```

[Senate Report 106-512]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 955
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-512

======================================================================

 
            RETIRED COAL MINERS HEALTH BENEFIT SECURITY ACT

                                _______
                                

   November 1 (legislative day, September 22), 2000.--Ordered to be 
                                printed

                                _______
                                

    Mr. Roth, from the Committee on Finance, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 3267]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance reported an original bill (S. 
3267) to amend the Internal Revenue Code of 1986 to extend the 
solvency of and adjust inequities related to the United Mine 
Workers of America Combined Benefit Fund, having considered the 
same, reports favorably thereon with an amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Legislative Background...........................................2
 II. Explanation of the Bill..........................................2
          A. Transfer of Funds to the Combined Benefit Fund (sec. 
              2).................................................     2
III. Budget Effects of the Bill.......................................3
          A. Committee Estimates.................................     3
          B. Budget Authority and Tax Expenditures...............     3
          C. Consultation with the Congressional Budget Office...     3
 IV. Votes of the Committee...........................................6
  V. Regulatory Impact and Other Matters..............................6
          A. Regulatory Impact...................................     6
          B. Unfunded Mandates Statement.........................     7
          C. Tax Complexity Analysis.............................     7
 VI. Additional Views.................................................8
VII. Changes to Existing Law Made by the Bill as Reported............10

                       I. LEGISLATIVE BACKGROUND

Committee markup

    The Senate Committee on Finance marked up an original bill 
(the ``Retired Coal Miners Health Benefit Security Act'') on 
September 7, 2000, and approved the provisions on September 7, 
2000 by a rollcall vote of 12 yeas and 1 nay, with a quorum 
present.

                      II. EXPLANATION OF THE BILL

 A. Transfer of Funds to the Combined Benefit Fund (Sec. 2 of the Bill 
                       and Sec. 9705 of the Code)

                              present law

    The United Mine Workers of America (the ``UMWA'') Combined 
Benefit Fund was established by the Coal Industry Retiree 
Health Benefit Act of 1992 (the ``Coal Act'') to assume 
responsibility of payments for medical care expenses of retired 
miners and their dependents who were eligible for health care 
from the private 1950 and 1974 UMWA Benefit Plans. The Combined 
Benefit Fund is financed by assessments on current and former 
signatories to labor agreements with the UMWA, past transfers 
from an overfunded United Mine Workers pension fund, and 
transfers from the Abandoned Mine Land reclamation fund (the 
``AML Fund''). Pursuant to the Coal Act, the Social Security 
Administration is responsible for assigning eligible retired 
miners and their dependents to current and former signatories 
to labor agreements with UMWA and calculating annual 
contributions to be paid by each such signatory for each 
beneficiary assigned to the signatory.
    In June 1998, the United States Supreme Court ruled in 
Eastern Enterprises that assignments of beneficiaries to 
companies that were not signatories to the 1974 or later labor 
agreements with the UMWA were unconstitutional. The Eastern 
Enterprises ruling has enabled several companies to obtain 
refunds with respect to their contributions to the Combined 
Benefit Fund. However, other companies that did not sign the 
1974 or later agreements with the UMWA, claimed that the 
assignments of beneficiaries as applied to them were 
unconstitutional, and received final judgments against their 
claims are not entitled to receive refunds for their 
contributions to the Combined Benefit Fund.

                           reasons for change

    Although the Committee is concerned about the state of the 
Combined Benefit Fund, the Committee believes that no consensus 
currently exists with respect to the appropriate long-term 
reform of the Combined Benefit Fund and the Coal Act. The 
Committee believes that the solvency of the Combined Benefit 
Fund should be extended until the Congress is able to analyze 
recommendations for such reform. In addition, the Committee 
believes that all companies with respect to whom assignments of 
beneficiaries have been declared unconstitutional should be 
entitled to recover their contributions to the Combined Benefit 
Fund.

                        explanation of provision

    The provision authorizes a transfer of $77,438,000 of 
general revenue to the Combined Benefit Fund for fiscal year 
2001 and directs the Secretary of the Treasury to make the 
transfer on October 1, 2000. The provision provides that 
$57,000,000 of the amount transferred shall be available to pay 
benefits. The remaining $20,438,000 of the amount transferred 
shall be available to refund amounts previously paid to the 
Combined Benefit Fund on or before September 7, 2000, by 
companies (1) whose beneficiary assignments have been voided by 
the Commissioner of the Social Security Administration, (2) 
that brought actions prior to September 7, 2000, claiming that 
their beneficiary assignments were unconstitutional, and (3) 
that received final judgments against such claims. In addition, 
the provision directs the General Accounting Office to submit 
to the Senate Committee on Finance prior to March 1, 2001, 
recommendations for long-term reform of the Coal Act.

