Friday, January 22, 1999

Hands off settlement money, state officials tell feds

Enquirer Washington Bureau

        WASHINGTON — Three Tristate senators joined state attorneys general Thursday in telling the Clinton administration to keep its hands off of money the states have won from the tobacco industry.

        “We've worked long and hard to get this money for our respective states. Fair is fair,” Ohio Attorney General Betty Montgomery said at a Capitol Hill press conference held with senators.

        At issue is the $206 billion that the industry agreed to pay 46 states over 25 years for smoking-related health care costs covered by Medicaid, the federal-state health care program for the low income and elderly.

        Four other states had previously obtained their own settlements from the industry, totaling $40 billion.

        Sens. George Voinovich, R-Ohio; Mitch McConnell, R-Ky.; and Evan Bayh, D-Ind., are lead sponsors of legislation that would prohibit the federal government from making any claim to the states' money.

        Under the settlement that the states reached with the industry in November, Ohio is scheduled to get close to $10 billion, Kentucky $3.45 billion and Indiana $4 billion.

        Officials of the Health Care Financing Administration (HCFA), the federal agency that runs Medicaid, have said they are entitled to a share of the settlement funds that equals the federal share of state Medicaid budgets. Those percentages vary from state to state but are usually as high as 60 to 80 percent.

        But Justice Department officials said Thursday that the planned federal lawsuit against the tobacco industry would not seek any of the money collected by the states through their settlement with the industry.

        Administration officials have said they are willing to negotiate the dispute, suggesting that the states might be able to keep all of the money if they promise to spend it on public health.

        In Ohio's case, Ms. Montgomery said, the government would want 60 percent of Ohio's $10 billion share of the settlement — or about $6 billion.

        For Kentucky, the loss could be up to $2.4 billion of its $3.45 billion award. Indiana could lose $2.5 billion of the $4 billion it would receive.

        HCFA spokesman Chris Peacock said the agency is required by law to seek a part of any Medicaid funds that the states get back from third parties.

        However, Mr. Peacock said, the agency is willing to negotiate with Congress and the states to resolve these federal claims. One possibility is a pledge by the states to target certain public health needs, including programs to address youth smoking.

        Mr. Voinovich has identified this federal “recoupment” issue as his top priority as incoming senator.

        “We think it is a major issue dealing with states' rights,” Mr. Voinovich said.

        Mr. Voinovich said state legislatures across the country are wondering whether they can appropriate the settlement money to address needs.

        “The sooner we can get this passed in Congress ... the sooner we can untie these funds,” he said.

        Senators and state officials emphasized it is unjust for the federal government to lay claim to money that it played no part in winning.

        “It was the states who filed the lawsuits against the tobacco companies and the states who entered into the settlement with the industry last November, not federal bureaucrats,” said Sen. Mitch McConnell, R-Ky.

        Hearst News Service contributed to this report.


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