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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1246 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 1246

To amend the Internal Revenue Code of 1986 to increase excise taxes on 
 cigarettes and other tobacco and tobacco-related products and to use 
 the increased revenues to expand Medicaid eligibility, and for other 
                               purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 8, 1993

Mr. Andrews of Texas (for himself, Mr. Stark, Mr. Levin, Mr. McDermott, 
Mr. Synar, and Mr. Huffington) introduced the following bill; which was 
   referred jointly to the Committees on Ways and Means, Energy and 
                       Commerce, and Agriculture

_______________________________________________________________________

                                 A BILL

 
To amend the Internal Revenue Code of 1986 to increase excise taxes on 
 cigarettes and other tobacco and tobacco-related products and to use 
 the increased revenues to expand Medicaid eligibility, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    (a) Short Title.--This Act may be cited as the ``Tobacco Health Tax 
Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. INCREASE IN EXCISE TAXES ON TOBACCO PRODUCTS.

    (a) Cigars.--Subsection (a) of section 5701 is amended--
            (1) by striking ``$1.125 cents per thousand (93.75 cents 
        per thousand on cigars removed during 1991 or 1992)'' in 
        paragraph (1) and inserting ``$4.69 per thousand'', and
            (2) by striking ``equal to'' and all that follows in 
        paragraph (2) and inserting ``equal to 53.17 percent of the 
        price for which sold but not more than $120 per thousand.''
    (b) Cigarettes.--Subsection (b) of section 5701 is amended--
            (1) by striking ``$12 per thousand ($10 per thousand on 
        cigarettes removed during 1991 or 1992)'' in paragraph (1) and 
        inserting ``$50.00 per thousand'',
            (2) by striking ``$25.20 per thousand ($21 per thousand on 
        cigarettes removed during 1991 or 1992)'' in paragraph (2) and 
        inserting ``$105 per thousand'', and by adding at the end 
        thereof the following new paragraph:
            ``(3) Additional tax on packs containing fewer than 20 
        cigarettes.--On any pack of cigarettes containing fewer than 20 
        cigarettes, the excess of $1 over the tax imposed by paragraphs 
        (1) and (2) on the cigarettes in such pack.''
    (c) Cigarette Papers.--Subsection (c) of section 5701 is amended by 
striking ``0.75 cent (0.625 cent on cigarette papers removed during 
1991 or 1992)'' and inserting ``3.18 cents''.
    (d) Cigarette Tubes.--Subsection (d) of section 5701 is amended by 
striking ``1.5 cents (1.25 cents on cigarette tubes removed during 1991 
or 1992)'' and inserting ``6.25 cents''.
    (e) Smokeless Tobacco.--Subsection (e) of section 5701 is amended--
            (1) by striking ``36 cents (30 cents on snuff removed 
        during 1991 or 1992)'' in paragraph (1) and inserting ``$10'', 
        and
            (2) by striking ``12 cents (10 cents on chewing tobacco 
        removed during 1991 or 1992)'' in paragraph (2) and inserting 
        ``$4.80''.
    (f) Pipe Tobacco.--Subsection (f) of section 5701 is amended by 
striking ``67.5 cents (56.25 cents on pipe tobacco removed during 1991 
or 1992)'' and inserting ``$2.82''.
    (g) Imposition of Tax on Cigarette Tobacco.--
            (1) In general.--Section 5701 of such Code is amended by 
        redesignating subsection (g) as subsection (h) and by inserting 
        after subsection (f) the following new subsection:
    ``(g) Cigarette Tobacco.--On cigarette tobacco, manufactured in or 
imported into the United States, there shall be imposed a tax of $22.40 
per pound (and a proportionate tax at the like rate on all fractional 
parts of a pound).''
            (2) Cigarette tobacco defined.--Section 5702 of such Code 
        is amended by adding at the end thereof the following new 
        subsection:
    ``(p) Cigarette tobacco.--The term `cigarette tobacco' means any 
tobacco which, because of its appearance, type, packaging, or labeling, 
is suitable for use and likely to offered to, or purchased by, 
consumers as tobacco to be rolled into a cigarette.''
            (3) Conforming amendments.--
                    (A) Subsection (c) of section 5702 of such Code is 
                amended by striking ``and pipe tobacco'' and inserting 
                ``pipe tobacco, and cigarette tobacco''.
                    (B) Subsection (d) of section 5702 of such Code is 
                amended by striking ``or pipe tobacco'' and inserting 
                ``pipe tobacco, or cigarette tobacco''.
    (h) Inflation Adjustment of Tobacco Tax Rates.--Section 5701 is 
amended by adding at the end thereof the following new subsection:
    ``(i) Inflation Adjustment.--In the case of articles removed in any 
calendar year after 1993, each dollar amount contained in this 
subsection shall be increased by an amount equal to--
            ``(1) such dollar amount, multiplied by
            ``(2) the greater of--
                    ``(A) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                the removal occurs by substituting `calendar year 1992' 
                for `calendar year 1989' in subparagraph (B) thereof, 
                or
