Last year marked the 20th anniversary of the Master Settlement Agreement between the tobacco industry and the nation’s states. The Master Settlement Agreement (MSA) ended litigation brought by the states against the nation’s major tobacco companies. In that litigation the states charged that the tobacco companies deliberately misled the general public, and specifically smokers, about the dangers of their products. As a result, more people smoked, more people got sick, and the states had to pick up additional – and significantly higher – health care costs, particularly through the Medicaid program. Medicaid offers health insurance for the poor and states’ pick up much of the tab. Big Tobacco also settled a separate case with the federal government over similar claims.
The MSA was an agreement by the states to drop their litigation if the industry made marketing changes and paid the states hundreds of billions of dollars over the next few decades to compensate them for the health care costs resulting from the misery of sick smokers.
New York was a party to that agreement and at that time heralded the MSA as a way for the state to have new resources for health care and financing to keep kids from starting to smoke and to help smokers to quit.
A report released this week examined the financial impact of the MSA on New York and concluded that the state shortchanges its programs to keep kids from using tobacco products and to help smokers to quit. According to the New York Public Interest Research Group (NYPIRG), the state has collected over $39 billion from tobacco taxes and revenues from the MSA. As part of that agreement, the tobacco industry has paid the state nearly $16 billion over the past twenty years.
Yet despite promises to use a portion of the revenues for tobacco control programs, the state spends far less than recommended by the federal government and, when accounting for inflation, spends less today than it did 20 years ago on the program.
The report, Dissipated, reviewed the revenues collected by New York State and its spending on tobacco control. The report found:
- New York State has received nearly $16 billion in tobacco revenues from the MSA since it went into effect in 1999.
- New York has collected over $23 billion in tobacco taxes and fees since the MSA went into effect. Combined with tobacco revenues from the MSA, New York has collected over $39 billion.
- Despite this windfall, New York spends less today (adjusted for inflation) on its state tobacco control program than ever. New York has spent less than $1 billion on tobacco control since the MSA, despite promises to use the money to combat tobacco addiction.
- It appears that the state does follow expert guidance on how to implement a tobacco control program, but independent audits have repeatedly identified the state’s lack of resources as a major flaw.
- Despite impressive reductions in tobacco use statewide, the vast majority of New York counties have smoking rates that exceed the national average. The counties tend to be upstate, older, and more rural. Recent studies have shown that children in similar communities are at the greatest risk of exposure to second-hand tobacco smoke, a known human carcinogen.
In the report, NYPIRG recommended:
- New York should increase its commitment to tobacco control efforts by following the recommendations of the U.S. Centers for Disease Control and Prevention’s (CDC) guidelines; it recommends the state spend at least $140 million annually.
- New York should target its resources to those areas of the state hardest hit by tobacco use.
- Given the dramatic increased use of electronic cigarettes, they should be taxed at the equivalence of combustible cigarettes and those revenues earmarked for the state’s underfunded tobacco control efforts.
This week, New York lawmakers examine the governor’s proposed health budget, which does not include any increases in spending on tobacco control programs. Hopefully, this is the year that the Legislature will demand that New York reverse course and boost its efforts to curb tobacco use. New York has the money, all it needs is the political will.
Blair Horner is executive director of the New York Public Interest Research Group.
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