29 Pages Posted: 18 Jul 2000
Date Written: June 2000
Recent litigation against major tobacco companies culminated in a Master Settlement Agreement' (MSA) under which the participating companies agreed to compensate most states for Medicaid expenses. We outline the terms of the settlement and analyze whether it was a move toward economic efficiency using data from Massachusetts. Medicaid spending will fall, but only a modest amount ($0.1 billion). The efficiency issue turns mainly on the treatment of health benefits from reduced smoking induced by the settlement. We conclude that the settlement was a move towards economic efficiency.
Suggested Citation: Suggested Citation
Cutler, David M. and Gruber, Jonathan and Hartman, Raymond S. and Landrum, Mary Beth and Newhouse, Joseph P. and Rosenthal, Meredith B., The Economic Impacts of the Tobacco Settlement (June 2000). NBER Working Paper No. w7760. Available at SSRN: https://ssrn.com/abstract=235716