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					Securing Tobacco Settlement
Funds for Health Care


Dona Upson, MD
Pulmonary & Critical Care Medicine
New Mexico Veterans’ Affairs Health Care Services
University of New Mexico

American College of Physicians – 4/13/05
Master Settlement Agreement
 Written by and for tobacco companies
 Implemented 1998
 States supposed to use payments to
  support public health and tobacco
  prevention
 Settlement, not a law
    – Only the parties involved, the tobacco
      companies and the states, have legal
      standing to enforce its terms
Challenges
   Since 1998, tobacco companies have
    doubled spending on marketing and
    promotion
    ($5.7 to $12.7 billion)
   States’ economies have declined
   Many state anti-tobacco media campaigns
    reduced or cut since 2002
   Funding decreased for Legacy (truth)
   Youth smoking rates stable since 2002
    (previously in decline)
Finances - Fiscal Year 2005
   Annual smoking caused health costs
    – $75+ billion
   Prevention spending
    – $538 million
   CDC minimum prevention spending goal
    – $1.6 billion
   Total state revenue from tobacco
    – $19,966.5 million ($12,911 taxes; $7,055 MSA)
   Total prevention spending 2.7% of tobacco
    revenue (0% DC, MO to 10.1% ME)
Tobacco Use Prevention and
Control (TUPAC) - New Mexico
$37 million from MSA
TUPAC Funding:
 2001 $2.225 million
 2002 $5 million
 2003 $5 million
 2004 $5 million

 CDC recommends $14.2 million annual funding for NM
  tobacco control
 CDC funds TUPAC staff positions & administrative costs
  ($1.1 million)
                                $160
                                                                                                  0.441$
                                $140


                                $120
Annual Spending (in millions)




                                $100


                                $80

                                                                         7.75$
                                $60


                                $40


                                $20
                                               0.5$
                                 $0
                                       Currrent TUPAC Program   Tobacco Industry Marketing Tobacco-Caused Medicaid
                                            Funding in NM                 in NM                  Costs in NM
                             Funds
                          to TUPAC


    TUPAC PROGRAM COMPONENTS
 School  Cessation                  Community
Programs Programs  Evaluation Media
                                     Programs


                         Best Practices




                PROGRAM GOALS
                  Promote Eliminate               Identify and
    Prevent
   Initiation   Quitting Among     Exposure to     Eliminate
Among Youth &     Youth and        Secondhand    Tobacco-related
 Young Adults        Adults          Smoke         Disparities
Partnerships
   Oversight group
    – Planning, coordination & implementation
   Voluntaries - ALA, ACS, AHA, etc
    – Funding, advice, credibility
   Legislators
    – On key committees
   Department of Health
    – Promote each other’s agendas
    – Provide state-specific data and education
   Health care professionals
    – Credibility, access, personal stories
   Grassroots advocates
Strategy

   Education
    – Public, legislature, executive branch
 Polling
 Lobbyist
 Media
    – Advertising, press conferences, editorials
Oversight group - NMCAT



NMCAT works to create community norms
that discourage smoking and spit tobacco
use. We believe that through responsible
public policy changes New Mexico can
become a healthier state and tobacco-related
illnesses can be decreased.
NMCAT Background
Established in 1997
 Initially funded by ACS, AHA, ALA &
  Campaign for Tobacco Free Kids
 Staffed entirely by contractors
 Primary Focus: Legislative campaign for
  settlement dollars & other tobacco issues
 900+ members on email/ fax/ phone lists
 Currently have grassroots network of 2,000
Report to the Tobacco Settlement Revenue
Oversight Committee




   Susan Baum, Physician/Epidemiologist
   Larry Elmore, Program Manager
Tobacco Use Prevention and Control Program
  September 29, 2004
Data-driven

   Program planning
    – Baselines and future directions
 Measuring performance
 Measuring outcomes
    – short-, intermediate- and long-term
 Counter marketing
 Justify continued/ increased funding
Smoking &
Lower Quality of Life
   CDC 2003 estimate
    – For every premature death caused each
      year by smoking, there are at least 20
      smokers suffering with at least one serious
      illness from smoking.
   NM estimate
    – 42,000 New Mexicans living with serious
      smoking-related diseases.
FY04 Highlights -
             Adults Quitting
 Over 37,000 adults were screened
  for tobacco use, and over 2,700
  adults received cessation services
 1,500 healthcare providers trained in
  brief interventions
 Best Practices as of FY04: All UNM Hospital
  patients are now screened for tobacco use.

