going to do this year. I will get into more about that
later, but this single amendment, if adopted, I maintain, will do more
to enhance the well-being and health of our future citizens--the kids
today--10, 15, 20 years from now, 30 years from now, than anything that
we will do this year.
Why do I say that? Look at this chart. This really illustrates what
is happening today and continuing to happen with the consumption of
tobacco. Tobacco kills more Americans than alcohol, car accidents,
suicides, AIDS, homicides, illegal drugs and fires, all combined. I use
this chart a lot because I think it just spells it out in stark detail.
Add up everything from alcohol to homicides to AIDS and illegal drugs.
How much money do we spend every year fighting illegal drugs? Compare
it to how many people die of tobacco-related illnesses. It is minute.
This is what we are going after--cutting down the illnesses and
deaths caused by tobacco uses in this country. It is an epidemic.
Tobacco also imposes a heavy financial cost, $50 billion a year
estimated in health costs alone. And a big portion of that is borne by
Federal taxpayers, who, as the Senator from Pennsylvania pointed out,
pay over half the cost of Medicaid. The average, as he said, is 57
percent. Sometimes it goes as high as 77 percent. In no case is it less
than 50 percent of the Federal taxes used to fund the Medicaid programs
in the States.
I want to commend the States for their efforts to recover the costs
that they and the Federal Government have borne related to tobacco.
What our amendment does, as the Senator from Pennsylvania very
correctly pointed out, is simply require the States to use 20 percent
of the total settlement on reducing tobacco use, mainly going after
teen smoking, because if we know we can get it there, we solve the
problem, but just to use 20 percent of that and 30 percent for public
health programs--again, public health broadly; we did not spell it out,
we did not try to micromanage--or for tobacco farmer assistance, to
help some of the tobacco farmers in some of our States in their
transition away from growing tobacco to doing something else.

Again, our amendment did not in any way dictate specific programs the
states can spend the money on. It did not require the Federal
Government have a role in designing any initiative the states
undertake. This amendment simply sets broad, commonsense parameters on
a portion of the funds.
The Congressional Budget Office has estimated that the Federal share
of the State's tobacco settlement would total $14 billion over the next
5 years. That is a lot of money, $14 billion.
I know there are some who are saying that the Federal Government had
no role in these lawsuits; therefore, no right to these funds. I heard
that argument made in the committee when the amendment was adopted.
That is not true. If it were true, we would not be here today.
Keep in mind that Medicaid is a Federal-State partnership. The
Federal Government pays over 50 percent of the cost of each State's
Medicaid Program. But here is the real clincher. Under the Social
Security Act, it is the responsibility of the States to recover any
costs caused by third parties. In fact, the law says that only the
States can file such suits.
It is really kind of, I think, shading the truth a little bit to say
the Federal Government was not involved in the lawsuits. The Federal
Government could not be involved in the lawsuits. By law, only the
States can file such suits. Then the Medicaid law requires a State to
turn back to the Federal Government its share of any money the State
recovers. That is the law.
A, the Social Security Act says it is the responsibility of the
States to recover any costs caused by third parties.
B, the law says only the States can file such lawsuits.
C, Medicaid law says the States then have to turn back to the Federal
Government its share of any Federal money that they recover.
All right. What happened? The States settled this case with the
tobacco companies, and in November of 1998, when

[[Page S2832]]

the States settled this case, even those that did not include a
Medicaid claim in their suit, waived their right to any future claims
under Medicaid.
Think about that. If the States, in conjunction with the tobacco
companies--and I have to hand it to the tobacco companies, they have
great lawyers; they have the best--they negotiated with the States that
if you settle for $206 billion over 25 years, we will agree to that if
you waive your right to any future claims under Medicaid.
The States said, ``We waive our rights.'' By waiving their rights,
they waive our rights, the Federal Government's rights, to go out and
reclaim any of those Federal tax dollars that went out. So the States
have, by using the law, precluded us on the Federal end from reclaiming
any of these moneys.
It is just not right. Federal taxpayers have provided over 50 percent
of those Medicaid payments to those States. As I said, the law requires
the States to file those lawsuits and only the States can file those
lawsuits. The States then must, under the law, return those funds to
the Federal Government. Yet, they made an agreement with the tobacco
companies to waive all of their rights and, thus, waiving our rights.
Turning over all of the Federal share of the tobacco settlement to
the States without any requirement that a penny of the funds be used to
reduce teen smoking defies common sense. The whole purpose of this
effort was to protect our kids and to cut down on smoking. Now that the
States have settled with the tobacco companies, it only makes sense to
use some of those moneys to strengthen the public health system and to
fight tobacco use.
As the Senator from Pennsylvania said, I have to ask the questions:
Did the States file their lawsuits against the tobacco companies
because the tobacco companies were not building highways in their
States?

