News: 2012-11-15 Tobacco Master Settlement Agreement

Tobacco Master Settlement Agreement 

UPDATE: Oregon’s 2013-2014 budget invests TMSA funds in tobacco prevention and cessation programs for the first time ever. This session, Oregon’s legislature dedicated $4 million in TMSA funds to the state’s Tobacco Prevention and Education Program, $4 million to school-based physical education programs, and the remaining $112 million in TMSA funds to Oregon’s health systems transformation. This is a great first step towards investing TMSA funds appropriately and ONA will continue working to ensure these funds are used for their intended purpose in the future.

ONA has been working in coalition with leading health and health care organizations in Oregon on a legislative proposal to invest the newly released Tobacco Master Settlement Agreement (Tobacco MSA) funds into children’s health, Coordinated Care Organizations (CCOs), community wellness programs, and tobacco prevention. ONA’s proposal fulfills the original intent of the Tobacco MSA by investing in tobacco prevention and helping to offset the cost of tobacco related illness and disease in our state.

Take Action Today &Tell Oregon’s Leaders to Invest Oregon’s Tobacco Master Settlement Dollars in Prevention

As we enter the final days of Oregon’s legislation session, Oregon’s leaders have the opportunity to make a key investment in the public’s health by protecting kids from the harmful effects of tobacco.

For the first time in a decade, money for the Tobacco Master Settlement Agreement (TMSA) – given to us by Big Tobacco to compensate taxpayers for paying for the health problems caused by tobacco use – is available. Lend the voice of nursing to this cause by telling your state legislators to invest Oregon’s TMSA dollars in public health and prevention.

Encourage your legislators to invest this money in a healthier Oregon. Tell them, as a nurse you’d like to see the TMSA funds invested to keep kids from smoking and helping adults quit.

A small investment in tobacco prevention can have a big impacts on reducing these scary statistics:

  • Without more investments in tobacco prevention programs, another 4,200 Oregon kids will become daily smokers in 2013.
  • If all the cigarette packs smoked by Oregon kids this year were stacked on top of each other it would be taller than Mount Hood.

You can learn more at the following links:

News About TMSA

In their “Turning Point" budget released on March 4, the Co-Chairs of Oregon’s Joint Committee on Ways and Means acknowledged the importance of Oregon’s tobacco prevention program and children’s physical education by including both on their "priority add-back" list. It is now up to the co-chairs and members of the Ways and Means Subcommittee on Human Services to make these investments a reality for Oregon’s children and families.

The Tobacco Master Settlement Agreement (TMSA) Campaign recognizes the extraordinarily difficult job the co-chairs had in prioritizing funding and preserving services for children and vulnerable Oregonians. We commend Co-Chair Devlin and Co-Chair Buckley for their commitment to services for children, particularly investment in K-12 Education, early childhood services and health care for Oregon’s children.

What remains unclear, however, is the Legislative Assembly's commitment to following through on a promise made over 15 years ago.

In 1998, under the TMSA, Oregon and 45 other states negotiated with major tobacco companies to recover states' tobacco-related health care costs incurred over decades. Since then Oregon has received more than $1 billion in TMSA payments and has spent the bulk of that revenue on retiring debt or on non-tobacco-related services. With the debt retirement now having occurred, Oregon has the opportunity to align public policy with TMSA goals to prevent and reduce tobacco use, especially among children, and lessen the financial toll of tobacco on our state.

We, members of the TMSA Campaign, urge lawmakers to use the newly available $120 million in Oregon's 2013-15 Tobacco MSA funds to lead the way to a healthier Oregon with three investments:

  • Children’s Health & Prevention: $35 million
  • CCOs and Community-Based Health Initiatives: $73 million - To be Matched with Federal Funds, Expanding the Amount Available to State Health Reform Efforts
  • Investment in Oregon’s Tobacco Prevention Efforts: $12 million

Click here to read the one-page proposal document with more details about each of the investments above.