“Of all the classes I’ve ever attended, this class was
the most effective because you inspired my self-
confidence.”
                --Freedom from Smoking Graduate
    FY04 Highlights -
                  Youth & Schools
   CDC Guidelines implemented in over
    150 schools, reaching 45,000
    students statewide

   Nearly 1,000 youth trained as peer
    educators & coalition members


“My students became better communicators,
especially after they participated in the
National Smoke-free Movies Campaign.
They became empowered!”
        --Alameda Middle School SQUADS Facilitator
Smoking Cessation Assistance
                      Percent of NM Smokers Advised to Quit Smoking by a
                              Health Care Provider in the Past Year

                                                                               68
                     80
                                       49
    Percent (%) of




                     60
      Smokers




                     40

                     20

                     0
                                  2001                                    2003

   30% of smokers were advised to quit smoking by their dental
    providers
   20% of working adults report that their employer has offered
    some type of stop smoking program or assistance in the past
    year

                              Sources: 2003 NM Adult Tobacco Survey & 2001 BRFSS
Smoking Cessation among Adults in
New Mexico
               Smokers who tried to Quit
                 Smoking in Past Year

               60     55.4           56.6
                                               51.3    More than half of smokers
               50                                     have made a quit attempt
                                                      during the past 12 months.
 Percent (%)




               40

               30

               20

               10

                0
                     2001           2002       2003

                    Source: BRFSS, 2001-2003
Polling -
Secondhand Smoke: Attitudes
   91% of New Mexicans believe that secondhand smoke is
    harmful to their health (up from 84% in 2001)

           Place                        Percent of New Mexicans who believe
                                       place should be completely smoke-free

Day Care Centers                                                  97%
Indoor Work Areas                                                 76%
Public Buildings                                                  73%
Indoor Shopping Malls                                             71%
Indoor Sporting Events                                            71%
Indoor Dining Area of                                             65%
Restaurants
                   Sources: 2001 & 2003 NM Adult Tobacco Survey
Health & Economic
Impact of Tobacco


   New Mexico and
    United States

    Updated March 2005
Total Annual Smoking-Attributable
Costs in NM (2002)

   Direct Medical Costs                                              $425 million
   Lost Productivity Costs                                           $428 million
   Total Costs Annually                                              $853 million
   Annual Per Capita                                                 $460 per person
   Sources: Campaign for Tobacco Free Kids, ―The Toll of Tobacco in New Mexico‖ Fact sheet (2002 dollars),
   Full list of references available at http://tobaccofreekids.org/reports/settlements/toll.php?StateID=NM. Per
   capita calculation based on 2002 NM population.
Annual Smoking-Attributable
Direct Medical Costs in NM

   Ambulatory                                 $135 million
   (outpatient)
   Hospital                                   $103 million
   Nursing Home                               $58 million
   Prescription Drugs                         $29 million
   Other medical                              $35 million
   Annual Total                               $360 million
   Annual Per Capita                          $208 per person
   Source: Annual Smoking-Attributable Mortality, Years of Potential Life Lost, and
   Economic Costs—United States, 1995-1999, MMWR (CDC), April 12, 2002/51(14);
   300-303
Smoking-Attributable Neonatal
Costs
Annual Neonatal Costs in New                                     $92 million
Mexico
Smoking-Attributable Neonatal                                    $1.6 million
Costs
Percent of Total Neonatal Costs                                  1.75%
Related to Maternal Smoking
Annual Smoking-Attributable                                      $635       (Medicaid or Uninsured)
Costs per Maternal Smoker by
Insurance Status                                                 $583       (Private or Other Insurance)

Source: State Estimates of Neonatal Health-Care Costs Associated with Maternal Smoking, United States, 1996, MMWR (CDC),
October 8, 2004/53(39); 915-917.
Smoking-Attributable Deaths in
NM & US, Disease-Specific


                      Disease                                             NM                                 US
                                                               (Deaths per 100,000)              (Deaths per 100,000)

  Smoking-Related Cancers
  (Lung cancer accounts for about 75% of the smoking-                    80.1                             111.0
  related cancer deaths in NM)


  Cardiovascular Diseases                                                80.4                              90.4
  Respiratory Diseases                                                   76.2                              71.1
  Source: 2001 Annual Smoking-Attributable Mortality calculated using Smoking-Attributable Mortality, Morbidity, and Economic
  Cost (SAMMEC) software. Available at www.cdc.gov/tobacco/sammec. Does not include burn or secondhand smoke deaths.
  NM and US Per Capita Taxable
  Cigarette Sales among Adults,
  1992-2001
                            140
                                                                                                          Per capita sales in
Packs per Capita (Adults)




                            120                                                                           NM have historically
                                                                                                          been lower than in the
                            100
                                                                                                          U.S.
                             80
                                                                                                          Per capita sales have
                             60                                                                           been decreasing from
                             40                                                                           1992 through 2001.