Did the States file a lawsuit against the tobacco companies because
they were not building enough prisons in their States?
Did the States file the lawsuit against the tobacco companies because
you, tobacco companies, were not building a sports arena in our State?
Did they file the lawsuit because you, tobacco companies, were not
building enough highways in our State?
No, that was not the basis of the lawsuit. The basis of the lawsuit
was the health impact on its citizens from smoking.
Now we hear from the States, oh, now they want to use the money for
highways, they want to use the money to build some prisons, they want
to use the money to build a sports arena, they want to use the money
for tax relief, and on and on and on and on. That was not the basis for
the lawsuits.
The basis for the lawsuits were to recoup the costs that Medicaid
spent taking care of the health impacts of smoking on our people. It
had nothing to do with paving a highway or building a prison or
anything else.
Again, we are not even saying that the States have to use their money
for that. If the States want to use their share of the money to build a
prison, that is their business. I can tell you, if I were a citizen of
a State, and our State legislature and Governor were spending money
that way, I would be vocal about it in my State, and I assume other
people would be in their States. But that is not for us here at the
Federal level. It is for us at the Federal level to say how about the
Federal portion. What should you do with that? Should we be allowed to
build highways with it when the basis of the lawsuit had to do with the
health impact and the deaths of people that we paid for on Medicaid to
take care of them because they got hooked on tobacco, because they were
lied to by the tobacco companies?
All we are saying is that the Federal share be used to attack tobacco
use and to protect the public health. How much are we saying? Fifty
percent: 20 percent to reduce teen smoking, 30 percent for a broad
variety of public health programs to reduce smoking or to assist
farmers, to assist the tobacco farmers.
No State receives less than 50 percent of its Medicaid money from the
Federal Government. Some States receive as high as 77 percent. The
average is 57 percent. So actually we are being somewhat generous in
this amendment. We are not saying you have to spend even all of your
Federal moneys.
Some States are going to get a windfall. Those States that are
getting 70 percent of their Medicaid moneys paid for by the Federal
Government, if our amendment is adopted, will have at least 20 percent
of that Federal money that they can use as they see fit. Rather than
trying to draw the line in each State, we just settled on the 50
percent and said that is fair for everybody. It gives some States, I
will admit, a bit of a windfall. Again, it does not take away from any
State any more than the Federal shares that they already get.
Mr. President, this is a bipartisan, commonsense amendment. I hope
all of our colleagues can support it. It will be a dramatic step
forward in saving lives and protecting children and saving billions of
dollars in future health care costs.
I know you are going to hear talk about how all the Governors support
the Hutchison amendment that was added in committee. By the way, it
should not even be on this bill. It should be in the Finance Committee.
All the Governors support it. I said to myself, ``If I was Governor, I
probably would support it, too.'' But I am not a Governor.
I represent my State, but we all have to represent the national
interest here. More than that, we have to represent the interest of
those people who are getting hooked on tobacco and what this tobacco
lawsuit was all about. So I think we ought to keep that in mind as the
debate goes forward. I know we will hear some more this evening, but
tomorrow morning we will have more debate on the amendment and we will
have more to say at that time.

