I

104TH CONGRESS

2D SESSION H. R. 3779

To amend title XIX of the Social Security Act to reward States for collecting

Medicaid funds expended on tobacco-related illnesses, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 10, 1996

Mr. OBERSTAR (for himself, Mr. DURBIN, Mr. FRAZER, Mr. MEEHAN, Mr.

MINGE, Mr. HANSEN, Mrs. MORELLA, Mr. REED, Mr. SERRANO, Mr.

DELLUMS, and Ms. EDDIE BERNICE JOHNSON of Texas) introduced the

following bill; which was referred to the Committee on Commerce, and

in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such

provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend title XIX of the Social Security Act to reward

States for collecting Medicaid funds expended on tobaccorelated 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:
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1 (1) Federal taxpayers pay for approximately

2 $20,000,000,000 each year in Federal health ex3 penditures to treat tobacco-related illnesses, includ4 ing expenditures incurred under the Medicare and

5 Medicaid programs operated under titles XVIII and

6 XIX of the Social Security Act, health care pro7 grams carried out by the Secretary of Veterans Af8 fairs under chapter 17 of title 38, United States

9 Code, and other Federal health care programs.

10 These expenditures often contribute to an increase

11 in the Federal budget deficit.

12 (2) According to the Centers for Disease Con13 trol and Prevention, tobacco-related illnesses cost

14 the Medicaid program under title XIX of the Social

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

16 (3) The efforts of several States that are at17 tempting under Federal law, including in some

18 cases, under the Federal anti-racketeering statutes,

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

20 incurred under the Medicaid program for the treat21 ment of individuals with diseases attributable to the

22 use of tobacco products from the manufacturers of

23 such products, are to be commended.

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

25 States that successfully recover the Federal and State
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1 health care costs incurred under the Medicaid program for

2 the treatment of individuals with diseases attributable to

3 the use of tobacco products by providing increased funding

4 for their Medicaid programs and to provide increased re5 sources to the National Institutes of Health.

6 SEC. 3. INCENTIVE PAYMENTS FOR COLLECTION OF MED7 ICAID FUNDS EXPENDED ON TOBACCO-RE8 LATED ILLNESSES.

9 (a) FINANCIAL REWARD FOR SUCCESSFUL RECOV10 ERIES.—Section 1903(d) of the Social Security Act (42

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

12 following new paragraph:

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

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

15 suit arising under Federal or State law, amounts expended

16 as medical assistance under the State plan for the treat17 ment of individuals with diseases attributable to the use

18 of tobacco products, from a manufacturer of tobacco prod19 ucts, the State shall notify the Secretary of the amount

20 of such recovery. Upon receipt of such a notice, the Sec21 retary shall determine the amount of Federal expenditures

22 under this title that are attributable to the amounts recov23 ered, based on the Federal medical assistance percentage,

24 as defined in section 1905(b), for such State. The Sec25 retary shall treat the amount so determined as an overpay-
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1 ment under this section, in accordance with paragraph

2 (2)(A), and with respect to such amount shall do the fol3 lowing:

‘‘(i) Provide that the State shall retain 1 4 ⁄3 of

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

6 meet the non-Federal share of expenditures under

7 the State plan with respect to which payments may

8 be made under this title.

‘‘(ii) Pay 1 9 ⁄3 of such amount to the Director of

10 the National Institutes of Health, for the purpose of

11 conducting disease research.

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

13 resulting from the provisions of this paragraph shall not

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

15 the Balanced Budget and Emergency Deficit Control Act

16 of 1985.

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

18 ‘‘(i) the term ‘manufacturer of tobacco prod19 ucts’ has the meaning given such term by section

20 5702(d) of the Internal Revenue Code of 1986; and

21 ‘‘(ii) the term ‘tobacco products’ has the mean22 ing given such term by section 5702(c) of such

23 Code.’’.

24 (b) CONFORMING AMENDMENT.—Section 1902(a) of

25 such Act (42 U.S.C. 1396a(a)) is amended—
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1 (1) by striking ‘‘and’’ at the end of paragraph

2 (61);

3 (2) by striking the period at the end of para4 graph (62) and inserting ‘‘; and’’; and

5 (3) by inserting after paragraph (62) the fol6 lowing new paragraph:

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

8 prompt notice to the Secretary of the amount of any

9 recovery from a manufacturer of tobacco products,

10 as defined in section 1903(d)(7)(C)(i), of expendi11 tures for medical assistance provided under such

12 plan for the treatment of individuals with diseases

13 attributable to the use of tobacco products, as de14 fined in section 1903(d)(7)(C)(ii).’’.

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

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

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

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