                             20
                              0
                                                                                                              New Mexico
                              92
                              93
                              94
                              95
                              96
                              97
                              98
                              99
                              00
                              01
                                                                                                              United States
                            19
                            19
                            19
                            19
                            19
                            19
                            19
                            19
                            20
                            20

                                  Sources: NM Taxation & Revenue Dept. and Orzechowski, W & Walker, RC,
                                  Tax Burden on Tobacco, 2001
                      NM Per Capita Taxable Cigarette
                      Sales 1992-2003
                                                                  Per capita cigarette sales decreased
                                                                  by one-third between 1992 and 2003.
                      80
                           68
Packs of Cigarettes




                                  64    64     63        62       59        60
                      60                                                             54        55
                                                                                                     53    50
                                                                                                                  45
                             Tobacco Control
                      40
                              begins in NM
                                                                            MSA Funding
                                                                                                           70-cent tax
                      20                                                                                    increase


                       0
                           '92   '93   '94     '95      '96       '97      '98       '99       '00   '01   '02   '03

                                                                    Year
                                               Source: NM Taxation & Revenue Department, 1992-2003
True Cost of a Pack of Cigarettes in
New Mexico

 Retail Price Per Pack                                                                   $3.35
 Smoking-Attributable Medical &                                                          $8.94
 Lost Productivity Costs Per Pack
 Smoking-Attributable Medicaid                                                           $1.78
 Costs Per Pack
 Source: Sustaining State Programs for Tobacco Control: Data Highlights, 2004, CDC. Direct medical
 expenses are updated from 1998 to 2002 dollars, and lost productivity costs are updated from 1999 to 2002
 dollars, using the Medical Consumer Price Index and the Wage Consumer Price Index.
Tobacco Industry Marketing
Expenditures
Annual tobacco industry marketing                                                                 $12.7
expenditures, U.S.                                                                                billion
Estimated annual tobacco industry                                                                $57.7
marketing expenditures, New Mexico                                                               million
Estimated annual tobacco industry                                                                $30.77
marketing expenditures per New Mexican
Annual expenditures on tobacco                                                                    $3.25
prevention and control per New Mexican
Sources: Campaign for Tobacco Free Kids ―The Toll of Tobacco in New Mexico‖ fact sheet. Original source: U.S. Federal
Trade Commission (FTC), Cigarette Report for 2000, 2002; FTC, Federal Trade Commission Smokeless Tobacco Report
for the Years 2000 and 2001. State total a prorated estimate based on its population. Tobacco prevention and control
expenditures data from TUPAC Program.
Tobacco Industry vs. Tobacco
Prevention & Control Spending
   Tobacco companies spend $23 to market their products
    for every $1 states spend on tobacco prevention.

   States have cut funding for tobacco prevention programs
    by 28% in the past three years, resulting in overall funding
    which is only one-third of CDC minimum
    recommendations.

   In NM, the amount spent by tobacco companies on
    marketing their products is about ten times the amount
    spent by the State on tobacco prevention and control
    programs.
    Source: National Cancer Institute, Smoking and Tobacco Control Monograph No. 10 NIH Pub. #99-4645, 1999;
    NM estimate derived from NCI monograph, assuming a similar ratio between smoking deaths and secondhand
    smoking deaths in NM as in the US.
Securitization
Securitization

 Sale of future state tobacco settlement
  receipts for smaller lump-sum payment
  today
 25-40 cents on the dollar
 Credit or bond ratings downgraded due
  to lower future revenue stream
Benefits of Dedicated Trust Fund

 Improve health
 Moral obligation to use funds as
  intended
 Political capital - popular use of funds
 Reduces future state expenditures
 Strengthens bond and credit ratings

				
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posted:11/11/2011
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