                             effective date

    The provision is effective on the date of enactment.

                    III. BUDGET EFFECTS OF THE BILL

                         A. Committee Estimates

    In complianec with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the following statement is made 
concerning the estimated budget effects of the provisions of 
the bill as reported.
    The estimated budget effects of the bill, as reported, for 
fiscal years 2001-2005 are described in the Congressional 
Budget Office Cost Estimate for the bill (see CBO statement in 
Part III.C., below).

                B. Budget Authority and Tax Expenditures

 Budget authority

    In compliance with section 308(a)(1) of the Budget Act, the 
Committee states that the provisions of the bill, as reported, 
involve new or increased budget authority as described in the 
Congressional Budget Office Cost Estimate for the bill (see CBO 
statement in Part III.C., below)

Tax expenditures

    In compliance with section 308(a)(2) of the Budget Act, the 
Committee states that the revenue-reducing income tax 
provisions do not involve increased tax expenditures (See CBO 
statement in Part III.C., below.)

          C. Consultation With the Congressional Budget Office

    In accordance with section 403 of the Budget Act, the 
Committee advises that the Congressional Budget office has 
submitted a statement on this bill.

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 5, 2000.
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear. Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for the Retired Coal Miners 
Health Benefit Security Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Cyndi 
Dudzinski Smith.
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

Retired Coal Miners Health Benefit Security Act

    Summary: The Retired Coal Miners Health Benefit Security 
Act would transfer $77 million from the general fund of the 
U.S. Treasury to the United Mine Workers of America Combined 
Benefit Fund (CBF). Of that total, $57 million would be 
available to pay for the health and death benefits of the 
retired coal miners and their dependents who are beneficiaries 
of the CBF. The remaining $20 million would be available to 
reimburse companies that had their assignments voided by the 
Commissioner of the Social Security Administration following 
Eastern Enterprises v. Apfel, 524 U.S. 498 (1988), but did not 
receive refunds of their premiums from the CBF because they 
already were subject to final judgments.
    The transfer would decrease federal Medicaid spending by 
about $1 million in each of fiscal years 2001 and 2002, and 
increase receipts from corporate income taxes by $5 million in 
2001.
    In total, enacting this legislation would increase direct 
spending by $54 million in 2001 and by $21 million in 2002, and 
increase federal receipts by $5 million. Because the bill would 
affect direct spending and receipts, pay-as-you-go procedures 
would apply.
    The Retired Coal Miners Health Benefit Security Act 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA). Enacting 
the bill would result in Medicaid savings for state 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the Retired Coal Miners Health Benefit 
Security Act is shown in the following table. The costs of this 
legislation fall within budget functions 550 (health).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2001     2002     2003     2004     2005
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

Additional CBF Payments:
    Budget Authority...............................................       77        0        0        0        0
    Estimated Outlays..............................................       55       22        0        0        0
Federal Share of Medicaid:
    Estimated Budget Authority.....................................       -1       -1        0        0        0
    Estimated Outlays..............................................       -1       -1        0        0        0
Net Effect:
    Estimated Budget Authority.....................................       76       -1        0        0        0
    Estimated Outlays..............................................       54       21        0        0        0

                                               CHANGES IN REVENUES

Estimated Revenues.................................................        5        0        0        0        0
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: CBO estimates that in 2001, $35 million 
of the amount transferred by the legislation would be spent on 
benefits and $20 million of the transfer would be spent to 
refund premiums paid by companies that had their assignments 
revoked following the case of Eastern Enterprises. The 
remaining $22 million of the transfer would be spent on 
benefits in 2002.
    CBO estimates that beginning in 2001, the CBF will not have 
sufficient income to cover benefits. In the event of a deficit, 
the trustees of the CBF would first try to balance the fund 
through reducing spending on items and services other than 
health benefits. But if the deficit were large enough, they 
would have to cut benefits. For retired coal miners who are 
also enrolled in Medicaid, a portion of those benefits would be 
shifted to the Medicaid program. Under the bill, $57 million of 
the transfer to the CBF would reduce the amount of benefits 
that would otherwise be shifted to Medicaid. That change would 
decrease federal Medicaid spending by about $1 million each 
year for 2001 and 2002.
    In addition, the $20 million refunded to the coal companies 
would be counted as income that is subject to corporate income 
tax. The Joint Committee on Taxation (JCT) estimates that 
provision would increase revenues from the corporate income tax 
by $5 million in 2001.
    The bill also would require the Comptroller General of the 
United States to study long-term reform of the Coal Industry 
Retiree Health Benefit Act of 1992 and retiree health benefits 
under that act. Under current law, the General Accounting 
Office is performing this study pursuant to a request from the 
Congress. As a result, CBO estimates no additional cost from 
mandating the report through legislation.
