II

104TH CONGRESS

2D SESSION S. 1892

To reward States for collecting medicaid funds expended on tobacco-related

illnesses, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 19, 1996

Mr. LAUTENBERG (for himself and Mr. WELLSTONE) introduced the following

bill; which was read twice and referred to the Committee on Finance

A BILL

To reward States for collecting medicaid funds expended

on tobacco-related illnesses, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Tobacco Medicaid Re5 covery Act of 1996’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds the following:

8 (1) Federal taxpayers pay for approximately

9 $20,000,000,000 each year in Federal health ex10 penditures to treat tobacco-related illnesses, includ-
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1 ing expenditures incurred under the medicare and

2 medicaid programs operated under titles XVIII and

3 XIX of the Social Security Act, health care pro4 grams carried out by the Secretary of Veterans Af5 fairs under chapter 17 of title 38, United States

6 Code, and other Federal health care programs.

7 These expenditures often contribute to an increase

8 in the Federal budget deficit.

9 (2) According to the Centers for Disease Con10 trol and Prevention, tobacco-related illnesses cost

11 the medicaid program under title XIX of the Social

12 Security Act $5,100,000,000 each year.

13 (3) The efforts of several States that are at14 tempting under Federal law, including in some

15 cases, under the Federal anti-racketeering statutes,

16 or under State law, to recover the health care costs

17 incurred under the medicaid program for the treat18 ment of individuals with diseases attributable to the

19 use of tobacco products from the manufacturers of

20 such products, are to be commended.

21 (b) PURPOSE.—The purpose of this Act is to reward

22 States that successfully recover the Federal and State

23 health care costs incurred under the medicaid program for

24 the treatment of individuals with diseases attributable to

25 the use of tobacco products by providing increased funding
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1 for their medicaid programs and to provide increased re2 sources to the National Institutes of Health.

3 SEC. 3. INCENTIVE PAYMENTS FOR COLLECTION OF MED4 ICAID FUNDS EXPENDED ON TOBACCO-RE5 LATED ILLNESSES.

6 (a) FINANCIAL REWARD FOR SUCCESSFUL RECOV7 ERIES.—Section 1903(d) of the Social Security Act (42

8 U.S.C. 1396b(d)) is amended by adding at the end the

9 following new paragraph:

10 ‘‘(7)(A) Notwithstanding any other provision of law,

11 if a State recovers, by judgment in, or settlement of, any

12 suit arising under Federal or State law, amounts expended

13 as medical assistance under the State plan for the treat14 ment of individuals with diseases attributable to the use

15 of tobacco products, from a manufacturer of tobacco prod16 ucts, the State shall notify the Secretary of the amount

17 of such recovery. Upon receipt of such a notice, the Sec18 retary shall determine the amount of Federal expenditures

19 under this title that are attributable to the amounts recov20 ered, based on the Federal medical assistance percentage,

21 as defined in section 1905(b), for such State. The Sec22 retary shall treat the amount so determined as an overpay23 ment under this section, in accordance with paragraph

24 (2)(A), and with respect to such amount shall do the fol25 lowing:
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‘‘(i) Provide that the State shall retain 1 1 ⁄3 of

2 such amount, for the purpose of using such funds to

3 meet the non-Federal share of expenditures under

4 the State plan with respect to which payments may

5 be made under this title.

‘‘(ii) Pay 1 6 ⁄3 of such amount to the Director of

7 the National Institutes of Health, for the purpose of

8 conducting disease research.

9 ‘‘(B) Any amount of new budget authority or outlays

10 resulting from the provisions of this paragraph shall not

11 be counted for any purpose under section 251 or 252 of

12 the Balanced Budget and Emergency Deficit Control Act

13 of 1985.

14 ‘‘(C) For purposes of this paragraph—

15 ‘‘(i) the term ‘manufacturer of tobacco prod16 ucts’ has the meaning given such term by section

17 5702(d) of the Internal Revenue Code of 1986; and

18 ‘‘(ii) the term ‘tobacco products’ has the mean19 ing given such term by section 5702(c) of such

20 Code.’’.

21 (b) CONFORMING AMENDMENT.—Section 1902(a)

22 (42 U.S.C. 1396a(a)) is amended—

23 (1) by striking ‘‘and’’ at the end of paragraph

24 (61);
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1 (2) by striking the period at the end of para2 graph (62) and inserting ‘‘; and’’; and

3 (3) by inserting after paragraph (62) the fol4 lowing new paragraph:

5 ‘‘(63) provide that the State shall provide

6 prompt notice to the Secretary of the amount of any

7 recovery from a manufacturer of tobacco products,

8 as defined in section 1903(d)(7)(C)(i), of expendi9 tures for medical assistance provided under such

10 plan for the treatment of individuals with diseases

11 attributable to the use of tobacco products, as de12 fined in section 1903(d)(7)(C)(ii).’’.

13 (c) EFFECTIVE DATE.—The amendments made by

14 subsections (a) and (b) shall apply to amounts recovered

15 on and after the date of the enactment of this Act.

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