How good a deal was the tobacco settlement?: Assessing payments to Massachusetts

We estimate the increment in Massachusetts Medicaid program costs attributa ble to smoking from December 20, 1991 to 1998. We describe how our methods improve upon earlier estimates of analogous costs at the national level. Cu rrent costs to the Massachusetts Medicaid program approximate the payments to Massachusetts under the tobacco settlement of November 1998. Whether the se payments are viewed as appropriate compensation for Medicaid costs over time depends upon the rate of increase in future health care costs, the rat e of decline in smoking, the proportion of smoking that should be attribute d to the actions of the tobacco companies and the likelihood the state woul d have prevailed at trial. The costs to the Medicaid program are dwarfed by the internal costs to smokers themselves.