                    ``(B) the cost-of-living adjustment which would be 
                determined under subparagraph (A) if only changes in 
                the tobacco and smoking products component of the 
                Consumer Price Index (as defined in section 1(f)(5)) 
                were taken into account.
If any increase determined under this subsection is not a multiple of 
\1/4\ cent, such increase shall be rounded to the nearest \1/4\ cent.''
    (i) Effective Date.--The amendments made by this section shall 
apply with respect to articles removed after December 31, 1993.
    (j) Floor Stock Taxes.--
            (1) Imposition of tax.--On tax-increased articles 
        manufactured in or imported into the United States which are 
        removed before January 1, 1994, and held on such date for sale 
        by any person, there shall be imposed the following taxes:
                    (A) Small cigars.--On cigars, weighing not more 
                than 3 pounds per thousand, $3.565 per thousand.
                    (B) Large cigars.--On cigars weighing more than 3 
                pounds per thousand, 40.42 percent of the wholesale 
                price, but not more than $120 per thousand.
                    (C) Small cigarettes.--On cigarettes, weighing not 
                more than 3 pounds per thousand, $38 per thousand.
                    (D) Large cigarettes.--On cigarettes weighing more 
                than 3 pounds per thousand, $79.80 per thousand; except 
                that, if more than 6\1/2\ inches in length, they shall 
                be taxable at the rate prescribed for cigarettes 
                weighing not more than 3 pounds per thousand, counting 
                each 2\3/4\ inches, or fraction thereof, of the length 
                of each as one cigarette.
                    (E) Cigarette packs containing fewer than 20 
                cigarettes.--On any pack of cigarettes containing fewer 
                than 20 cigarettes, the excess of $1 over the sum of--
                            (i) the tax imposed by paragraphs (1) and 
                        (2) of section 5701(a) of the Internal Revenue 
                        Code of 1986, plus
                            (ii) the tax imposed by this subsection,
                on the cigarettes in such pack.
                    (F) Cigarette papers.--On each book or set of 
                cigarette papers containing more than 25 papers, 2.43 
                cents for each 50 papers or fractional part thereof; 
                except that, if cigarette papers measure more than 6\1/
                2\ inches in length, they shall be taxable at the rate 
                prescribed, counting each 2\3/4\ inches, or fraction 
                thereof, of the length of each as one cigarette paper.
                    (G) Cigarette tubes.--On cigarette tubes, 4.75 
                cents for each 50 tubes or fractional part thereof; 
                except that, if cigarette tubes measure more than 6\1/
                2\ inches in length, they shall be taxable at the rate 
                prescribed, counting each 2\3/4\ inches, or fraction 
                thereof, of the length of each as one cigarette tube.
                    (H) Snuff.--On snuff, $9.64 per pound (and a 
                proportionate tax at the like rate on all fractional 
                parts of a pound).
                    (I) Chewing tobacco.--On chewing tobacco, $4.68 per 
                pound (and a proportionate tax at the like rate on all 
                fractional parts of a pound).
                    (J) Pipe tobacco.--On pipe tobacco, $2.145 per 
                pound (and a proportionate tax at the like rate on all 
                fractional parts of a pound).
                    (K) Cigarette tobacco.--On cigarette tobacco, 
                $22.40 per pound (and a proportionate tax at the like 
                rate on all fractional parts of a pound).
            (2) Liability for tax and method of payment.--
                    (A) Liability for tax.--A person holding tax-
                increased articles on January 1, 1994, to which any tax 
                imposed by paragraph (1) applies shall be liable for 
                such tax.
                    (B) Method of payment.--The tax imposed by 
                paragraph (1) shall be paid in such manner as the 
                Secretary shall prescribe by regulations.
                    (C) Time for payment.--The tax imposed by paragraph 
                (1) shall be paid on or before June 30, 1994.
            (3) Tax-increased articles.--For purposes of this 
        subsection, the term ``tax-increased articles'' means tobacco 
        products (as defined by section 5702(c) of the Internal Revenue 
        Code of 1986, as amended by this Act), cigarette papers (as 
        defined by section 5702(f) of such Code), cigarette tubes (as 
        defined by section 5702(g) of such Code), and packs of 
        cigarettes containing fewer than 20 cigarettes.
            (4) Other laws applicable.--All provisions of law, 
        including penalties, applicable with respect to the taxes 
        imposed by section 5701 of such Code shall, insofar as 
        applicable and not inconsistent with the provisions of this 
        subsection, apply to the floor stocks taxes imposed by 
        paragraph (1), to the same extent as if such taxes were imposed 
        by such section 5701.

