National tobacco settlement legislation has become a financial feeding frenzy worth hundreds of billions of dollars, with federal healthcare programs, including Medicare, reaping a potential windfall.
But that windfall could rot under the tree while members of Congress, state and federal governments and special-interest groups argue about how to spend the proceeds from a settlement worth an estimated $368.5 billion over 25 years.
Although that settlement was reached last June between tobacco companies and state attorneys general, its national scope will require that Congress pass and President Clinton sign legislation to implement it.
Left unclear is how the federal government will levy those dollars from the tobacco companies or how it will be spent. What is clear is a legislative imbroglio will ensue.
The battles that are particularly acute involve the use of tobacco tax revenues to finance new social spending and the allocation of any money in excess of the allotments authorized under the terms of the tobacco deal.
In the latter issue, opinions range from those who believe any excess should be used to pay down the national debt and reduce income-tax rates to those who argue that Medicare, public health or anti-smoking programs deserve that money.
Tobacco-related illnesses add an estimated $20 billion a year in costs to federal health programs, including Medicare, the Department of Veterans Affairs, the Defense Department and the federal employee health insurance program.
Clinton complicated the debate by proposing that new tobacco money be used for expansion of federal education and child-care programs. His fiscal 1999 budget submission to Congress assumes collection of $9.8 billion in new tobacco tax revenues and proposes that $2.3 billion of that be spent on child care and reducing class sizes in schools. That is a departure from the attorneys general settlement, which proposed that tobacco levies be spent on public health programs.
Senate Democrats, in a separate bill introduced earlier this month, also have called for federal tobacco tax revenues to be funneled to the states for child care, education and other purposes, such as college scholarships for families running tobacco farms.
Many Republicans fear the use of the windfall for new spending programs. In fact, at least one bill introduced in Congress would bar tobacco revenues from being used to start new federal programs or expand or maintain existing ones unless specifically designated under the terms of the national tobacco settlement.
With such a bonanza, it's not surprising that government officials and special interests have begun arguing for many different ways to spend the projected revenues, said James Bentley, senior vice president for strategic policy planning with the American Hospital Association.
"That's a big amount of money. That attracts lots of people who want to get their hands on the money," Bentley said.
Because of the intensity of the debate, however, the assistant Senate majority leader, Don Nickles (R-Okla.), said he wasn't sure that a comprehensive tobacco package would pass.
But he said he believed Congress would pass an "anti-smoking campaign . . . that could include reimbursement for Medicare costs" due to smoking.
One group that has come out in favor of earmarking the settlement money for Medicare is the Senate Steering Committee, an informal group of conservative Republicans.
Outlining the committee's position earlier this month, its chairman, Sen. Phil Gramm (R-Texas), said the Medicare program could justify slicing a piece from the settlement pie because Medicare has paid to treat beneficiaries with smoking-related illnesses.
Education programs, however, cannot make such a argument, he said.
"If there is a federal tobacco settlement, (Gramm) intends to lay claim to every penny of that for Medicare," added his spokesman, Larry Neal.
Not surprisingly, that is a position being supported by at least one provider group, the AHA.
"The justification for a settlement is the health effects that tobacco has on people," Bentley said. "Therefore the money should be used for health programs."
The prospects for passing national tobacco legislation are further complicated by a brewing conflict between the state and federal governments.
The states, which filed many of the lawsuits against the tobacco companies that led to the settlement, want the tobacco companies to reimburse them for the costs to their Medicaid programs of tobacco-related illnesses.
States fear that the federal government will try to get a share of the dollars destined for state Medicaid programs.
The National Governors' Association adopted a policy last year that said the organization would oppose any efforts to "seize" state tobacco settlement funds. The federal government effort to recoup its healthcare costs must be "distinct and separate," the NGA said.
Gramm, however, argues that the federal government has a greater stake in the settlement, saying that there is $6 in Medicare costs connected to tobacco-related illnesses for every $1 in Medicaid costs.
Another broad issue that still could snarl the settlement is the question of whether to offer the tobacco industry immunity to new lawsuits seeking reimbursement for healthcare costs.
Public health advocates and many Democrats are adamantly opposed to such immunity, although tobacco companies said they need such protection.