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

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Listed:
  • Cutler, David M
  • Epstein, Arnold M.
  • Frank, Richard G.
  • Hartman, Raymond
  • King, Charles III
  • Newhouse, Joseph P.
  • Rosenthal, Meredith B.
  • Vigdor, Elizabeth Richardson

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 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

Suggested Citation

  • Cutler, David M & Epstein, Arnold M. & Frank, Richard G. & Hartman, Raymond & King, Charles III & Newhouse, Joseph P. & Rosenthal, Meredith B. & Vigdor, Elizabeth Richardson, 2000. "How Good a Deal Was the Tobacco Settlement? Assessing Payments to Massachusetts," Journal of Risk and Uncertainty, Springer, vol. 21(2-3), pages 235-261, November.
    • Handle: RePEc:kap:jrisku:v:21:y:2000:i:2-3:p:235-61
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    References listed on IDEAS

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    1. David M. Cutler & Jonathan Gruber & Raymond S. Hartman & Mary Beth Landrum & Joseph P. Newhouse & Meredith B. Rosenthal, 2002. "The Economic impacts of the tobacco settlement," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 1-19.
    2. W. Kip Viscusi, 1995. "Cigarette Taxation and the Social Consequences of Smoking," NBER Chapters, in: Tax Policy and the Economy, Volume 9, pages 51-102, National Bureau of Economic Research, Inc.
    3. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1991. "Rational Addiction and the Effect of Price on Consumption," American Economic Review, American Economic Association, vol. 81(2), pages 237-241, May.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    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 115-126, April.
    9. 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.
    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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    Cited by:

    1. W. Kip Viscusi & Joni Hersch, 2010. "Tobacco Regulation through Litigation: The Master Settlement Agreement," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 71-101, National Bureau of Economic Research, Inc.
    2. Michael E. Darden & Robert Kaestner, 2022. "Smoking, selection, and medical care expenditures," Journal of Risk and Uncertainty, Springer, vol. 64(3), pages 251-285, June.
    3. Viscusi, W. Kip & Hersch, Joni, 2008. "The mortality cost to smokers," Journal of Health Economics, Elsevier, vol. 27(4), pages 943-958, July.
    4. Liu, Yuanli & Rao, Keqin & Hu, Teh-wei & Sun, Qi & Mao, Zhenzhong, 2006. "Cigarette smoking and poverty in China," Social Science & Medicine, Elsevier, vol. 63(11), pages 2784-2790, December.

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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • K0 - Law and Economics - - General

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