Again, what we have to keep in mind is the basic underlying fact: Why
was the lawsuit brought? On what basis? On the health basis, Medicare
expenditures to pay for the sickness and illness and death of people.
Who put the money into Medicaid? The Federal Government, 57 percent
average; States, 43 percent average.
Law requires the States to file the lawsuits. Law requires the States
to return to the Federal Government the Federal Government share of
those lawsuits.
Law--only the States can file those lawsuits.
Settlement facts--States settle with the tobacco companies and strike
a sweetheart deal, where they waive all of our rights to ever sue again
under Medicaid to recoup those costs--waive our rights. Think about
that. That is why this amendment is so important, Mr. President. If
this amendment is adopted, it will have a big impact on cutting down on
health care costs in the future. That is what it is all about.
I yield the floor.
Mr. SESSIONS addressed the Chair.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. Mr. President, I rise in opposition to the plan of the
Senator from Iowa to mandate to the States how they will spend the
money they won in litigation against tobacco companies. It went on for
quite a number of years. The State attorneys general gradually, through
various different theories of law--and there were lots of different
theories--won those lawsuits and achieved a tremendous settlement.
Basically, the tobacco companies, at some point, just capitulated and
agreed to pay billions of dollars.

At this point, the Federal Government may or may not have a claim
upon that money. Senator Hutchison of Texas has introduced legislation,
which I intend to support, which would say that that money would stay
with the States. They won it in the litigation. It is part of their
settlements. They should keep it. And the Federal Government is not
claiming it.
I understand the Senator's idea--and I know he has the highest
motives behind it--is to tell the States how they should spend portions
of that money, primarily under the theory that it was Medicaid money,
and the Federal Government put money into Medicaid, a big chunk of the
money is paid by the Federal Government for Medicaid. But let me just
say why I think we would be better off not doing that.
First of all, in all the settlements, as I understand it, only one
settlement, Florida's, mentions Medicaid. A large number of the cases
mentioned Medicaid in their lawsuits, but a lot of

[[Page S2833]]

them were based on other causes of action against the tobacco
companies: RICO, the racketeering charges; antitrust violations--unjust
enrichment was the one in Mississippi, which I thought was astounding,
to win several billion dollars on the old common law theory, equity
theory, of unjust enrichment. In fact, they filed it in an equity court
and did not even have a jury trial. They eventually settled it without
even a trial occurring.
But at any rate, that money goes to the States, and it is their
money. I suggest that the States already are planning how to spend it.
I understand in Texas, according to Senator Hutchison, who will be back
on the floor shortly, they have antismoking educational campaigns
planned.
Alabama has, I believe, a good program. It is called Children First.
It is a program to deal with dropouts, to deal with teen smoking and
drinking and drug abuse and problem kids, preschool programs, a
comprehensive plan to deal with juvenile crime and violence and
delinquency, and to help place children first. The funding for it will
come from the settlement of this lawsuit. They are counting on doing
that.
To mandate them to spend it on entirely a new set of proposals they
have never given any thought to would complicate Alabama's freedom to
spend the money they won the way they want to spend it. I really
believe it would be a terrible burden on the State of Alabama. I think
that is going to be true in every State where these settlements have
taken place.
So what we have is the Federal Government saying, ``If we can't have
the money, and if we're going to lose on this amendment''--and Senator
Hutchison has bipartisan support for it, and I am confident it will
pass--``if we're going to lose on this amendment, if we don't get to
bring it into our Treasury so we can spend it and do what we want to do
with it, we'll just declare how the States have to spend it. By the
way, if you don't satisfy us, the Secretary of HHS, Secretary Shalala,
can cut off your Medicaid funding or deny you benefits under these
settlements in the future.''
So I just believe that that isn't what we need to be doing here. I do
not think that is good public policy. I believe that these States are
already at this moment planning how to spend it.
And, by the way, these mandates are not easily
achievable. Presumably, a State, to get money under it, would have to
call a special session of their legislature--have to call a special
session. And what if they did not want to vote to do that? What if good
and decent State legislators said: We don't want to do these
percentages that the Senator has just proposed. We don't want to spend
our money just like that. We would like to spend it on Children First.
We would like to spend it on delinquency camps or alternative schools.
We want to do it on various other projects that are not precisely what
is mandated here. Maybe they are already spending money on programs
mandated here.

