On November 12, the Senate Commerce, Science, and Transportation Committee held a hearing to determine how states are using the funds they received from the 1998 Master Settlement Agreement (MSA).
On November 23, 1998, 46 states settled their lawsuits against the four major tobacco companies to recover tobacco-related health care costs, joining four states that had reached earlier, individual settlements. The MSA required the tobacco companies to make annual payments to the states in perpetuity, with total payments over the first 25 years estimated at $246 billion. The MSA imposed no restrictions on how states were to use the funds, but, in 1999 and 2001 resolutions, the National Governors Association pledged to spend “a significant portion of the tobacco settlement funds on smoking cessation programs.”
In his opening statement, Chair John McCain (R-AZ) stated, “In the U.S. alone, an estimated 400,000 people die each year as a result of a smoking-related illness, which equates to approximately 1,200 smoking-related deaths per day.” He also noted that 60 percent of smokers in this country begin before the age of 14, and 90 percent become addicted by age 19.
Mississippi Attorney General Mike Moore, a proponent of tobacco use prevention efforts, lamented that many states are using the settlement money “on one-time budget deficits, college scholarships, tobacco warehouses, roads, anything but prevention, cessation, and improving [the] public health of this country.”
Matthew of the Campaign for Tobacco-Free Kids summarized a report on tobacco use prevention efforts in the states released this month by his organization, the American Cancer Society, the American Heart Association, and the American Lung Association. The report found that only four states Maine, Delaware, Mississippi, and Arkansas currently fund tobacco prevention programs at the minimum levels recommended by the Centers for Disease Control and Prevention (CDC); in FY2004, states plan to cumulatively spend $541.1 million on tobacco prevention programs, $1.05 billion less than the CDC recommendation. Mr. Myers also cited a Federal Trade Commission report that noted that, over the past two years, states have cut funding for tobacco prevention by 28 percent; and the tobacco industry increased its marketing expenditures by 66 percent in the three years after the settlement to a record $11.45 billion a year, or $31.4 million a day.
Cheryl Healton of the American Legacy Foundation highlighted a number of programs to reduce smoking in the United States, including a youth marketing campaign against tobacco, a cessation program for pregnant women, and “Circle of Friends,” which provides support to the 20 million women in the United States who are struggling to quit smoking. She concluded by urging the committee and Congress to “continue your oversight responsibilities, tracking the progress of the MSA and encouraging the federal government to find appropriate avenues to become a more direct partner in tobacco prevention programs at the national level.”
Testifying on behalf of the National Governors Association and defending the states, Raymond Scheppach summed up the states’ use of the MSA funds. “About 36 percent went to health services and long-term care. About four percent went to tobacco use prevention. Another 12 percent went to research, education, and services for children. Also, states allocated three percent to tobacco farmers for crop diversification efforts to reduce their states’ dependence on tobacco production. The remainder went to endowments, budget reserves, and other programs,” he stated. Noting that “smoking during pregnancy is currently responsible for 20 percent of all low birth-weight babies, 8 percent of preterm births, and 5 percent of all perinatal deaths,” Mr. Sheppach also discussed efforts to prevent maternal smoking. These programs include classes and one-on-one counseling on the dangers of smoking, protocols for breaking the smoking habit, statewide quit lines, and media campaigns aimed at women of reproductive age.
Sen. Bill Nelson (D-FL) asked if was possible for states to quickly reduce their Medicaid costs by spending more on smoking prevention programs. Mr. Moore emphatically responded that there would be a quick turnaround in Medicaid costs. He went on to explain that over half the pregnant women who smoke in this country are on Medicaid, and a low birth-weight baby costs the state an additional $60,000 in Medicaid health care costs. “If you can dramatically reduce that [cost], not only do you improve the lives of our youngest, most vulnerable children, you save immediate taxpayer dollars…It’s not just shortsighted, it’s wrong to think that tobacco prevention doesn’t save money quickly,” he argued.
Mr. Myers agreed and added, “For example, Massachusetts and California both targeted pregnant women. They reduced smoking among pregnant women by 50 percent and paid for the entire cost of the program by doing so. They also reduced heart disease caused by tobacco within 12 months,” he stated.