    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act sets up pay-as-you-go procedures 
for legislation affecting direct spending or receipts. The net 
changes in outlays and governmental receipts that are subject 
to pay-as-you-go procedures are shown in the following table. 
For the purposes of enforcing pay-as-you-go procedures, only 
the effects in the budget year and the succeeding four years 
are counted.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2001   2002   2003   2004   2005   2006   2007   2008   2009   2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................     54     21      0      0      0      0      0      0      0      0
Changes in receipts.......................      5      0      0      0      0      0      0      0      0      0
----------------------------------------------------------------------------------------------------------------

    Estimated impact on state, local, and tribal governments: 
The Retired Coal Miners Health Benefit Security Act contains no 
intergovernmental mandates as defined in UMRA. Because 
additional resources in the combined Benefit Fund would provide 
health benefits to eligible retired coal miners, estimated 
Medicaid spending would decrease. CBO estimates that states 
would save about $500,000 in each of the fiscal years 2001 and 
2002 in the Medicaid program.
    Estimated impact on the private sector: This bill contains 
no new private-sector mandates as defined in UMRA.
    Estimate prepared by: Federal Costs: Cyndi Dudzinski Smith 
(CBF). Eric Rollins (Medicaid). Ron Jeremias (corporate income 
tax), JCT. Impact on State, Local, and Tribal Governments: Leo 
Lex. Impact on the Private Sector: Lauren Marks.
    Estimated approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                       IV. VOTES OF THE COMMITTEE

    In compliance with paragraph 7(b) of rule XXVI of the 
Standing Rules of the Senate, the following statements are made 
concerning the rollcall votes in the Committee's consideration 
of the bill.

Motion to report the bill

    The bill, as amended, was ordered favorably reported by a 
rollcall vote of 12 yeas and 1 nay on September 7, 2000. If 
proxies were allowed in reporting a measure, the vote would 
have been 17 yeas and 1 nay. A quorum was present. The vote was 
as follows:
    Yeas--Senators Roth, Grassley, Hatch, Nickles, Lott 
(proxy), Jeffords, Mack, Thompson, Moynihan, Baucus (proxy), 
Rockefeller, Breaux, Conrad, Graham (proxy), Bryan, Kerrey 
(proxy), Robb (proxy).
    Nays--Senator Gramm.

Votes on amendments

    An amendment in the nature of a substitute by Senator 
Nickles to provide for a transfer of general revenue to extend 
the solvency of the Combined Benefit Fund and to direct the 
General Accounting Office to submit recommendation for the 
long-term reform of the Coal Act was approved by a voice vote.
    A second degree amendment by Senator Conrad to reduce the 
assessment on reachback companies by 50 percent was defeated by 
a rollcall vote of 6 yeas and 13 nays. The vote was as follows:
    Yeas--Senators Grassley, Murkowski (proxy), Gramm, Mack, 
Thompson, Conrad.
    Nays--Senators Roth, Hatch, Nickles, Lott (proxy), 
Jeffords, Moynihan, Baucus, Rockefeller, Breaux, Graham 
(proxy), Bryan, Kerrey, Robb (proxy).
    An amendment by Senator Grassley to authorize a transfer of 
general revenue to the Combined Benefit Fund in order to refund 
contributions to final judgment companies was approved by a 
rollcall vote of 11 yeas and 8 nays. The vote was a follows:
    Yeas--Senators Roth, Grassley, Hatch, Murkowski (proxy), 
Nickles, Gramm, Lott (proxy), Jeffords, Mack, Thompson, Conrad.
    Nays--Senators Moynihan, Baucus (proxy), Rockefeller, 
Breaux, Graham (proxy), Bryan, Kerrey (proxy), Robb (proxy).

                 V. REGULATORY IMPACT AND OTHER MATTERS

                          A. Regulatory Impact

    Pursuant to paragraph 11(b) of rule XXVI of the Standing 
Rules of the Senate, the Committee makes the following 
statement concerning the regulatory impact that might be 
incurred in carrying out the providings of the bill as 
reported.

Impact on individuals and businesses

    The bill provides for transfers of funds to the United Mine 
Workers of America Combined Benefit Fund in order to extend the 
solvency of the fund and adjust inequities related to 
contributions by certain companies to the fund. The bill will 
have no impact on individuals taxpayers. The bill will reduce 
the tax burden on affected businesses.

Impact on personal privacy and paperwork

    The bill should not have any adverse impact on personal 
privacy. No additional paperwork will be required by the 
provisions of the bill.

                     B. Unfunded Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, and tribal 
governments.