I salute the Senator from Texas. I believe she has the right
approach. We need to let this money go, give it up. We did not file the
lawsuits; the States filed the lawsuits. We did not win the lawsuits;
the States won the lawsuits. The tobacco companies agreed to pay the
money to the States. And they are going to spend it for what they
believe is best for their people. I think we ought to follow that.
I want to mention one other thing. I am uncomfortable with this deal
in which the Secretary of HHS would be able to review the allocation of
the funds by the States and given the power to cut off funds to the
States if they did not precisely allocate it as this proposal would
allocate it. I do not think that is the kind of power we need to have
over the States.
I think this is good legislation. The Senator from Texas, I know,
will be returning to the floor in just a moment, and she will be making
further comments on it. I thank the Chair for his attention and I yield
the floor.
Mr. President, I suggest the absence of a quorum.
Mr. STEVENS. Will the Senator withhold that?
Mr. SESSIONS. Yes.
The PRESIDING OFFICER. The Senator from Alaska is recognized.
Mr. STEVENS. Mr. President, I have not gone into this argument
before. In the committee, in dealing with this supplemental, I did vote
for the Hutchison amendment. I voted for it because I do believe that,
because of the circumstances of this series of settlements coming after
the failure of the Congress to pass the tobacco legislation, we should
not force the States to turn the money over to the Federal Government
as required by law.
The Social Security Act does provide that--I ask unanimous consent
that this section 1903(d)(3) be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Section 1903(D)(3)

(3) The pro rata share to which the United States is
equitably entitled, as determined by the Secretary, of the
net amount recovered during any quarter by the State or any
political subdivision thereof with respect to medical
assistance furnished under the State plan shall be considered
an overpayment to be adjusted under this subsection.

Mr. STEVENS. This section states:

Clearly, that has required other States to make payments to the
Federal Government to restore the amounts of money that were paid under
the Federal plans and recovered by State litigation.
The difficulty with the position that I understand the Senator has
just taken, Senator Sessions, is that the States did file their cases,
but Section 1902(a)(9)(A) of the Social Security Act says:

. . . the State or local agency administering such plan will
take all reasonable measures to ascertain the legal liability
of third parties (including health insurers, group health
plans (as defined in section 607(1) of the Employee
Retirement Income Security Act. . . .

And it sets forth the duty of the State to take that action, and
since we have assigned that duty to the State, the Federal Government
cannot take that action.
As a consequence, while I believe that Senator Hutchison's amendment
is correct, that we should not take this money from the States at this
time, I do believe that the requirement that the States show that they
will spend the money in the way envisioned by the Social Security Act
is a fair compromise, and it is my intention to support the amendment
offered by the Senator from Pennsylvania in order to try to see to it
that we have that consideration.
Failure to do so will exacerbate the future bills that we will
present to the Senate which will have to seek money to make the
payments for the programs that the State will not undertake unless that
requirement is there. That money, incidentally, is projected in both
the President's budget and in past budgets adopted by the Senate.
So if this money stays in the hands of the State, and there is no
obligation to comply with existing law, we will be in the position
where we will have to come up and find more money--in effect, break the
caps on the Health and Human Services bill, which is the bill that is
now the largest bill that we will prepare for the Congress this year;
the largest bill is no longer Defense, it is the Health and Human
Services bill.
That bill is under severe stress for the future and cannot afford to
see this money stay in the State hands and the money be spent in the
way envisioned by the recovery; really, a recovery for moneys spent by
the States using Federal taxpayer's funds in the past. If the State
diverts those funds to other endeavors, we will have to make that up in
future appropriations bills, in my judgment.
I intend to support the amendment of Senator Specter and Senator
Harkin to require the States to show that they will, in fact, make
those payments. As I understand it, it will not take a great deal of
trouble on behalf of the States to show that they are doing that. I
think many States are doing that.
I understand my State has taken the position that they don't like
Senator Specter's amendment. I sometimes have duties here that are
contrary to that of the Governors in terms of trying to see to it that
fairness is provided as far as the use of funds from the recovery that
comes about because of actions such as the States have taken,