SEC. 3. ESTABLISHMENT OF TOBACCO HEALTH TAX TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 (relating to trust fund 
code) is amended by adding at the end thereof the following new 
section:

``SEC. 9512. TOBACCO HEALTH TAX TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Tobacco Health 
Tax Trust Fund', consisting of such amounts as may be appropriated or 
credited to such Trust Fund as provided in this section or section 
9602(b).
    ``(b) Transfers to Trust Fund.--
            ``(1) In general.--There is hereby appropriated to the 
        Tobacco Health Tax Trust Fund amounts equivalent to the 
        increase in net revenues received in the Treasury from the 
        Tobacco Health Tax Act of 1993 taxes.
            ``(2) Net revenues.--For purposes of paragraph (1), the 
        term `net revenues' means the amount estimated by the Secretary 
        based on the excess of--
                    ``(A) the Tobacco Health Tax Act of 1993 taxes 
                received in the Treasury, over
                    ``(B) the decrease in the tax imposed by chapter 1 
                resulting from such taxes.
            ``(3) Tobacco health tax act of 1993 taxes.--For purposes 
        of this subsection, the term `Tobacco Health Tax Act of 1993 
        taxes' means the taxes imposed by section 5701 which are 
        attributable to the amendments made by the Tobacco Health Tax 
        Act of 1993 and the taxes imposed by section 2(j) of such Act.
    ``(c) Expenditures From Trust Fund.--The following percentages of 
the amounts appropriated or credited to the Tobacco Health Tax Trust 
Fund shall be available, as provided in appropriation Acts, for the 
following purposes:
            ``(1) 80 percent shall be available to make Federal 
        payments to States to carry out section 4 of the Tobacco Health 
        Tax Act of 1993;
            ``(2) 10 percent shall be available to make grants under 
        section 5 of such Act;
            ``(3) 4.5 percent shall be available for additional funding 
        under section 6 of such Act (relating to general health 
        prevention and health care);
            ``(4) 2.5 percent shall be available to provide for counter 
        advertising and tobacco preventive activities under section 7 
        of such Act; and
            ``(5) 3 percent shall be available under section 8 of such 
        Act to assist tobacco producers experiencing financial hardship 
        caused by increased excise taxes on tobacco products.''
    (b) Clerical Amendment.--The table of sections for such subchapter 
A is amended by adding at the end thereof the following new item:

                              ``Sec. 9512. Tobacco Health Tax Trust 
                                        Fund.''

SEC. 4. MEDICAID ELIGIBILITY AND PAYMENT EXPANSIONS.

