Broken Promises to Our Children: A State-by-State Look at the 1998 Tobacco Settlement 20 Years Later

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Author(s): The Campaign for Tobacco-Free Kids | American Cancer Society Cancer Action Network | American Heart Association | American Lung Association | Robert Wood Johnson Foundation | Americans for Nonsmokers’ Rights and Truth Initiative

Published: Dec. 14, 2018

Report Intro/Brief:
“This year marks the 20th anniversary of the landmark 1998 legal settlement between 46 states and the major tobacco companies (the Master Settlement Agreement or MSA), which required the companies to compensate the states for tobacco-related health care costs, restricted some forms of tobacco marketing and provided funding for a national public education campaign to prevent youth tobacco use. The MSA, along with earlier settlements with four individual states, requires tobacco companies to make annual payments to the states in perpetuity, with payments estimated at $246 billion over the first 25 years. The states also collect billions each year in tobacco taxes.

Over the past two decades, our organizations have issued annual reports assessing how well the states have kept their promise to use a significant portion of their settlement funds to combat tobacco use in the United States. This year’s report finds that, once again, most states get a failing grade and are spending a small fraction of their tobacco revenues to fight tobacco use and the enormous public health problems it causes.

In the current budget year, Fiscal Year 2019, the states will collect $27.3 billion in revenue from the tobacco settlement and tobacco taxes. But they will spend only 2.4 percent of it – $655 million – on programs to prevent kids from smoking and help smokers quit. This means the states are spending less than three cents of every dollar in tobacco revenue to fight tobacco use.

Over the past 20 years, from FY2000 to FY2019, the states have spent just 2.6 percent of their total tobacco-generated revenue on tobacco prevention and cessation programs. During this time, the states have received $453.4 billion in tobacco revenue – $156.7 billion from the tobacco settlement and $296.7 billion from tobacco taxes. They have allocated $11.8 billion to tobacco prevention and cessation programs.

The states’ failure to adequately fund tobacco prevention and cessation programs is hindering the nation’s efforts to reduce tobacco use – still the leading preventable cause of death in the country and the killer of more than 480,000 Americans each year. It is also indefensible given the conclusive evidence that such programs work to curtail smoking, save lives and reduce tobacco-related health care costs. These costs total about $170 billion a year in the United States, according to the Centers for Disease Control and Prevention (CDC).

Other key findings of this year’s report include:

  • The states continue to fall far short of CDC-recommended spending levels for tobacco prevention programs. The $655 million allocated by the states amounts to less than 20 percent of the $3.3 billion the CDC recommends for all states combined. Not a single state currently funds tobacco prevention programs at the CDC-recommended level.
  • Only two states – Alaska and California – provide even 70 percent of the CDC-recommended funding. Twenty-eight states and the District of Columbia are spending less than 20 percent of what the CDC recommends. Connecticut (for the third year in a row), West Virginia (for the second year in a row) and Tennessee have allocated no state funds for tobacco prevention programs this year.
  • The states’ funding of tobacco prevention programs is dwarfed by the billions of dollars tobacco companies spend to market their deadly and addictive products. According to the latest Federal Trade Commission (FTC) data, the major cigarette and smokeless tobacco companies spent $9.5 billion in 2016 – more than $1 million every hour – on marketing. This means the tobacco companies spend more than $14 to market tobacco products for every $1 the states spend to reduce tobacco use.
  • States with well-funded, sustained tobacco prevention programs continue to see significant progress, adding to the evidence that these programs work. Florida, with one of the longest-running programs, reduced its high school smoking rate to 3.6 percent in 2018, one of the lowest ever reported by any state.”

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