II

104TH CONGRESS

1ST SESSION S. 597

To insure the long-term viability of the medicare, medicaid, and other federal

health programs by establishing a dedicated trust fund to reimburse

the government for the health care costs of individuals with diseases

attributable to the use of tobacco products.

IN THE SENATE OF THE UNITED STATES

MARCH 22 (legislative day, MARCH 16), 1995

Mr. LAUTENBERG (for himself, Mr. BRADLEY, and Mr. HARKIN) introduced

the following bill; which was read twice and referred to the Committee

on Finance

A BILL

To insure the long-term viability of the medicare, medicaid,

and other federal health programs by establishing a dedicated trust fund to reimburse the government for the

health care costs of individuals with diseases attributable

to the use of tobacco products.

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 ‘‘Medicare/Medicaid Sol5 vency Act’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds that—
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1 (1) illnesses and diseases that result from the

2 use of tobacco products cost Federal Government

3 health care programs billions of dollars, including

4 $10,200,000,000 in the medicare program,

5 $5,100,000,000 in the medicaid program, and

6 $4,700,000,000 in other Federal health programs in

7 fiscal year 1993;

8 (2) in April 1994, the trustees of the medicare

9 trust funds concluded that such funds may be insol10 vent in 2001;

11 (3) such insolvency would severely affect the

12 ability of the medicare trust funds to continue to

13 protect the health of America’s senior citizens; and

14 (4) the medicare population has a significantly

15 higher risk of contracting illnesses and diseases that

16 result from the use of tobacco products than young17 er age groups.

18 (b) PURPOSE.—The purpose of this Act is to insure

19 the long-term viability of the medicare, medicaid, and

20 other federal health programs by establishing a dedicated

21 trust fund to reimburse the government for the health care

22 costs of individuals with diseases attributable to the use

23 of tobacco products.
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1 SEC. 3. TOBACCO PRODUCT MANUFACTURERS CONTRIBU2 TION TO HEALTH CARE COST REIMBURSE3 MENT TRUST FUND.

4 (a) IN GENERAL.—The Internal Revenue Code of

5 1986 is amended by adding at the end the following new

6 subtitle:

7 ‘‘Subtitle K—Tobacco Product Man8 ufacturers Contribution to

9 Health Care Cost Reimburse10 ment Trust Fund.

‘‘CHAPTER 100. Tobacco Product Manufacturers Contribution to

Health Care Cost Reimbursement Trust Fund.

11 ‘‘CHAPTER 100—TOBACCO PRODUCT MAN12 UFACTURERS CONTRIBUTION TO

13 HEALTH CARE COST REIMBURSEMENT

14 TRUST FUND.

‘‘Sec. 9801. Establishment of Tobacco Product Health Care Cost

Reimbursement Trust Fund.

‘‘Sec. 9802. Contributions to Trust Fund.

15 ‘‘SEC. 9801. ESTABLISHMENT OF TOBACCO PRODUCT

16 HEALTH CARE COST REIMBURSEMENT

17 TRUST FUND.

18 ‘‘(a) CREATION OF TRUST FUND.—There is estab19 lished in the Treasury of the United States a trust fund

20 to be known as the ‘Tobacco Product Health Care Cost

21 Reimbursement Trust Fund’ (hereafter referred to in this

22 chapter as the ‘Trust Fund’), consisting of such amounts
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1 as may be appropriated or transferred to the Trust Fund

2 as provided in this section or section 9602(b).

3 ‘‘(b) TRANSFERS TO TRUST FUND.—The Secretary

4 shall transfer to the Trust Fund an amount equivalent

5 to contributions received in the Treasury under section

6 9802.

7 ‘‘(c) DISTRIBUTION OF AMOUNTS IN TRUST FUND.—

8 ‘‘(1) IN GENERAL.—The amounts in the Trust

9 Fund shall be available in each fiscal year (begin10 ning with fiscal year 1997), as provided by appro11 priation Acts, to the Secretary—

12 ‘‘(A) to distribute to each particular Sec13 retary responsible for the expenditure of Fed14 eral funds for that fiscal year under title XVIII

15 or XIX of the Social Security Act or any other

16 Federal program for the payment of health care

17 costs of individuals with diseases attributable to

18 the use of tobacco products, and

19 ‘‘(B) to pay all expenses of administration

20 incurred by the Department of the Treasury in

21 administering this chapter and the Trust Fund.

