Clinton Signs Away Tobacco Industry Settlement Money
Date: May 29, 1999
By Julie Rovner
On May 21, President Clinton waived the federal government's
claim to a portion of the US$206 billion settlement between the
states and the tobacco industry. The provision was tucked into
a mid-year supplemental spending bill to fund the war in Kosovo
and provide aid to victims of Hurricane Mitch in Central America.
The tobacco provision was added to the Senate version of the bill
in March, and despite Clinton's threats to veto the policy, it was kept
in the measure by a House-Senate conference committee. Backers
of the bill bet--correctly--that Clinton would not dare veto a bill that
included the $15 billion he wanted for Kosovo and other critical
priorities. Nonetheless, said Clinton, "Congress [has] passed up
an important opportunity to protect our children from the death and
diseases caused by tobacco".
Even before the settlement was reached last November, the
Clinton administration and the states had been in a war of words
over whether a portion of the funds would have to be returned to
Washington. As Medicaid is a joint federal-state programme, with
the federal government paying about 55% of the costs, settlement
funds attributable to federal Medicaid contributions by law must be
returned to Washington. But the states argued that their lawsuits
were not based on Medicaid, so the government had no claim.
Clinton had offered a compromise where the states could keep
even Medicaid money if they agreed to spend it on anti-tobacco
programmes. But many states have earmarked their settlement
funds for non-health programmes. And backers of the provision
said the government should have no say in the matter. "I believe the
states are acting responsibly", said Senator Bob Graham, a former
governor and cosponsor of the provision.
Anti-tobacco activists are outraged that the new law not only
waives the federal government's past claims to tobacco-company
refunds for Medicaid, but also bars it from seeking compensation
for tobacco-related Medicaid costs that may accrue in the future.