Senate Report 106-512 - RETIRED COAL MINERS HEALTH BENEFIT SECURITY ACT

[Senate Report 106-512]
[From the U.S. Government Publishing Office]

Calendar No. 955
106th Congress Report
SENATE
2d Session 106-512

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RETIRED COAL MINERS HEALTH BENEFIT SECURITY ACT

_______

November 1 (legislative day, September 22), 2000.--Ordered to be
printed

_______

Mr. Roth, from the Committee on Finance, submitted the following

R E P O R T

together with

ADDITIONAL VIEWS

[To accompany S. 3267]

[Including cost estimate of the Congressional Budget Office]

The Committee on Finance reported an original bill (S.
3267) to amend the Internal Revenue Code of 1986 to extend the
solvency of and adjust inequities related to the United Mine
Workers of America Combined Benefit Fund, having considered the
same, reports favorably thereon with an amendment and
recommends that the bill do pass.

CONTENTS

Page
I. Legislative Background...........................................2
II. Explanation of the Bill..........................................2
A. Transfer of Funds to the Combined Benefit Fund (sec.
2)................................................. 2
III. Budget Effects of the Bill.......................................3
A. Committee Estimates................................. 3
B. Budget Authority and Tax Expenditures............... 3
C. Consultation with the Congressional Budget Office... 3
IV. Votes of the Committee...........................................6
V. Regulatory Impact and Other Matters..............................6
A. Regulatory Impact................................... 6
B. Unfunded Mandates Statement......................... 7
C. Tax Complexity Analysis............................. 7
VI. Additional Views.................................................8
VII. Changes to Existing Law Made by the Bill as Reported............10

I. LEGISLATIVE BACKGROUND

Committee markup

The Senate Committee on Finance marked up an original bill
(the ``Retired Coal Miners Health Benefit Security Act'') on
September 7, 2000, and approved the provisions on September 7,
2000 by a rollcall vote of 12 yeas and 1 nay, with a quorum
present.

II. EXPLANATION OF THE BILL

A. Transfer of Funds to the Combined Benefit Fund (Sec. 2 of the Bill
and Sec. 9705 of the Code)

present law

The United Mine Workers of America (the ``UMWA'') Combined
Benefit Fund was established by the Coal Industry Retiree
Health Benefit Act of 1992 (the ``Coal Act'') to assume
responsibility of payments for medical care expenses of retired
miners and their dependents who were eligible for health care
from the private 1950 and 1974 UMWA Benefit Plans. The Combined
Benefit Fund is financed by assessments on current and former
signatories to labor agreements with the UMWA, past transfers
from an overfunded United Mine Workers pension fund, and
transfers from the Abandoned Mine Land reclamation fund (the
``AML Fund''). Pursuant to the Coal Act, the Social Security
Administration is responsible for assigning eligible retired
miners and their dependents to current and former signatories
to labor agreements with UMWA and calculating annual
contributions to be paid by each such signatory for each
beneficiary assigned to the signatory.
In June 1998, the United States Supreme Court ruled in
Eastern Enterprises that assignments of beneficiaries to
companies that were not signatories to the 1974 or later labor
agreements with the UMWA were unconstitutional. The Eastern
Enterprises ruling has enabled several companies to obtain
refunds with respect to their contributions to the Combined
Benefit Fund. However, other companies that did not sign the
1974 or later agreements with the UMWA, claimed that the
assignments of beneficiaries as applied to them were
unconstitutional, and received final judgments against their
claims are not entitled to receive refunds for their
contributions to the Combined Benefit Fund.

reasons for change

Although the Committee is concerned about the state of the
Combined Benefit Fund, the Committee believes that no consensus
currently exists with respect to the appropriate long-term
reform of the Combined Benefit Fund and the Coal Act. The
Committee believes that the solvency of the Combined Benefit
Fund should be extended until the Congress is able to analyze
recommendations for such reform. In addition, the Committee
believes that all companies with respect to whom assignments of
beneficiaries have been declared unconstitutional should be
entitled to recover their contributions to the Combined Benefit
Fund.

explanation of provision

The provision authorizes a transfer of $77,438,000 of
general revenue to the Combined Benefit Fund for fiscal year
2001 and directs the Secretary of the Treasury to make the
transfer on October 1, 2000. The provision provides that
$57,000,000 of the amount transferred shall be available to pay
benefits. The remaining $20,438,000 of the amount transferred
shall be available to refund amounts previously paid to the
Combined Benefit Fund on or before September 7, 2000, by
companies (1) whose beneficiary assignments have been voided by
the Commissioner of the Social Security Administration, (2)
that brought actions prior to September 7, 2000, claiming that
their beneficiary assignments were unconstitutional, and (3)
that received final judgments against such claims. In addition,
the provision directs the General Accounting Office to submit
to the Senate Committee on Finance prior to March 1, 2001,
recommendations for long-term reform of the Coal Act.

effective date

The provision is effective on the date of enactment.

