Running head: GOVERNMENT INTERVENTION DISCUSSION

Government Intervention Discussion

Elton Tooahnippah
ECO 231
September 28th, 2015
Dr. Sarah Cosgrove

GOVERNMENT INTERVENTION DISCUSSION

Government Intervention Discussion

Cigarettes cause over 480,000 deaths per year and are a major drain on the health care
industry due to Cardiovascular Disease, Lung Cancer and Stroke among many others (Centers
for Disease Control and Prevention, 2014). Smoking not only affects the health of the smoker but
the health of those who are exposed to the second-hand smoke causing the death of tens of
thousands of innocent bystanders every year. It also costs governments billions of dollars in
health care which also has an adverse effect on taxation and rising health care costs.
During the early to mid-90s the industry was at its peak sales point but in 1994 the State
of Mississippi filed a lawsuit seeking to recoup medical costs incurred by smokers (Gruber,
2002). This led to other states following suit and resulted in the industry agreeing to pay a
settlement of 246 billion over twenty-five years to settle with them. Shortly after, the Department
of Justice also filed a lawsuit to help recoup lost federal medical costs.
Currently state and federal governments impose an excise tax on smokers and limit where
they are allowed to smoke. In order to decrease the possibility of second-hand smoke, restrictions
on smoking in public places have been enforced and there is an ongoing campaign to limit the
exposure and access to our youth (Fields & U.S. Department of Health and Human Services,
2003). These regulations are but a few of the efforts being utilized to minimize the continuation
of and start of smoking. They work, to an extent, but without the intervention of friends and
family they are limited to what they can accomplish without continuing education and proper
funding.

GOVERNMENT INTERVENTION DISCUSSION

I feel that rather than increase the tax on cigarettes to effect a market based change in the
number of smokers we should make it harder and more expensive to produce the inputs
necessary for their creation. Federal laws, such as the Family Smoking Prevention and Tobacco
Control Act (Tobacco Control Act), which grant the FDA broad authority over the marketing and
sales of cigarettes only affect cigarettes after they are made which limits the FDAs authority to
that specific market (Betobaccofree.gov, 2015). If we make it more expensive to produce tobacco
and its inputs then the overall cost of cigarette production will rise.
The Law of Supply and Demand dictates that if the cost of inputs rise then the production
cost will rise. Although the demand for cigarettes is fairly inelastic in the short term its long-term
elasticity is high so a higher production cost will decrease the number of smokers more and more
as time goes by. We, as free Americans, maintain our rights as individuals but we are limited to
the amount of change we are able to effect, whereas, the federal government is not only able to
authorize regulatory actions but also has the ability to enforce them on a nationwide scale. I am a
firm believer that federal intervention is necessary to realize effective prevention and education
because many individuals do not possess the proper resources and/or motivations to quit by
themselves.

GOVERNMENT INTERVENTION DISCUSSION

Centers for Disease Control and Prevention. (2014, February 6). CDC - Fact Sheet Health Effects of Cigarette Smoking - Smoking & Tobacco Use. Retrieved from
http://www.cdc.gov/tobacco/data_statistics/fact_sheets/health_effects/effects_cig_smoking/

Gruber, J. (2002, March). The Economics of Tobacco Regulation. Retrieved from

content.healthaffairs.org/content/21/2/146.full

Fields, L., & U.S. Department of Health and Human Services. (2003, November 6).Public and
Private Sector Roles in Tobacco Use Reduction. Retrieved from
http://www.cdc.gov/tobacco/icsh/meetings/summary110603/fed_role/index.htm

Betobaccofree.gov. (2015, September 21). Tobacco Laws and Policies | Be Tobacco Free.gov.
Retrieved September 21, 2015, from http://betobaccofree.hhs.gov/laws/