[19991012]97-1053_The Proposed Tobacco Settlement Who Pays for the Health Costs of Smoking.pdf

Congressional Research Service The Library of CongressCRS Report for CongressReceived through the CRS Web97-1053 EUpdated October 12, 1999The Proposed Tobacco Settlement: Who Pays forthe Health Costs of Smoking?(name redacted)Senior Specialist in Economic PolicyGovernment and Finance DivisionSummaryOne of the issues raised in the consideration of tobacco settlements is thecompensation of various parties that might pursue lawsuits to recover the health costsof smoking. These parties include states whose settlements now total $26 billion over26 years, the federal government which has filed suit against the industry, andindividuals. Popular estimates of the annual medical costs of smoking range around $50billion, with the states accounting for slightly under $4 billion, individuals about $10billion and the remainder paid for by the federal government and private entities. Somerecent estimates have reported higher costs. A more complete accounting of the healthcosts of smoking not only increases the size of the costs, but also reallocates costs andimplies net financial benefits for some parties. Governments save on the costs of old-agemedical care, social security, and nursing home car