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Update On State's Use Of Tobacco Settlement To Fund Treatment And Services For People With Mental Illnesses

Chris Marshall
For Immediate Release
23 Jun 99

The Tobacco Settlement Agreement, finalized on November 23, 1998 by forty-six states, five commonwealths and territories, and the District of Columbia with the tobacco industry, merited $206 billion from the tobacco companies over the next twenty-five years. Florida, Minnesota, Mississippi and Texas previously settled lawsuits with the tobacco industry for more than $40 billion dollars and thus did not participate in this settlement. The settlement resolves numerous lawsuits filed by the states to recover Medicaid funds spent over the years to treat low-income persons with tobacco-related illnesses.

Governors are establishing trust funds and endowments to allocate tobacco settlement funds to be used for health care, tobacco prevention and cessation programs, public health and aid to tobacco farmers. There are little, if any, restrictions on how states can spend their share of the settlement. Already, several states have either made the decision to direct tobacco proceeds to mental illness treatment, or had state officials publicly support this position. The following is an update on state activities specifically targeted to mental illness.


Governor Jane Dee Hull (R) has proposed to allocate $75 million toward replacing the state’s aging and underfunded psychiatric hospital. Some state legislators would like to see a split between the hospital and community mental health services.


PACT (Program of Assertive Community Treatment) Teams received $3.2 million in funding from the Mental Health Block Grant and an additional $900,000 from the tobacco settlement.


This state has allocated $30.5 million of tobacco funds for new medications and $15 million for children’s mental health services, both for a two year period, 2000-2001.

Rhode Island

The new Lt. Governor has gone on record in support of using tobacco funds for mental illness treatment.


All NAMI grassroots members should contact your Governor and State legislators and encourage them to invest new resources from the tobacco settlement agreement into the public mental illness treatment system in your state. Although some Governors may have already made specific commitments, approval of the legislature is still needed. The public process by which these decisions are made should provide NAMI advocates with the opportunity to make the case for investment in treatment and services for people with severe mental illnesses. A list of annual payments to each state can be located at


In seeking to make the case of using these funds for mental illness treatment, services, and supports, NAMI advocates are likely to be most successful by developing a link to the original basis of the state initiated lawsuits; i.e., the link between tobacco, disease, and state Medicaid expenditures to treat sick smokers. However, this linkage need not be explicit. For example, some governors have already declared interest in spending their settlement funds on child care programs, health prevention programs, and initiatives to keep children from smoking.

While nearly all of these spending plans are related to tobacco and public health, none are directly linked to state dollars that have already been spent to treat Medicaid recipients with smoking-related illnesses. In fact, a case can be made that leaving settlement proceeds in the state treasury to replace previously spent Medicaid funds would be the most logical use for these funds. Of course few, if any, elected officials are willing to resist the temptation to spend state revenues not derived from direct taxation on pressing public needs. Thus, there are likely to be important opportunities for advocates to make the case for investment in new or existing state and local programs if there is a link to tobacco and smoking-related illness.


A review of the medical and public health literature by the NAMI policy staff has found considerable evidence indicating both that adults with severe mental illness have higher rates of smoking, and that the symptoms of brain disorders such as schizophrenia and major depression are linked to tobacco use. The following points are supported by the existing science and research.

1. Adults with severe mental illnesses smoke at a rate higher than the general population. Evidence:

a) chronic schizophrenia patients smoke at a rate that approaches 90% (Lohr & Flynn, "Smoking and Schizophrenia" Schizophrenia Res, 8:93-102, 1992),

b) while testing a new drug for smoking cessation, a 1988 study found that 42 to 71 smokers (60%) in the study had a history of major depression, while the best available data suggests that lifetime smoking rates for the general community are around 18% (Kessler, McGonagle, Zhao, Nelson, Hughes, Eshleman, Wittchen, Kendler, "Lifetime and 12-month prevalence of DSM-III psychiatric disorders in the U.S.: Results from the National Comorbidity Survey," Archives of General Psychiatry, 51:8-19, 1994).

c) patients coming to a medical center for treatment for a variety of psychiatric conditions, including depression, were more likely to be smokers than the general population (Hughes, Hatsukami, Mitchell, Dahlgren, "Prevalence of smoking among psychiatric outpatients," American Journal of Psychiatry, 143:993-997, 1986).

d) In a study on smoking cessation, 31% of those smokers with no history of psychiatric illness were able to stop smoking for more than 1 year, and 28% of those individuals with either no psychiatric history (or no psychiatric history except for depression) were able to quit; among those with a lifetime history of major depression, less than 14% of smokers were able to stop (Glassman, Helzer, Covey, Cottler, Stetner, Tipp, Johnson, "Smoking, smoking cessation and major depression," JAMA 264:1546-1549, 1990).

e) Individuals with schizophrenia in the U.S. smoke over 10 billion packs of cigarettes each year, at a cost of over $20 billion (Torrey, Surviving Schizophrenia, 3rd Edition, 1995).

2. There is mounting evidence that smoking is a form of self-medication for individuals with schizophrenia in that nicotine appears to reduce anxiety and sedation and improve concentration in some people.

a) Nicotine is known to affect the receptors for many brain neurotransmitters and to promote the release of dopamine, serotonin, acetylcholine, and norepinephrine - of which are related to serious brain disorders such as schizophrenia (Surviving Schizophrenia, 3rd edition, pp. 250-253, 1995).

b) Studies of smokers with schizophrenia reveal that smoking cantransiently improve specific brain functioning, including auditory sensory gating, that are known to be impaired by the disease (Surviving Schizophrenia, 3rd edition, pp. 250-253, 1995).

c) Studies have also shown that smoking decreases side effects of antipsychotic medications such as stiffness and tremors (Surviving Schizophrenia, 3rd edition, pp. 250-253, 1995).

d) There are nicotine receptors in the brain and many scientists believe that these are related to schizophrenia (Surviving Schizophrenia, 3rd edition, pp. 250-253, 1995).

e) Nicotine has been shown in some studies to decrease the blood level of antipsychotic medications by increasing the excretion by the kidneys; smokers with schizophrenia are known to require higher doses of antipsychotic medications than non-smokers, although a direct link to increased kidney excretion has not been found yet (although a study of Tourette’s disease reported that nicotine potentiated the effects of haloperidol in decreasing tics) (Surviving Schizophrenia, 3rd edition, pp. 250-253, 1995).