III. BUDGET EFFECTS OF THE BILL

A. Committee Estimates

In complianec with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate, the following statement is made
concerning the estimated budget effects of the provisions of
the bill as reported.
The estimated budget effects of the bill, as reported, for
fiscal years 2001-2005 are described in the Congressional
Budget Office Cost Estimate for the bill (see CBO statement in
Part III.C., below).

B. Budget Authority and Tax Expenditures

Budget authority

In compliance with section 308(a)(1) of the Budget Act, the
Committee states that the provisions of the bill, as reported,
involve new or increased budget authority as described in the
Congressional Budget Office Cost Estimate for the bill (see CBO
statement in Part III.C., below)

Tax expenditures

In compliance with section 308(a)(2) of the Budget Act, the
Committee states that the revenue-reducing income tax
provisions do not involve increased tax expenditures (See CBO
statement in Part III.C., below.)

C. Consultation With the Congressional Budget Office

In accordance with section 403 of the Budget Act, the
Committee advises that the Congressional Budget office has
submitted a statement on this bill.

U.S. Congress,
Congressional Budget Office,
Washington, DC, October 5, 2000.
Hon. William V. Roth, Jr.,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear. Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for the Retired Coal Miners
Health Benefit Security Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Cyndi
Dudzinski Smith.
Sincerely,
Steven Lieberman
(For Dan L. Crippen, Director).
Enclosure.

Retired Coal Miners Health Benefit Security Act

Summary: The Retired Coal Miners Health Benefit Security
Act would transfer $77 million from the general fund of the
U.S. Treasury to the United Mine Workers of America Combined
Benefit Fund (CBF). Of that total, $57 million would be
available to pay for the health and death benefits of the
retired coal miners and their dependents who are beneficiaries
of the CBF. The remaining $20 million would be available to
reimburse companies that had their assignments voided by the
Commissioner of the Social Security Administration following
Eastern Enterprises v. Apfel, 524 U.S. 498 (1988), but did not
receive refunds of their premiums from the CBF because they
already were subject to final judgments.
The transfer would decrease federal Medicaid spending by
about $1 million in each of fiscal years 2001 and 2002, and
increase receipts from corporate income taxes by $5 million in
2001.
In total, enacting this legislation would increase direct
spending by $54 million in 2001 and by $21 million in 2002, and
increase federal receipts by $5 million. Because the bill would
affect direct spending and receipts, pay-as-you-go procedures
would apply.
The Retired Coal Miners Health Benefit Security Act
contains no intergovernmental or private-sector mandates as
defined in the Unfunded Mandates Reform Act (UMRA). Enacting
the bill would result in Medicaid savings for state
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of the Retired Coal Miners Health Benefit
Security Act is shown in the following table. The costs of this
legislation fall within budget functions 550 (health).

Additional CBF Payments:
Budget Authority............................................... 77 0 0 0 0
Estimated Outlays.............................................. 55 22 0 0 0
Federal Share of Medicaid:
Estimated Budget Authority..................................... -1 -1 0 0 0
Estimated Outlays.............................................. -1 -1 0 0 0
Net Effect:
Estimated Budget Authority..................................... 76 -1 0 0 0
Estimated Outlays.............................................. 54 21 0 0 0

CHANGES IN REVENUES

Estimated Revenues................................................. 5 0 0 0 0
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Basis of estimate: CBO estimates that in 2001, $35 million
of the amount transferred by the legislation would be spent on
benefits and $20 million of the transfer would be spent to
refund premiums paid by companies that had their assignments
revoked following the case of Eastern Enterprises. The
remaining $22 million of the transfer would be spent on
benefits in 2002.
CBO estimates that beginning in 2001, the CBF will not have
sufficient income to cover benefits. In the event of a deficit,
the trustees of the CBF would first try to balance the fund
through reducing spending on items and services other than
health benefits. But if the deficit were large enough, they
would have to cut benefits. For retired coal miners who are
also enrolled in Medicaid, a portion of those benefits would be
shifted to the Medicaid program. Under the bill, $57 million of
the transfer to the CBF would reduce the amount of benefits
that would otherwise be shifted to Medicaid. That change would
decrease federal Medicaid spending by about $1 million each
year for 2001 and 2002.
In addition, the $20 million refunded to the coal companies
would be counted as income that is subject to corporate income
tax. The Joint Committee on Taxation (JCT) estimates that
provision would increase revenues from the corporate income tax
by $5 million in 2001.
The bill also would require the Comptroller General of the
United States to study long-term reform of the Coal Industry
Retiree Health Benefit Act of 1992 and retiree health benefits
under that act. Under current law, the General Accounting
Office is performing this study pursuant to a request from the
Congress. As a result, CBO estimates no additional cost from
mandating the report through legislation.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. The net
changes in outlays and governmental receipts that are subject
to pay-as-you-go procedures are shown in the following table.
For the purposes of enforcing pay-as-you-go procedures, only
the effects in the budget year and the succeeding four years
are counted.