22 ‘‘(2) DETERMINATION OF DISTRIBUTION.—

23 Each particular Secretary described in paragraph

24 (1)(A) shall submit to the Secretary of the Treasury

25 such documentation as the Secretary requires to de-
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1 termine the appropriate distribution under para2 graph (1)(A).

3 ‘‘(3) USE OF DISTRIBUTIONS.—In any case in

4 which an expenditure of Federal funds described in

5 paragraph (1)(A) was made from a trust fund, the

6 distribution under paragraph (1)(A) reimbursing

7 such expenditure shall be made to such trust fund.

8 ‘‘(4) STATE MEDICAID EXPENDITURES.—For

9 purposes of this section, the Secretary of Health and

10 Human Services shall include in the Secretary’s sub11 mission under paragraph (2) the expenditure of

12 State funds under State plans under title XIX of the

13 Social Security Act for the payment of health care

14 costs of individuals with diseases attributable to the

15 use of tobacco products, and to the extent the dis16 tribution to the Secretary under paragraph (1)(A) is

17 attributable to such expenditure, shall reimburse the

18 various States for such expenditures.

19 ‘‘(d) ADMINISTRATIVE RULES.—For purposes of this

20 section, the rules of subchapter B of chapter 98 shall

21 apply.

22 ‘‘(e) TOBACCO PRODUCTS.—For purposes of this

23 chapter, the term ‘tobacco products’ has the meaning

24 given such term by section 5702(c).
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1 ‘‘SEC. 9802. CONTRIBUTIONS TO TRUST FUND.

2 ‘‘(a) ANNUAL PREMIUMS.—Each manufacturer of to3 bacco products shall pay to the Trust Fund, an annual

4 contribution equal to the product of the amount deter5 mined under subsection (b) for each fiscal year (beginning

6 with fiscal year 1997) and the manufacturer’s market

7 share percentage determined under subsection (c) for the

8 calendar year preceding such fiscal year.

9 ‘‘(b) DETERMINATION OF FUNDING LEVELS.—

10 ‘‘(1) IN GENERAL.—Not later than the date the

11 President is required to submit the budget of the

12 United States for a fiscal year to Congress, the Di13 rector of the Centers for Disease Control and Pre14 vention, after consultation with the Directors of the

15 National Institutes of Health, the National Cancer

16 Institute, and the National Heart, Lung, and Blood

17 Institute, shall make an estimate of—

18 ‘‘(A) the amount of Federal expenditures

19 for that fiscal year under titles XVIII and XIX

20 of the Social Security Act and other Federal

21 programs, and

22 ‘‘(B) the amount of State expenditures for

23 that fiscal year under State plans under title

24 XIX of the Social Security Act,

25 for payment of health care costs of individuals with

26 diseases attributable to the use of tobacco products.
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1 ‘‘(2) DISCLOSURE OF ESTIMATE METHODOL2 OGY.—The Director of the Centers for Disease Con3 trol and Prevention shall publish in the Federal Reg4 ister all relevant documentation considered and the

5 methodology used in making the estimate described

6 in paragraph (1).

7 ‘‘(3) REPORT IN BUDGET.—The President shall

8 include the estimate described in paragraph (1) in

9 the budget for the fiscal year.

10 ‘‘(c) MARKET SHARE PERCENTAGE.—

11 ‘‘(1) IN GENERAL.—Not later than July 1, the

12 Secretary shall determine and publish the market

13 share percentage for the preceding calendar year for

14 each manufacturer of tobacco products by determin15 ing such manufacturer’s percentage share of the

16 total amount of tobacco products sold in the United

17 States during such calendar year.

18 ‘‘(2) INFORMATION.—Not later than April 1,

19 each manufacturer of tobacco products shall furnish

20 to the Secretary such information as the Secretary

21 may require to determine any market share percent22 age under this subsection for the preceding calendar

23 year.

24 ‘‘(d) PAYMENT OF CONTRIBUTIONS.—The annual

25 contribution under subsection (a) for any fiscal year shall
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1 be payable in 12 monthly installments, due on the twenty2 fifth day of each calendar month in the fiscal year.

3 ‘‘(e) ENFORCEMENT.—For penalties and other gen4 eral and administrative provisions applicable to this sec5 tion, see subtitle F.

6 ‘‘(f) MANUFACTURER OF TOBACCO PRODUCTS.—For

7 purposes of this section, the term ‘manufacturer of to8 bacco products’ has the meaning given such term by sec9 tion 5702(d).’’

10 (b) EFFECTIVE DATE.—The amendments made by

11 this section shall take effect on the date of the enactment

12 of this Act.

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