The Economic Impacts of the Tobacco Settlement / David M. Cutler, Jonathan Gruber, Raymond S. Hartman, M.B. Landrum, J. Newhouse, Meredith B. Rosenthal.

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Cutler, David M

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w7760.Publication details: Cambridge, Mass. National Bureau of Economic Research 2000.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: 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.

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Working Paper	Biblioteca Digital	Colección NBER	nber w7760 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w7757 The US Economic Model at Y2K: Lodestar for Advanced Capitalism? /	nber w7758 Alcohol Consumption and Alcohol Advertising Bans /	nber w7759 The Boskin Commission Report and its Aftermath /	nber w7760 The Economic Impacts of the Tobacco Settlement /	nber w7761 Borrowing Constraints and the Returns to Schooling /	nber w7762 Generational Conflict, Human Capital Accumulation, and Economic Growth /	nber w7763 Emerging Equity Markets and Economic Development /	Next

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.