How Good a Deal Was the Tobacco Settlement?: Assessing Payments to Massachusetts

Abstract

We estimate the increment in Massachusetts Medicaid program costs attributable to smoking from December 20, 1991, to 1998. We describe how our methods improve upon earlier estimates of analogous costs at the national level. Current costs to the Massachusetts Medicaid program approximate the payments to Massachusetts under the tobacco settlement of November 1998. Whether these payments are viewed as appropriate compensation for Medicaid costs over time depends upon the rate of increase in future health care costs, the rate of decline in smoking, the proportion of smoking that should be attributed to the actions of the tobacco companies and the liklihood that state would have prevailed at trial. The costs to the Medicaid program are dwarfed by the internal costs to smokers themselves.