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
----------------------------------------------------------------------------------------------------------------
Changes in outlays........................ 54 21 0 0 0 0 0 0 0 0
Changes in receipts....................... 5 0 0 0 0 0 0 0 0 0
----------------------------------------------------------------------------------------------------------------

Estimated impact on state, local, and tribal governments:
The Retired Coal Miners Health Benefit Security Act contains no
intergovernmental mandates as defined in UMRA. Because
additional resources in the combined Benefit Fund would provide
health benefits to eligible retired coal miners, estimated
Medicaid spending would decrease. CBO estimates that states
would save about $500,000 in each of the fiscal years 2001 and
2002 in the Medicaid program.
Estimated impact on the private sector: This bill contains
no new private-sector mandates as defined in UMRA.
Estimate prepared by: Federal Costs: Cyndi Dudzinski Smith
(CBF). Eric Rollins (Medicaid). Ron Jeremias (corporate income
tax), JCT. Impact on State, Local, and Tribal Governments: Leo
Lex. Impact on the Private Sector: Lauren Marks.
Estimated approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

IV. VOTES OF THE COMMITTEE

In compliance with paragraph 7(b) of rule XXVI of the
Standing Rules of the Senate, the following statements are made
concerning the rollcall votes in the Committee's consideration
of the bill.

Motion to report the bill

The bill, as amended, was ordered favorably reported by a
rollcall vote of 12 yeas and 1 nay on September 7, 2000. If
proxies were allowed in reporting a measure, the vote would
have been 17 yeas and 1 nay. A quorum was present. The vote was
as follows:
Yeas--Senators Roth, Grassley, Hatch, Nickles, Lott
(proxy), Jeffords, Mack, Thompson, Moynihan, Baucus (proxy),
Rockefeller, Breaux, Conrad, Graham (proxy), Bryan, Kerrey
(proxy), Robb (proxy).
Nays--Senator Gramm.

Votes on amendments

An amendment in the nature of a substitute by Senator
Nickles to provide for a transfer of general revenue to extend
the solvency of the Combined Benefit Fund and to direct the
General Accounting Office to submit recommendation for the
long-term reform of the Coal Act was approved by a voice vote.
A second degree amendment by Senator Conrad to reduce the
assessment on reachback companies by 50 percent was defeated by
a rollcall vote of 6 yeas and 13 nays. The vote was as follows:
Yeas--Senators Grassley, Murkowski (proxy), Gramm, Mack,
Thompson, Conrad.
Nays--Senators Roth, Hatch, Nickles, Lott (proxy),
Jeffords, Moynihan, Baucus, Rockefeller, Breaux, Graham
(proxy), Bryan, Kerrey, Robb (proxy).
An amendment by Senator Grassley to authorize a transfer of
general revenue to the Combined Benefit Fund in order to refund
contributions to final judgment companies was approved by a
rollcall vote of 11 yeas and 8 nays. The vote was a follows:
Yeas--Senators Roth, Grassley, Hatch, Murkowski (proxy),
Nickles, Gramm, Lott (proxy), Jeffords, Mack, Thompson, Conrad.
Nays--Senators Moynihan, Baucus (proxy), Rockefeller,
Breaux, Graham (proxy), Bryan, Kerrey (proxy), Robb (proxy).

V. REGULATORY IMPACT AND OTHER MATTERS

A. Regulatory Impact

Pursuant to paragraph 11(b) of rule XXVI of the Standing
Rules of the Senate, the Committee makes the following
statement concerning the regulatory impact that might be
incurred in carrying out the providings of the bill as
reported.

Impact on individuals and businesses

The bill provides for transfers of funds to the United Mine
Workers of America Combined Benefit Fund in order to extend the
solvency of the fund and adjust inequities related to
contributions by certain companies to the fund. The bill will
have no impact on individuals taxpayers. The bill will reduce
the tax burden on affected businesses.

Impact on personal privacy and paperwork

The bill should not have any adverse impact on personal
privacy. No additional paperwork will be required by the
provisions of the bill.

