Feds may stake claim to share of tobacco deal

Last week's settlement between the state attorneys general and cigarette manufacturers does not require congressional ratification-but Clinton administration officials believe the federal government, which pays almost 60 percent of state Medicaid costs, must by law claim a similar share of the portion of the suits that were based on Medicaid expenditures.

The White House and congressional Democrats plan to insist that Congress abrogate that claim only if there are clear directions on state spending of the federal share. "The bar will be pretty tight to make sure federal priorities are addressed," said one senior administration official.

Another senior official noted that it may be acceptable to allow the states a "menu" of methods for spending the money, and that Clinton aides were "very satisfied" with the options for state spending listed in the tobacco bill sponsored by Senate Commerce Committee Chairman John McCain, R-N.M. These included funding for child care, children's health, and drug-free school programs.

Under the settlement, the industry may deduct from its payments any new federal tobacco taxes whose revenues are sent to the states for either unrestricted or health-related purposes. The provision has raised eyebrows among Democrats and in the health community.

"It's clear the industry put this in to make it more difficult to pass an excise tax," charged Matt Meyers of the National Center for Tobacco-Free Kids.

But industry spokesman Scott Williams said the provision was intended to prevent "double dipping" by the states. One senior Democratic Senate aide argued that Republicans could effectively scuttle any new tobacco tax by arguing that revenues should be remanded to the states.

Meyers also revealed that the ENACT Coalition of public health groups plans to stay together to press for legislation on issues not addressed by the latest deal. "Clarifying and affirming the authority of the FDA [to regulate nicotine] will be at the top of the agenda for every health group," Meyers said.