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 subse-
quently 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 tobacco-
related illnesses, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Tobacco Medicaid Re-
covery Act of 1996’’.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS.—The Congress finds the following:
(1) Federal taxpayers pay for approximately
$20,000,000,000 each year in Federal health ex-
penditures to treat tobacco-related illnesses, includ-
ing expenditures incurred under the Medicare and
Medicaid programs operated under titles XVIII and
XIX of the Social Security Act, health care pro-
grams carried out by the Secretary of Veterans Af-
fairs under chapter 17 of title 38, United States
Code, and other Federal health care programs.
These expenditures often contribute to an increase
in the Federal budget deficit.
(2) According to the Centers for Disease Con-
trol and Prevention, tobacco-related illnesses cost
the Medicaid program under title XIX of the Social
Security Act $5,100,000,000 each year.
(3) The efforts of several States that are at-
tempting under Federal law, including in some
cases, under the Federal anti-racketeering statutes,
or under State law, to recover the health care costs
incurred under the Medicaid program for the treat-
ment of individuals with diseases attributable to the
use of tobacco products from the manufacturers of
such products, are to be commended.
(b) PURPOSE.—The purpose of this Act is to reward
States that successfully recover the Federal and State
health care costs incurred under the Medicaid program for
the treatment of individuals with diseases attributable to
the use of tobacco products by providing increased funding
for their Medicaid programs and to provide increased re-
sources to the National Institutes of Health.
SEC. 3. INCENTIVE PAYMENTS FOR COLLECTION OF MED-
ICAID FUNDS EXPENDED ON TOBACCO-RE-
LATED ILLNESSES.
(a) FINANCIAL REWARD FOR SUCCESSFUL RECOV-
ERIES.—Section 1903(d) of the Social Security Act (42
U.S.C. 1396b(d)) is amended by adding at the end the
following new paragraph:
‘‘(7)(A) Notwithstanding any other provision of law,
if a State recovers, by judgment in, or settlement of, any
suit arising under Federal or State law, amounts expended
as medical assistance under the State plan for the treat-
ment of individuals with diseases attributable to the use
of tobacco products, from a manufacturer of tobacco prod-
ucts, the State shall notify the Secretary of the amount
of such recovery. Upon receipt of such a notice, the Sec-
retary shall determine the amount of Federal expenditures
under this title that are attributable to the amounts recov-
ered, based on the Federal medical assistance percentage,
as defined in section 1905(b), for such State. The Sec-
retary shall treat the amount so determined as an overpay-
ment under this section, in accordance with paragraph
(2)(A), and with respect to such amount shall do the fol-
lowing:
‘‘(i) Provide that the State shall retain 1⁄3 of
such amount, for the purpose of using such funds to
meet the non-Federal share of expenditures under
the State plan with respect to which payments may
be made under this title.
‘‘(ii) Pay 1⁄3 of such amount to the Director of
the National Institutes of Health, for the purpose of
conducting disease research.
‘‘(B) Any amount of new budget authority or outlays
resulting from the provisions of this paragraph shall not
be counted for any purpose under section 251 or 252 of
the Balanced Budget and Emergency Deficit Control Act
of 1985.
‘‘(C) For purposes of this paragraph—
‘‘(i) the term ‘manufacturer of tobacco prod-
ucts’ has the meaning given such term by section
5702(d) of the Internal Revenue Code of 1986; and
‘‘(ii) the term ‘tobacco products’ has the mean-
ing given such term by section 5702(c) of such
Code.’’.
(b) CONFORMING AMENDMENT.—Section 1902(a) of
such Act (42 U.S.C. 1396a(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(61);
(2) by striking the period at the end of para-
graph (62) and inserting ‘‘; and’’; and
(3) by inserting after paragraph (62) the fol-
lowing new paragraph:
‘‘(63) provide that the State shall provide
prompt notice to the Secretary of the amount of any
recovery from a manufacturer of tobacco products,
as defined in section 1903(d)(7)(C)(i), of expendi-
tures for medical assistance provided under such
plan for the treatment of individuals with diseases
attributable to the use of tobacco products, as de-
fined in section 1903(d)(7)(C)(ii).’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply to amounts recovered
on and after the date of the enactment of this Act.
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