    (a) Expansion of Medicaid Eligibility.--Subject to subsection (c)--
            (1) the Secretary of Health and Human Services (in this 
        subsection referred to as the ``Secretary'') shall specify--
                    (A) a percentage (not to exceed 200 percent) that 
                shall apply under section 1902(z)(2)(A) of the Social 
                Security Act, and
                    (B) a maximum age (not to exceed 19 years) that 
                shall apply under section 1902(z)(2)(B) of such Act for 
                a fiscal year; and
            (2) if the percentage specified under paragraph (1)(A) is 
        200 percent and the maximum age specified under paragraph 
        (1)(B) is 19 years of age, the Secretary shall specify a 
        percentage (not to exceed 200 percent) that shall apply under 
        section 1902(a)(2)(B) of such Act for the fiscal year.
    (b) Authority To Require Increase in Medicaid Payment Rates to 
Hospitals and Physicians.--Subject to subsection (c), the Secretary 
may, in addition to specifying a percentages and a maximum age under 
subsection (a)--
            (1) specify a percent that shall apply for purposes of 
        subsection (e)(1)(A)(i), and
            (2) specify a percent that shall apply for purposes of 
        section 1902(aa)(1) of the Social Security Act (as added by 
        subsection (e)(2)(A) of this section).
    (c) Limitation on Total Increase.--The percentages and percents 
under subsections (a) and (b) for a fiscal year shall be specified in a 
manner so that the total amount of additional Federal expenditures in a 
fiscal year resulting from this section (and the amendments made by 
this section) does not exceed the amounts made available to carry out 
this section under section 9512(c)(1) of the Internal Revenue Code of 
1986 for the fiscal year.
    (d) Conforming Amendments for Medicaid Eligibility Expansion.--
            (1) Benefits for low-income individuals.--Section 
        1902(a)(10)(A)(i) of the Social Security Act (42 U.S.C. 
        1396a(a)(10)(A)(i)) is amended--
                    (A) by striking ``or'' at the end of subclause 
                (VI);
                    (B) by striking the semicolon at the end of 
                subclause (VII) and inserting ``, or''; and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(VIII) who are described in 
                                subsection (z)(1);''.
            (2) Individuals described.--
                    (A) In general.--Section 1902 of such Act (42 
                U.S.C. 1396a) is amended by adding at the end the 
                following new subsection:
    ``(z)(1) Individuals described in this paragraph are--
            ``(A) women during pregnancy (and during the 60-day period 
        beginning on the last day of the pregnancy) or individuals who 
        have not attained the age specified by the Secretary under 
        section 4(a)(1)(B) of the Tobacco Health Tax Act of 1993, who 
        are not described in any of subclauses (I) through (VII) of 
        subsection (a)(10)(A)(i), and whose family income does not 
        exceed the income level described in paragraph (2)(A) for a 
        family of the size of the family; and
            ``(B) individuals not described in subparagraph (A) who 
        have not attained 65 years of age, who are not described in any 
        of subclauses (I) through (VII) of subsection (a)(10)(A)(i), 
        and whose family income does not exceed the income level 
        described in paragraph (2)(B) for a family of the size of the 
        family.
    ``(2)(A) The income level described in this subparagraph is the 
percent, specified under section 4(a)(1)(A) of the Tobacco Health Tax 
Act of 1993, of the official poverty line (as defined by the Office of 
Management and Budget, and revised annually in accordance with section 
673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to 
a family of the size involved.
    ``(B) The income level described in this subparagraph is the 
percent (if any), specified under section 4(a)(2) of the Tobacco Health 
Tax Act of 1993, of the official poverty line (as defined by the Office 
of Management and Budget, and revised annually in accordance with 
section 673(2) of the Omnibus Budget Reconciliation Act of 1981) 
applicable to a family of the size involved.
    ``(3) Notwithstanding subsection (a)(17), for individuals who are 
eligible for medical assistance because of subsection 
(a)(10)(A)(i)(VIII)--
            ``(A) no resource standard shall be applied;
            ``(B) the income standard to be applied is the appropriate 
        income standard established under paragraph (2); and
            ``(C) family income shall be determined in accordance with 
        the methodology that is not more restrictive than the 
        methodology employed under the State plan under part A or E of 
        title IV (except to the extent such methodology is inconsistent 
        with clause (D) of subsection (a)(17)), and costs incurred for 
        medical care or for any other type of remedial care shall not 
        be taken into account.
Any different treatment provided under this paragraph for such 
individuals shall not, because of subsection (a)(17), require or permit 
such treatment for other individuals.
    ``(4)(A) In the case of any State which is providing medical 
assistance to its residents under a waiver granted under section 1115, 
the Secretary shall require the State to provide medical assistance for 
individuals described in paragraph (1) in the same manner as the State 
would be required to provide such assistance for such individuals if 
the State had in effect a plan approved under this title.
    ``(B) In the case of a State which is not one of the 50 States or 
the District of Columbia, the State need not meet the requirement of 
subsection (a)(10)(A)(i)(VIII) and, for purposes of paragraph (2)(A), 
the State may substitute for the percentages provided under such 
paragraph any percentages that are less than such percentages.
    ``(5) The Secretary may not require that an individual apply for 
eligibility under subclauses (I) through (VII) of subsection 
(a)(10)(A)(i) as a condition of being determined to be eligible for 
medical assistance under this title as an individual described in 
paragraph (1).''.
                    (B) Conforming amendment.--Section 1905(a) of such 
                Act (42 U.S.C. 1396d(a)) is amended--
                            (i) by striking ``or'' at the end of clause 
                        (ix),
                            (ii) by adding ``or'' at the end of clause 
                        (x), and
                            (iii) by inserting after clause (x) the 