                         C. Complexity Analysis

    Section 4022(b) of the Internal Revenue Service Reform and 
Restructuring Act of 1998 requires the staff of the Joint 
Committee on Taxation (in consultation with the Internal 
Revenue Service (``IRS'') and the Treasury Department) to 
provide a complexity analysis of tax legislation reported by 
the House Committee on Ways and Means, the Senate Committee on 
Finance, or a Conference Report containing tax provisions. The 
complexity analysis is required to report on the complexity and 
administrative issues raised by provisions that directly or 
indirectly amend the Internal Revenue Code and that have 
widespread applicability to individuals or small businesses.
    The staff of the Joint Committee on Taxation has determined 
that a complexity analysis is not required under section 
4022(b) of the IRS Reform Act because the bill contains no 
provisions that amend the Internal Revenue Code and that have 
widespread applicability to individuals or small businesses.

                          VI. ADDITIONAL VIEWS

    The Coal Act was passed as part of the Energy Policy Act of 
1992. It established a United Mine Workers Combined Benefit 
Fund (``the Fund'') to preserve the health benefits of a 
defined group of about 120,000 retired coalminers and their 
dependents whose employers signed the National Bituminous Coal 
Wage Agreement or another similar agreement with the United 
Mine Workers of America (``UMWA''). Approximately 66,000 
retired miners and their widows remain covered by the Fund and 
about half are over 80 years old; the beneficiaries of the Fund 
are a closed and declining population of individuals. The Fund 
is part of the Internal Revenue Code and is under the 
jurisdiction of the Senate Finance Committee.
    We all agree that retired mine workers covered by the Fund 
need the health benefits they were promised. Unfortunately, the 
Fund is inadequately financed, and, without legislative 
changes, these retired miners and their widows will have their 
health benefits cut.
    Today, the Committee reports a bill that partially 
addresses the Fund's financing deficit. It mandates a $57 
million general revenue transfer to the Fund to ensure that no 
benefit cuts will occur in fiscal year 2001. However, the Fund 
continues to project annual deficits of $40 to $50 million per 
year due to several factors, including an inadequate inflation 
adjustor, skyrocketing prescription drug costs, and court 
decisions that have reduced the Fund's contribution base. While 
we are pleased that the Committee acts to maintain these health 
care benefits for another year, we regret that there was no 
consensus to report more than a one-year financing solution. It 
is the responsibility of this Committee to reach a long-term 
funding solution to maintain full benefits. The beneficiaries 
of the Coal Act and the companies who pay into the fund should 
not face continued uncertainty regarding benefits from and 
liability to the Fund. And despite the Committee's action 
today, without further legislative changes, affected parties 
will be left with the same uncertainty after 2001.
    In its fiscal year 2001 budget, the Administration proposed 
a comprehensive package of reforms to provide retired miners 
and their dependents with ten years of health care security. 
Even the Chairman's mark adopted the fundamental components of 
the ten-year solution in the Administration's proposal. Yet, 
the Committee is acting on only a short-term basis. Congress 
and this Committee cannot neglect the long-term solvency of 
this health care fund, and we urge the Committee to find as 
soon as possible in 2001 a long-term solution that ensures full 
retiree health benefits.
    We do not pretend that the solution is simple, and the bill 
we report today provides evidence of this fact. It provides 
relief to so-called ``final judgment'' companies--companies 
that received an unfavorable final judgment court ruling and, 
thus, were unable to recover contributions to the Fund that 
were subsequently awarded to similarly situated taxpayers. A 
number of companies contributing to the Fund identify 
themselves as part of a unique taxpaying class (such as so-
called ``reachback'' companies, ``super-reachback'' companies, 
and ``stranded interim'' companies). They identify themselves 
generally according to which UMWA contract(s) they signed and 
for which retirees they are liable. (A vote on an amendment to 
this bill to provide 50% premium relief to reachback companies 
failed by a vote of 6-13.) Any long-term solution for the Fund 
must ensure the full health benefits of retired miners and 
their dependents who were promised those benefits by their 
former employers and by the federal government. The Committee 
should also consider the future obligations to the Fund of the 
companies currently paying premiums.

                                   Daniel P. Moynihan.
                                   Jay Rockefeller.
                                   Kent Conrad.
                                   Richard H. Bryan.
                                   Charles Robb.
                                   Max Baucus.
                                   John Breaux.
                                   Bob Graham.
                                   Bob Kerrey.

       VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In the opinion of the Committee, it is necessary in order 
to expedite the business of the Senate, to dispense with the 
requirements of paragraph 12 of rule XXVI of the Standing Rules 
of the Senate (relating to the showing of changes in existing 
law made by the bill as reported by the Committee).

                                

```