Tobacco Master Settlement Agreement History

In 1998, 46 states and the “Big 4” tobacco companies entered into a $221 billion settlement to compensate states for past and future smoking-caused expenditures. The intent was clear: Prevent and reduce tobacco use, especially among children, and lessen the financial toll of tobacco on states.i

“WHEREAS, the Settling States and Participating Manufacturers…have agreed to settle their respective lawsuits and potential claims pursuant to terms which will achieve for the Settling States and their citizens significant funding for the advancement of public health, [and] the implementation of important tobacco-related public health measures…” ii

It turns out, settlement payments from tobacco companies cover only $0.07iii of each $1.00iv that Oregonians spend treating smoking-related conditions. At the same time, not one penny of the $1 billion Oregon has received in payments has gone towards tobacco prevention.v

The Public Voice: Use Funds for Prevention and Cessation Programs

When the settlement dollars reached Oregon in 2000, voters decisively defeated two ballot initiatives that spent the funds without prevention and cessation investments. At the time, 85 percent of Oregonians supported spending Tobacco MSA funds on prevention and cessation  Despite the clear public voice, the funds were not put toward the intended purpose.

Using Funds for Other Purposes has Already Cost Us

In 2003, two credit agencies downgraded Oregon’s credit rating in part due to plans to use the Tobacco MSA funds to plug budget shortfalls. “…the poorer credit rating means [we] will end up paying millions of dollars in interest over the next 10 to 20 years,” said (State Treasurer Randall) Edwards.vii

The Costs of Tobacco

Tobacco use has a price. The state of Oregon incurs the following costs from tobacco use:

  • $563 per Oregon household in state & federal tax burden from smoking-caused government expendituresviii
  • $374 million in Oregon’s Medicaid costsix
  • $1.25 billion in total direct medical expendituresx

These costs can be decreased if public health and tobacco cessation programs are funded. For instance, there are now 182,000 fewer adult smokers since the Tobacco Prevention & Education Program (TPEP) began in 1997. TPEP yields a return on investment of $5 for every $1 spent.xi

Proposal: Leading the Way to a Healthier Oregon

Oregon has the opportunity to lead the nation in creating a health care system that meets the needs of all our citizens. Driven by principles of equity, prevention, local community empowerment, accountability, and innovation, our coalition believes that by giving our Coordinated Care Organizations (CCOs) and communities the tools to achieve healthier outcomes and our children the foundation they need for a healthy and successful life, we can fundamentally transform Oregon’s health care system.

To restore the public’s trust and fulfill the original intent of the Tobacco Master Settlement Agreement (TMSA), our coalition of health advocates recommends all available TMSA funds (approximately $120 million starting in the 2013-2015 biennium) be allocated to health and prevention efforts to build a healthier future.

Investing in Our Children and a Healthy Future

Allocating $120 million to health care and prevention efforts will:

  • Invest in our children’s future, health and success in life through health and prevention programs.
  • Equip CCOs and community based health initiatives for success and help achieve greater health transformation through community-based health initiatives and by connecting CCOs with their greater communities. Oregon’s health lies in the hands of the local and community level efforts, so we must provide the tools to succeed.
  • Reduce tobacco use and ease the financial and social burden of tobacco-caused conditions so Oregon can be a place where children never start smoking and where adult smokers can access tools they need to quit.


i. The Master Settlement Agreement. National Association of Attorneys General. 1998.
ii. The Master Settlement Agreement. National Association of Attorneys General. 1998.
iii. Actual Payments Received by the States from the Tobacco Settlements, 2002-2011. Campaign for Tobacco Free Kids website,  [accessed 5/16/2012].
iv. The Toll of Tobacco in Oregon. Campaign for Tobacco Free Kids website, [accessed 5-16-2012].
v. Actual Payments Received by the States from the Tobacco Settlements, 2002-2011. Campaign for Tobacco Free Kids website,  [accessed 5/16/2012].
vi. Davis Hibbitts & Midghall Inc. Polling, November 10, 1999.
vii. Credit rating agency downgrades Oregon. The Daily Courier, March 12, 2003.
viii. Smoking-Caused Federal & State Government Expenditures and Related Tax Burdens on Each State’s Citizens. Campaign For Tobacco Free Kids website, [accessed 5/17/12].
ix. Oregon Tobacco Facts & Laws. Tobacco Prevention and Education Program. Portland, Oregon: Oregon Department of Human Services, Oregon Public Health Division, 2010.
x. Smoking-Attributable Morbidity, Mortality and Economic Costs (SAMMEC), Centers for Disease Control and Prevention.
xi. Oregon Health Authority.



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