                        following new clause:
                            ``(xi) individuals described in section 
                        1902(z)(1),''.
            (3) Restrictions on benefits provided.--Section 1902(a)(10) 
        of such Act (42 U.S.C. 1396a(a)(10)) is amended in the matter 
        following subparagraph (F)--
                    (A) by striking ``; and (XI) the making'' and 
                inserting ``, (XI) the making'';
                    (B) by striking ``and (XI) the medical'' and 
                inserting ``(XII) the medical''; and
                    (C) by striking the semicolon at the end and 
                inserting the following: `` and (XIII) the medical 
                assistance required to be made available to an 
                individual described in subsection (z)(1) shall not 
                include nursing facility services, home and community-
                based services (as defined in section 
                1915(d)(5)(C)(i)), services in an intermediate care 
                facility for the mentally retarded, and community 
                supported living arrangements services;''.
    (e) Conforming Provisions Imposing a Floor on Medicaid Payment 
Levels for Inpatient Hospital Services and Physicians' Services.--
            (1) Inpatient hospital services.--
                    (A) In general.--(i) A State plan under title XIX 
                of the Social Security Act shall not be considered to 
                meet the requirement of section 1902(a)(13)(A) of such 
                Act (insofar as it requires payments to hospitals for 
                inpatient hospital services that are reasonable and 
                adequate to meet the costs which must be incurred by 
                efficiently and economically operated facilities), as 
                of a calendar quarter, unless the State has submitted 
                to the Secretary of Health and Human Services, by not 
                later than the first date of such quarter, an amendment 
                to such plan that assures that, in the aggregate, the 
                amount of payments for inpatient hospital services 
                provided in subsection (d) hospitals (as defined in 
                section 1886(d)(1)(B) of such Act) under the plan is 
                not less than--
                            (I) in the case of services furnished 
                        during fiscal year 1997, such percent as may be 
                        specified under section 4(b)(1) of the Tobacco 
                        Health Tax Act of 1993 (but not to exceed 80 
                        percent, or, if greater, the percent specified 
                        in clause (ii)) of the amount of payments for 
                        such services that would be made under title 
                        XVIII of such Act (without regard to any 
                        deductible imposed under section 1813(a) of 
                        such Act or any limitation on the coverage of 
                        inpatient hospital services under such title) 
                        for such services if covered under such title;
                            (II) in the case of services furnished 
                        during fiscal year 1998, such percent specified 
                        under section 4(b)(1) of the Tobacco Health Tax 
                        Act of 1993 (not to exceed 85 percent or, if 
                        greater, the percent specified in clause (ii)) 
                        of the amount of payments for such services 
                        that would be made under title XVIII of such 
                        Act (without regard to any deductible imposed 
                        under section 1813(a) of such Act or any 
                        limitation on the coverage of inpatient 
                        hospital services under such title) for such 
                        services if covered under such title; and
                            (III) in the case of services furnished 
                        during any succeeding fiscal year, such percent 
                        specified under section 4(b)(1) of the Tobacco 
                        Health Tax Act of 1993 (not to exceed 90 
                        percent) of the amount of payments for such 
                        services that would be made under title XVIII 
                        of such Act (without regard to any deductible 
                        imposed under section 1813(a) of such Act or 
                        any limitation on the coverage of inpatient 
                        hospital services under such title) for such 
                        services if covered under such title.
                    (ii) The percent specified in this clause is the 
                quotient of--
                            (I) the total payments made under the State 
                        plan under title XIX of the Social Security Act 
                        in fiscal year 1993 with respect to inpatient 
                        hospital services, divided by
                            (II) the amount of payments for such 
                        services that would be made under title XVIII 
                        of such Act (without regard to any deductible 
                        imposed under section 1813(a) of such Act or 
                        any limitation on the coverage of inpatient 
                        hospital services under such title) for such 
                        services in such fiscal year if covered under 
                        such title,
                expressed as a percentage, or, if less, 90 percent.
                    (iii) In computing amounts under clause (i), the 
                Secretary shall adjust for differences in case mix, 
                volume, the age and disability of the populations 
                covered by the two programs, and other relevant factors 
                identified by the Secretary.
                    (B) Review.--The Secretary, by not later than 90 
                days after the date of submission of a plan amendment 
                under subparagraph (A), shall--
                            (i) review each such amendment for 
                        compliance with the requirement of section 
                        1902(a)(13)(A) of the Social Security Act; and
                            (ii) approve or disapprove each such 
                        amendment.
                If the Secretary disapproves such an amendment, the 
                State shall immediately submit a revised amendment 
                which meets such requirement.
