Master Settlement Agreement
Forty-six states, the District of Columbia, and five U.S. territories receive annual payments from tobacco manufacturers that are parties to the tobacco Master Settlement Agreement (MSA). In 2008, those payments totaled over $8 billion.
Under the terms of the MSA, those payments are adjusted annually to account for changes in the volume of cigarette sales in the United States of participating manufacturers. Because CBO estimates that enacting this legislation would result in lower consumption of tobacco products, CBO estimates that the annual payments to states under the MSA also would decline by over $150 million over the 2010-2014 period. A decline in smoking among pregnant individuals is expected to result in a reduction of low-weight births. As a result, state spending for Medicaid would decrease by an estimated $15 million over the 2010-2014 period, with additional savings in subsequent years.
Under the terms of the MSA, those payments are adjusted annually to account for changes in the volume of cigarette sales in the United States of participating manufacturers. Because CBO estimates that enacting this legislation would result in lower consumption of tobacco products, CBO estimates that the annual payments to states under the MSA also would decline by over $150 million over the 2010-2014 period. A decline in smoking among pregnant individuals is expected to result in a reduction of low-weight births. As a result, state spending for Medicaid would decrease by an estimated $15 million over the 2010-2014 period, with additional savings in subsequent years.
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