[[Page S2834]]

and my State was one of them--to pursue those who have brought about
the great expenditures for health care that we had to face because of
the scourge of excessive smoking.
I do believe that this amendment is on the right track. I intend to
vote for it. I put my friends on notice that I do not believe that it
is inconsistent with the position of supporting the Hutchison amendment
in the first place, because I think the States should retain the money
and the States should make the plan of how the money should be spent.
The power of the Secretary of Health and Human Services is to approve
that plan, not to dictate how it is to be spent.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mrs. HUTCHISON. Mr. President, we will have time tomorrow to speak on
the amendment by Senator Specter and Senator Harkin, but I think it is
important that we understand what we are talking about. The Federal
Government had nothing to do with the lawsuits that were brought by the
States. In fact, the States asked for Federal help. They asked for
Federal guidance, and they got none.
It was only after the States had settled with the tobacco companies
and all States were covered that the Health Care Financing
Administration decided that these suits were based on Medicaid and,
therefore, the Federal Government should be able to take the average of
the Medicaid expenditures from the States from these tobacco
settlements. It came up with a figure of 57 percent. They are relying
on the part of the law that says the States are responsible for
recovering Medicaid overpayments or mistakes in billing; or if a person
is covered with private insurance and they get Medicaid coverage, the
States would go after the private insurance companies to pay these
Medicaid costs.
The Health Care Financing Administration is using that law to say
that the tobacco settlement should be covered for Medicaid, and they
are coming in and saying to the States that the tobacco settlement that
was made should not be allowed to be kept by the States and, in fact,
they want to withhold 57 percent.
The amendment that is before the Senate today would take 50 percent
and tell the States how to spend this money. It doesn't even tell the
States that they have to spend it on Medicaid. We are not even now
talking about what the Health Care Financing Administration had hoped
to get in the first place, and that is help on Medicaid payments. They
are just saying that big brother Federal Government is going to tell
the States that they must spend the money on health care or tobacco
cessation programs or helping tobacco farmers, and they are going to
allocate 50 percent of the State's money for these purposes.
Let's take the State of Ohio as an example. Say that the State of
Ohio has a legislature that meets every other year. They are not in
session. All of a sudden we have a Federal mandate that the States
spend 50 percent of their hard-earned money on these specific program
purposes and the Secretary of HHS says to the State of Ohio, ``I'm very
sorry, but your program doesn't meet my standard so I'm going to
withhold your Medicaid money.'' The legislature is not in session, the
programs are in place. Is the legislature going to have to come into
special session to try to determine how they are going to change the
program to meet this test? They are going to have to because no State
can absorb the loss of their Medicaid money, and, most certainly, they
are not going to leave people on the streets unserved by Medicaid.
This is going to be duplicated all over America if this amendment
passes. Nobody is thinking about what happens after the Federal
Government says, ``This is simple, this is simple. We will say you have
to spend 20 percent on tobacco cessation and 30 percent on the health-
related or tobacco farmer aid programs.'' They don't say what happens
after we pass this broad general guideline. But what happens is, we are
going to have standards, we are going to have regulations, we are going
to have certifications, and all of a sudden they have what always
happens in Washington, and that is we are going to have the Federal
Government encroaching on the States rights with the States' money,
earned by the States; and we are going to have costly regulations and
bureaucracy, and then we are going to have crisis after crisis after
crisis in States that are not going to meet the test of Health and
Human Services Secretaries for 25 years to come, who will be able to
hold on to the Medicaid money if we don't keep the underlying bill
intact.