                    (C) Collection of data.--The Secretary may provide 
                for such collection of data on payment for inpatient 
                hospital services as may be necessary to carry out this 
                paragraph.
                    (D) Nonwaivability.--The provisions of this 
                paragraph may not be waived by the Secretary.
            (2) Physicians' services.--
                    (A) In general.--Section 1902 of the Social 
                Security Act (42 U.S.C. 1396a) is amended--
                            (i) in subsection (a)(13)--
                                    (I) by striking ``and'' at the end 
                                of subparagraph (E);
                                    (II) by striking the semicolon at 
                                the end of subparagraph (F) and 
                                inserting ``; and''; and
                                    (III) by adding at the end the 
                                following new subparagraph:
                    ``(G) for payment for physicians' services through 
                a methodology under which the amount of payment for 
                such services furnished during a calendar quarter is 
                not less than the amount specified in subsection 
                (aa);''; and
                            (ii) by adding at the end the following new 
                        subsection:
    ``(aa)(1) For purposes of subsection (a)(13)(G), the amount 
specified in this subsection is--
            ``(A) for physicians' services furnished during a calendar 
        quarter in fiscal year 1997, a percent specified under section 
        4(b)(2) of the Tobacco Health Tax Act of 1993 (not to exceed 60 
        percent or, if greater, the percent specified in paragraph (2)) 
        of the applicable fee schedule amount established under section 
        1848 for services furnished in such year,
            ``(B) for physicians' services furnished during a calendar 
        quarter in fiscal year 1998, a percent specified under section 
        4(b)(2) of the Tobacco Health Tax Act of 1993 (but not to 
        exceed 70 percent or, if greater, the percent specified in 
        paragraph (2)) of the applicable fee schedule amount 
        established under section 1848 for services furnished in such 
        year, and
            ``(C) for physicians' services furnished during a calendar 
        quarter in a succeeding fiscal year, a percent specified under 
        section 4(b)(2) of the Tobacco Health Tax Act of 1993 (but not 
        to exceed 90 percent) of the applicable fee schedule amount 
        established under section 1848 for services furnished in such 
        year.
    ``(2) The percent specified in this paragraph is the quotient of--
            ``(A) the total payments made under the State plan under 
        title XIX of the Social Security Act in fiscal year 1993 for 
        physicians' services, divided by
            ``(B) the amount of payments for such services that would 
        be made under title XVIII of such Act (without regard to any 
        deductible or coinsurance) for such services in such fiscal 
        year if covered under such title,
expressed as a percentage, or, if less, 90 percent.''.
                    (B) Transmittal of payment information to states.--
                Section 1848(i) of such Act (42 U.S.C. 1395w-4(i)) is 
                amended by adding at the end the following new 
                paragraph:
            ``(4) Transmittal of physician payment information to 
        states.--Not later than August 1 of 1996 (and of each year 
        thereafter), the Secretary shall transmit such information to 
        the States as is necessary to enable the States to carry out 
        the requirements of section 1902(a)(13)(G) of the Social 
        Security Act (as added by section 4(e)(2)(A) of the Tobacco 
        Health Tax Act of 1993).''.
                    (C) Relation to payments for obstetrical and 
                pediatric services.--Section 1926 of such Act (42 
                U.S.C. 1396r-7) is amended by adding at the end the 
                following new subsection:
    ``(e) Payment rates established under this section with respect to 
services shall in no case be less than the minimum payment amounts 
specified under section 1902(aa) with respect to such services. The 
fact that payment amounts with respect to such services are consistent 
with the payment rates required under such section shall not be the 
basis for a determination that the payment amounts comply with the 
requirements of this section.''.
    (e) Full Federal Payment for Increased Costs.--Section 1903 of the 
Social Security Act (42 U.S.C. 1396b) is amended by adding at the end 
the following new subsection:
    ``(w)(1) Notwithstanding subsection (a), with respect to new 
mandated expenditures (as defined in paragraph (2)) in a quarter, 
instead of the amounts otherwise paid to a State under subsection (a) 
for a quarter with respect to such expenditures, there shall be paid to 
the State an amount equal to 100 percent of the amount of such 
expenditures.
    ``(2) In this subsection, the term `new mandated expenditures' 
means the sum of the following expenditures under the State plan during 
a quarter:
            ``(A) The amount by which (i) the minimum amount of 
        expenditures for medical assistance for inpatient hospital 
        services (consistent with section 4(e)(1)(A) of the Tobacco 
        Health Tax Act of 1993), exceeds (ii) the amount of 
        expenditures for such assistance which the Secretary determines 
        would have been payable under the plan (as such plan was in 
        effect as of the date of the enactment of this subsection).
            ``(B) The amount by which (i) the minimum amount of 
        expenditures under the plan for medical assistance for 
        physicians' services (consistent with section 1902(a)(13)(G)) 
        for the quarter, exceeds (ii) the amount of expenditures under 
        the plan for such assistance which the Secretary determines 
        would have been payable under the plan (as such plan was in 
        effect as of the date of the enactment of this subsection) for 
        the quarter.
            ``(C) The amount of expenditures for medical assistance 
        attributable to individuals with respect to whom the State plan 
        would not be required to provide such assistance but for the 
        amendments made by section 4(c) of the Tobacco Health Tax Act 
        of 1993.
            ``(D) The amount of expenses reasonably attributable to the 
        expenditures described in subparagraphs (A) through (C).''.

