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

  • Cutler, David M, et al

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 likelihood the state would have prevailed at trial. The costs to the Medicaid program are dwarfed by the internal costs to smokers themselves. Copyright 2000 by Kluwer Academic Publishers

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Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 21 (2000)
Issue (Month): 2-3 (November)
Pages: 235-61

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Handle: RePEc:kap:jrisku:v:21:y:2000:i:2-3:p:235-61
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  1. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
  2. David Cutler & Mark McClellan & Joseph Newhouse, 1998. "The Costs and Benefits of Intensive Treatment for Cardiovascular Disease," NBER Working Papers 6514, National Bureau of Economic Research, Inc.
  3. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
  4. David M. Cutler & Jonathan Gruber & Raymond S. Hartman & M.B. Landrum, J. Newhouse & Meredith B. Rosenthal, 2000. "The Economic Impacts of the Tobacco Settlement," NBER Working Papers 7760, National Bureau of Economic Research, Inc.
  5. Gary S.Grossman Becker & Michael Murphy & Kevin M., 1991. "Rational Addiction and the Effect of Price on Consumption," University of Chicago - George G. Stigler Center for Study of Economy and State 68, Chicago - Center for Study of Economy and State.
  6. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
  7. W. Kip Viscusi, 1994. "Cigarette Taxation and the Social Consequences of Smoking," NBER Working Papers 4891, National Bureau of Economic Research, Inc.
  8. Duan, Naihua, et al, 1983. "A Comparison of Alternative Models for the Demand for Medical Care," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(2), pages 115-26, April.
  9. John B. Shoven & Jeffrey O. Sundberg & John P. Bunker, 1989. "The Social Security Cost of Smoking," NBER Chapters, in: The Economics of Aging, pages 231-254 National Bureau of Economic Research, Inc.
  10. Viscusi, W Kip, 1999. "The Governmental Composition of the Insurance Costs of Smoking," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 575-609, October.
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