The underlying bill is very simple. It just says that the Federal
Government will not encroach on the States at all. The States are using
this money for very different purposes. Most of the States--in fact,
almost all of the States--did not sue on Medicaid, and if your purpose
is to help Medicaid, this amendment doesn't do it.
So I hope that we can keep it simple. I hope that we can allow the
States to do what they have sued to recover and achieve their purposes.
Some States sued on health care. Some States sued on consumer fraud.
Some States sued for RICO. There were a myriad of causes of action. But
the fact of the matter is, it is the States that sued.
So I say to the distinguished chairman of the committee, if he wants
to help Medicaid, this amendment doesn't do it. If he wants to help
Medicaid, what he needs to do is add another amendment that requires
the money go to Medicaid. He thinks that if we pass this amendment, it
will keep the State budgets from growing. It won't keep the States'
budgets from growing at all in Medicaid costs. What we are talking
about here is 20 percent going for tobacco cessation programs and 30
percent going for health care or tobacco farmers.
So I hope, if the purpose is to give Medicaid money, that we will
have a different amendment. The amendment that is before us today will
be costly, it will cause more bureaucracy, more regulation, and it will
cause crises in States if they don't meet the Secretary's test of what
the program should be. And this Secretary of Health and Human Services
will have a different interpretation, perhaps, than the next Secretary
of Health and Human Services. So the States are going to fashion a
program that meets Secretary Shalala's needs today, and 2 years from
now they are going to have to fashion a new set of programs in order
not to have the money jerked out from under their noses when they have
counted on this money because their tobacco settlement was made by the
States.
We have time to talk about this tomorrow. I hope Members will
consider the havoc that this would wreak on the States and the fact
that it will not help the Federal Government. It is putting a strain on
that which has no relationship to the problem that is being alleged. If
the problem is that we aren't going to share Medicaid, how are we going
to help tobacco farmers and meet the Medicaid needs? It is not going to
work.
This is not an amendment that has been thought through, and we have
not thought of what is going to happen 2 years from now, and 4 years
from now, and 6 years from now. I hope that Senators will understand
that this will wreak havoc on our States. It is an encroachment on
States rights, and it will not help the Federal coffers at all.
I thank the Chair. I yield the floor.
Mr. STEVENS. Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER (Mr. Smith of Oregon). The clerk will call the
roll.
The bill clerk proceeded to call the roll.
Mr. DURBIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. Mr. President, I rise in support of an amendment that is
to be offered by Senators Specter and Harkin relative to the tobacco
settlement funds and the question of Federal recoupment.
First, let me say that I have been involved in the tobacco issue on
Capitol Hill for almost as long as I have been here. As a Member of the
House of Representatives, I introduced legislation

[[Page S2835]]

to ban smoking on airplanes, and I have addressed this issue from so
many different angles that I believe I have some knowledge on the
subject.
Having said that, I have to tell you that I stand here in admiration
of the 42 State attorneys general who had the political courage and
foresight to file these lawsuits against the tobacco giants in an
effort to recoup some of the money that had been spent on tobacco-
related disease and death in their States. In my own home State, our
attorney general, Jim Ryan, was one of those. I have saluted him
privately and I do it publicly. I am happy they did this. The money
they have recouped is going to be an important resource for the State
of Illinois and all of the other States.
In addition, they have forced the tobacco companies to make some
major changes in the way they sell the product. Perhaps, we will see--I
hope in the not-too-distant future--a decline in the number of young
people who have become addicted to tobacco products. It is truly a
frightening statistic to consider the impact on America's public health
when you consider the percentage of high school students, and even
younger, who are taking up smoking. But now that we have recovered
money from the tobacco companies, the debate now is how it should be
spent. I have tried to come up with a reasonable approach to it. I
salute my colleagues, Senators Specter and Harkin, for what I consider
to be a reasonable approach as well.
Mr. President, I ask unanimous consent to be shown as a cosponsor of
the Specter-Harkin amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. Having said that, Mr. President, let me try to explain,
if I can, the predicament we face. Many of the States that filed
lawsuits against tobacco companies tried to recover in those lawsuits
moneys that had been spent for Medicaid. Medicaid is, of course, health
insurance for the poor and disabled. Across the United States, on
average, out of every dollar spent on the Medicaid health insurance
program, 57 cents of it comes from Washington, and 43 cents comes from
the local State.
In my State of Illinois, it is a 50/50 split. But including all
States, it is an average of 57 percent coming from the Federal
Government. Now, we send the money to the States and ask them to
administer the Medicaid funds. We also say to the States that if there
are lawsuits to be filed relative to Medicaid, it is your
responsibility as a State to do it. They are obligated to recoup any
cost that they recover in these lawsuits against third parties back to
the Federal Government, proportionately based on the Federal
Government's contribution.