SEC. 5. STATE GRANTS TO REPLACE STATE AND LOCAL REVENUE LOSS DUE TO 
              FEDERAL TOBACCO TAX INCREASE.

    With respect to the funds made available under section 9512(c)(2) 
of the Internal Revenue Code of 1986, the Secretary of the Treasury 
shall, by grant, allocate such funds among State and local governments 
to compensate for any reduction in revenues to such governments which 
such Secretary determines is attributable to the reduced consumption of 
articles subject to tax under section 5701 of such Code by reason of 
the amendments made by section 2 of this Act. In determining revenue 
reduction, such Secretary shall take into account the presence of 
military bases and international boundaries, among other factors.

SEC. 6. ADDITIONAL FUNDS FOR GENERAL HEALTH PREVENTION AND ACCESS TO 
              HEALTH CARE.

    With respect to the funds made available under section 9512(c)(3) 
of the Internal Revenue Code of 1986, the Secretary of Health and Human 
Services shall, for the purpose of providing additional funds to carry 
out the following programs, make such allocations as the Secretary 
deems appropriate:
            (1) Lead poisoning prevention.--The program under section 
        317A of the Public Health Service Act.
            (2) Minority health promotion.--Programs under section 1707 
        of such Act.
            (3) AIDS prevention.--Programs of the Centers for Disease 
        Control and Prevention under such Act to prevent infection with 
        the human immunodeficiency virus.
            (4) Preventive health and health services block grant.--The 
        program under part A of title XIX of such Act.
            (5) National health service corps.--The programs of the 
        National Health Service Corps under subparts II and III of part 
        D of title III of such Act.
            (6) Community health programs.--The programs under sections 
        329 and 330 of such Act.

SEC. 7. ADDITIONAL FUNDS FOR COUNTER ADVERTISING AND TOBACCO PREVENTIVE 
              ACTIVITIES.