B. Unfunded Mandates Statement

This information is provided in accordance with section 423
of the Unfunded Mandates Act of 1995 (P.L. 104-4).
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, and tribal
governments.

C. Complexity Analysis

Section 4022(b) of the Internal Revenue Service Reform and
Restructuring Act of 1998 requires the staff of the Joint
Committee on Taxation (in consultation with the Internal
Revenue Service (``IRS'') and the Treasury Department) to
provide a complexity analysis of tax legislation reported by
the House Committee on Ways and Means, the Senate Committee on
Finance, or a Conference Report containing tax provisions. The
complexity analysis is required to report on the complexity and
administrative issues raised by provisions that directly or
indirectly amend the Internal Revenue Code and that have
widespread applicability to individuals or small businesses.
The staff of the Joint Committee on Taxation has determined
that a complexity analysis is not required under section
4022(b) of the IRS Reform Act because the bill contains no
provisions that amend the Internal Revenue Code and that have
widespread applicability to individuals or small businesses.

VI. ADDITIONAL VIEWS

The Coal Act was passed as part of the Energy Policy Act of
1992. It established a United Mine Workers Combined Benefit
Fund (``the Fund'') to preserve the health benefits of a
defined group of about 120,000 retired coalminers and their
dependents whose employers signed the National Bituminous Coal
Wage Agreement or another similar agreement with the United
Mine Workers of America (``UMWA''). Approximately 66,000
retired miners and their widows remain covered by the Fund and
about half are over 80 years old; the beneficiaries of the Fund
are a closed and declining population of individuals. The Fund
is part of the Internal Revenue Code and is under the
jurisdiction of the Senate Finance Committee.
We all agree that retired mine workers covered by the Fund
need the health benefits they were promised. Unfortunately, the
Fund is inadequately financed, and, without legislative
changes, these retired miners and their widows will have their
health benefits cut.
Today, the Committee reports a bill that partially
addresses the Fund's financing deficit. It mandates a $57
million general revenue transfer to the Fund to ensure that no
benefit cuts will occur in fiscal year 2001. However, the Fund
continues to project annual deficits of $40 to $50 million per
year due to several factors, including an inadequate inflation
adjustor, skyrocketing prescription drug costs, and court
decisions that have reduced the Fund's contribution base. While
we are pleased that the Committee acts to maintain these health
care benefits for another year, we regret that there was no
consensus to report more than a one-year financing solution. It
is the responsibility of this Committee to reach a long-term
funding solution to maintain full benefits. The beneficiaries
of the Coal Act and the companies who pay into the fund should
not face continued uncertainty regarding benefits from and
liability to the Fund. And despite the Committee's action
today, without further legislative changes, affected parties
will be left with the same uncertainty after 2001.
In its fiscal year 2001 budget, the Administration proposed
a comprehensive package of reforms to provide retired miners
and their dependents with ten years of health care security.
Even the Chairman's mark adopted the fundamental components of
the ten-year solution in the Administration's proposal. Yet,
the Committee is acting on only a short-term basis. Congress
and this Committee cannot neglect the long-term solvency of
this health care fund, and we urge the Committee to find as
soon as possible in 2001 a long-term solution that ensures full
retiree health benefits.
We do not pretend that the solution is simple, and the bill
we report today provides evidence of this fact. It provides
relief to so-called ``final judgment'' companies--companies
that received an unfavorable final judgment court ruling and,
thus, were unable to recover contributions to the Fund that
were subsequently awarded to similarly situated taxpayers. A
number of companies contributing to the Fund identify
themselves as part of a unique taxpaying class (such as so-
called ``reachback'' companies, ``super-reachback'' companies,
and ``stranded interim'' companies). They identify themselves
generally according to which UMWA contract(s) they signed and
for which retirees they are liable. (A vote on an amendment to
this bill to provide 50% premium relief to reachback companies
failed by a vote of 6-13.) Any long-term solution for the Fund
must ensure the full health benefits of retired miners and
their dependents who were promised those benefits by their
former employers and by the federal government. The Committee
should also consider the future obligations to the Fund of the
companies currently paying premiums.

Daniel P. Moynihan.
Jay Rockefeller.
Kent Conrad.
Richard H. Bryan.
Charles Robb.
Max Baucus.
John Breaux.
Bob Graham.
Bob Kerrey.

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In the opinion of the Committee, it is necessary in order
to expedite the business of the Senate, to dispense with the
requirements of paragraph 12 of rule XXVI of the Standing Rules
of the Senate (relating to the showing of changes in existing
law made by the bill as reported by the Committee).