So the suggestion that a State would file a lawsuit against the
tobacco company claiming expenditures for Medicaid funds and recover,
and then be asked to send some of that money back to Washington is not
a novice suggestion. It is not radical. It is what happens by normal
course. That is what has happened in the past.
But there have been some who have argued that when it comes to the
tobacco settlement we should suspend that and say that the moneys
recovered by the States against the tobacco companies for Medicaid
expenditures should belong entirely to the States and not come back to
the Federal Government at all. I have a problem with that inasmuch as I
am concerned about how the money will be spent by the States.
Some Senators have come to the floor and said it is really none of
our business. The States filed the lawsuit; let them spend the money
the way they want. I think that is the wrong way to approach this. The
lawsuits were filed because of a public health problem with tobacco.
The money that was recovered--at least a portion of it--is Federal in
nature. I think it is reasonable for us to say that the money recouped
from these tobacco companies should at least be spent for the public
health purposes of the lawsuit. That is what the Specter-Harkin, and
now Durbin, amendment seeks to achieve.
I am also concerned, because, as part of their settlement, many of
the States relinquished their right to file claims in the future
against tobacco companies for Medicaid expenditures. In other words,
they said they would give up the right of the Federal Government to
recover funds under Medicaid against tobacco companies in the future.
They have, in fact, surrendered a right of the Federal Government. I
think that is noteworthy, because it means that, basically having
settled these future claims, we have no opportunity to pursue them if
we wanted to. The Federal Government has paid, and will continue to
pay, one-half or more of Medicaid costs associated with treating
tobacco-caused diseases, even though the States have now waived the
Federal Government's right to any further tobacco-related Medicaid
recovery. This further underscores the Federal right to have, if not a
share of the settlement proceeds, at least a voice in how they are
spent.
Let me say that the States routinely follow the requirements of the
Medicaid statutes when it comes to money that they collect.
For those who argue that the tobacco suits should be treated somewhat
differently, let me give them some evidence to consider.
In March 1996, five States--Florida, Louisiana, Massachusetts,
Michigan, and West Virginia--settled a lawsuit with the Liggett tobacco
company. In fiscal year 1996 and fiscal year 1997, the total reported
to HCFA, the Federal agency, as the Federal share, was $465,359. This
is the precedent for a Federal claim for the tobacco proceeds.
It is important to keep in mind that if we don't recoup this money
from the State in some form, we also create a budget problem on our
own.
The Congressional Budget Office estimates, for scoring purposes, that
we would recover from State tobacco suits $2.9 billion over 5 years and
$6.8 billion over 10 years. Any legislation that allows the States to
keep all the funds is going to require some more on our part to offset
this budget priority, this budget assumption.

Having said that, let me try to address my point of view on what I
believe the Specter-Harkin amendment will achieve.
It is less important to me who spends the money from the Tobacco
companies than how it is spent. It is not as important to me that a
Federal agency achieve the results so much as the results are achieved.
And the results I am seeking are several.
First, it reduces the number of young people who are taking up
tobacco and becoming addicted to it. Ultimately, one out of three die.
If we can bring that percentage down by innovative, creative, and
forceful State programs, that is all the better as far as I am
concerned.
But I worry about suggestions in the underlying Hutchison amendment
that we not be specific in terms of what we ask of the States. I am
happy to see that the amendment that has been proposed by Senators
Specter and Harkin will try to address this by putting 20 percent of
the proceeds into tobacco control to reduce the number of young people
who are addicted to the product. I think that is sensible.
Second, I think it is reasonable to ask that a portion of the money
recovered go toward public health purposes, particularly children's
health programs. And it is my understanding that the Specter-Harkin
amendment does that. It says that another 30 percent will go for those
purposes.
This is consistent with the National Governors' Association, which I
already identified, as their priorities at their 1999 winter meeting
for the tobacco settlement money. Let me quote from the statement that
they released:

The Nation's Governors are committed to spending a
significant portion of the settlement funds on smoking
cessation programs, health care education and programs
benefiting children.

The Specter-Harkin-Durbin amendment seeks to follow the
recommendations of the National Governors' Association--to say the
Federal Government will not claim a share of these proceeds so long as
they are spent for this purpose, and then to make certain that we are
doing something with the money that is consistent with the goals of the
initial litigation.
It would be troubling to me, and to many others who have been
involved in this battle for a long time, if the net result of the
tobacco lawsuits by the States should result in a windfall to the State
treasuries and are spent on other things that really forget these
important elements, important priorities of smoking cessation, as well
as children's health care.

[[Page S2836]]

So I will be supporting the amendment being offered by Senators
Specter and Harkin.
I can tell you that when the American people were asked through a
poll conducted by the American Heart Association last November, that 74
percent of the voters supported at least half of the Medicaid dollars
to go to tobacco addiction treatment and to efforts to educate teens
about the dangers of tobacco.
I am hoping that Members on both sides of the aisle will join us in
this bipartisan amendment to the supplemental appropriations bill.
At this point, I yield my time on this issue.

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