A Decade of Broken Promises

The 1998 State Tobacco Settlement Ten Years Later

The 10th anniversary of the state tobacco settlement comes as recent surveys have shown that the nation has made significant progress in reducing smoking in the past decade, but smoking declines have slowed in recent years.

On November 23, 1998, 46 states settled their lawsuits against the nation’s major tobacco companies to recover tobacco-related health care costs, joining four states—Mississippi, Texas, Florida and Minnesota—that had reached earlier, individual settlements. These settlements require the tobacco companies to make annual payments to the states in perpetuity, with total payments estimated at $246 billion over the first 25 years. The multistate settlement, known as the Master Settlement Agreement (MSA), also imposed limited restrictions on the marketing of tobacco products.

The tobacco settlements presented the states with a historic opportunity and unprecedented sums of money to attack the enormous public health problem posed by tobacco use in the United States. While the multistate settlement did not dictate how states should spend the money, many state attorneys general and governors pledged that they would use the tobacco companies’ own money to protect kids from tobacco and help those already addicted to quit.

Our public health organizations have issued regular reports tracking whether the states are living up to their promise to use their tobacco settlement money to address the tobacco problem. Ten years after the November 1998 state tobacco settlement, we find that most states have failed to keep their promise to use a significant portion of the settlement funds to reduce tobacco’s terrible toll on America’s children, families and communities.

Key Findings:

  • In the last 10 years, the states have spent just 3.2 percent of their total tobacco-generated revenue on tobacco prevention and cessation programs.
  • In the current budget year, Fiscal Year 2009, no state is funding tobacco prevention programs at levels recommended by the U.S. Centers for Disease Control and Prevention (CDC).
  • Currently, 41 states and the District of Columbia are funding tobacco prevention programs at less than half the CDC-recommended amount.
  • Total funding for state tobacco prevention programs this year is $718.1 million, including $670.9 million in state funds and $47.2 million in federal grants.
  • Despite the settlement’s restrictions on tobacco marketing, annual tobacco marketing expenditures increased by 94 percent from $6.9 billion in 1998 to $13.4 billion in 2005, the most recent year for which the Federal Trade Commission has reported such data. The tobacco companies spend nearly $19 to market tobacco products for every $1 the states spend to prevent kids from smoking and help smokers quit.
  • Several states that once were national leaders in funding tobacco prevention and cessation programs have yet to restore full funding for their programs after substantial budget cuts. These include California, Indiana, Massachusetts, Minnesota and Mississippi.

This report warns that the nation faces two significant and immediate challenges in the fight against tobacco use: Complacency and looming state budget shortfalls.

Our nation has made significant progress in reducing tobacco use with a comprehensive approach that includes well-funded tobacco prevention and cessation programs, tobacco tax increases and smoke-free workplace laws. Continued progress will not occur, however, unless states step up efforts to implement these proven measures, including using more of their billions of dollars in tobacco revenue to fund tobacco prevention and cessation programs at CDC-recommended levels. It is also imperative that Congress provide much needed leadership by enacting the legislation granting the FDA authority over tobacco products, significantly increasing the federal cigarette tax and funding a national public education and smoking cessation campaign.

If national and state leaders step up the fight against tobacco use, the 1998 state tobacco settlement could yet mark a historic turning point in the battle to reduce tobacco’s terrible toll. If they do not, it will be a tragic missed opportunity for the nation’s health.