    With respect to the funds made available under section 9512(c)(4) 
of the Internal Revenue Code of 1986, the Secretary of Health and Human 
Services shall provide for public education and other activities to 
discourage the use of tobacco products, with special emphasis on 
discouraging cigarette smoking by youths. At least \1/2\ of such funds 
shall be made available for counter-advertising to discourage the use 
of such products.

SEC. 8. DEPARTMENT OF AGRICULTURE PROGRAMS TO ASSIST TOBACCO PRODUCERS 
              EXPERIENCING FINANCIAL HARDSHIP CAUSED BY INCREASED 
              EXCISE TAXES ON TOBACCO PRODUCTS.

    (a) Income Assistance.--
            (1) Assistance authorized.--If the Secretary of Agriculture 
        determines that the domestic consumption of tobacco for a 
        marketing year is equal to or less than 95 percent of the 
        normal year's domestic consumption of tobacco calculated in 
        1993, the Secretary may make payments to a tobacco producer in 
        the United States to offset all or a portion of the reduced 
        sales of tobacco made by that producer during that marketing 
        year compared to sales made by that producer during the 
        marketing year ending in 1993.
            (2) Exception.--The Secretary may not make a payment under 
        this subsection to a tobacco producer if the Secretary 
        determines that the reduction in tobacco sales by the 
        producer--
                    (A) is unrelated to the increase in excise taxes on 
                tobacco products imposed by section 2; or
                    (B) is offset by sales of other crops produced on 
                lands converted from tobacco production.
    (b) Promotion of Alternative Crops.--The Secretary of Agriculture 
shall encourage and assist tobacco producers in the United States to 
convert their farm operations from the production of tobacco to other 
crops. Assistance provided under this subsection may include--
            (1) the provision of grants and loans to purchase 
        equipment, seeds or nursery stocks, or fertilizer to produce 
        other crops;
            (2) the treatment of lands converted from tobacco 
        production to the production of another program crop as lands 
        considered planted to that crop in the calculation of crop 
        acreage bases under title V of the Agricultural Act of 1949 (7 
        U.S.C. 1461 et seq.);
            (3) the provision of technical advice regarding the care 
        and harvesting of other crops; and
            (4) the undertaking of measures to improve the access of 
        tobacco producers to the markets for other crops.
    (c) Processing and Marketing Initiatives.--
            (1) Grants.--The Secretary of Agriculture shall make grants 
        to States in which tobacco is produced to assist those States--
                    (A) in attracting food processing companies to 
                establish food processing facilities in those States in 
                order to create a market for tobacco producers who 
                convert their farm operations from the production of 
                tobacco to other crops; and
                    (B) in establishing a cooperative collection and 
                distribution process among tobacco producers who 
                convert to other crops in order to efficiently supply 
                food processing facilities in those States.
            (2) Application and conversion plan.--To receive a grant 
        under this subsection, a State shall submit to the Secretary an 
        application in such form and containing such information as the 
        Secretary may require. The application shall contain--
                    (A) a description of the extent to which the 
                economy of the State is dependent upon the production 
                of tobacco and the manufacturing of tobacco products; 
                and
                    (B) a specific plan to use the grant to reduce the 
                State's dependence upon the production of tobacco and 
                the manufacturing of tobacco products.
            (3) Report.--Not later than 15 months after receiving a 
        grant under this subsection, each State receiving such a grant 
        shall submit a report to the Secretary containing--
                    (A) a description of the uses made of the grant by 
                the State, including the amount of the grant expended 
                for each use; and
                    (B) an evaluation of the extent to which the grant 
                assisted the State in reducing its dependence upon the 
                production of tobacco and the manufacturing of tobacco 
                products.
    (d) Funding.--The Secretary of Agriculture shall carry out this 
section using funds made available to the Secretary from the Tobacco 
Health Tax Trust Fund under section 9512(c)(5) of the Internal Revenue 
Code of 1986.
    (e) Definitions.--For purposes of this section:
            (1) The term ``normal year's domestic consumption'' has the 
        meaning given that term in section 301(b)(11)(B) of the 
        Agricultural Adjustment Act of 1938 (7 U.S.C. 1301(b)(11)(B)).
            (2) The term ``marketing year'' has the meaning given that 
        term in section 301(b)(7) of such Act (7 U.S.C. 1301(b)(7)).

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