4 Reasons Substance Abuse is Driving up Healthcare Costs in 2017

May 17, 2017
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The rise in instances of substance abuse in the United States is having an impact on healthcare expenses. This not only increases the strain on our health system, but the added coverage that the Affordable Care Act offers results in higher policy costs for consumers as insurance companies struggle to cover the added expense, which is then passed onto the consumer with higher premiums.

According to a report published by BipartisanPolicy.org, “this rapid growth in health expenditures creates an unsustainable burden on America’s economy, with far-reaching consequences.” To understand the areas of substance abuse that are impacting healthcare costs, let’s take a closer look at 4 ways healthcare costs are impacted by substance abuse.

1. An Increasing Trend in Deaths due to Overdose

National Overdose Deaths, as reported by the National Institute on Drug Abuse, shows that the NIDA received confirmation of more than 25,000 deaths due to prescription drug overdoses in 2014. This is more than a 2.8-fold increase since 2001. The vast majority of these deaths are due to abuse of opioid pain relievers, which rose more than 340% from 2001’s number, to 18,000 fatalities.

For a country that prides itself on world-class healthcare, the prevalence of opioid pain abuse is shocking. Yes, these are highly addictive substances, but the technology at our disposal to track and monitor opioid prescriptions should allow us, as a society, to put a dent in these numbers.

2. 4-Fold Increase in Opioid Prescription Scripts since 1999

Another contributing factor is the prevalence with which healthcare providers prescribe opioid pain relievers. Since 1999, the number of opioid prescriptions filled by America’s pharmacies quadrupled to reach 259 million scripts in 2012 (Source: CDC). What’s fascinating is the disparity of where these scripts are written and filled. The states with the highest volume of opioid prescriptions (primarily located in the south) are nearly ten times higher than the states on the other end of the spectrum.

Clearly there are different prescribing guidelines in practice from state to state. It’s also possible that some states have more lax regulations, which allows for out of state residents to fly in and attain and then fill their prescriptions.

3. Increasing Number of Private Rehabilitation Facilities with Ranging Levels of Medical Care and Professional Competency

In the United States, there are more than 14,000 rehabilitation facilities. Unfortunately, these facilities are in demand and many are full according to Market Watch. It can be a struggle to find a quality rehabilitation facility that accepts a patient’s insurance and provides quality care. Thankfully, there are agencies that independently rate these facilities for patients. There is government oversight, with agencies like the Center for Medicare and Medicaid Services providing what they call a “Five Star Quality Rating System”. The same system is used for both nursing homes and in-patient / out-patient rehabilitation facilities.

4. Increase in Rehabilitation Firms as a Result of ACA Coverage Requirements

Coverage for drug and alcohol rehabilitation became one of the ten essential benefits mandated by the Affordable Care Act in 2012. This was welcome news to state and local governments struggling to cover the cost of reimbursing private and public providers of rehabilitation services to those without insurance, or adequate insurance to cover services. As a result of the ACA, the burden for the majority of costs associated with rehabilitation for the poor and underinsured transferred to the insurers operating in each state.

But, as any economist will tell you, there are unintended consequences to every government action. The decision to provide rehabilitation coverage for all Americans insured in the US with ACA compliant health coverage has resulted in a rush of firms looking to profit from the new coverage. Unfortunately, quality care doesn’t always result from a gold rush spurred by new coverage limits.

In addition, lower costing ACA plans do not fully cover the cost. Cost-sharing means the burden for paying for this potentially expensive treatment is shared with the patient. Add into this equation the indirect cost of drug abuse, which in 1997 alone reached $294 billion; only $11.9 billion of the social cost directly paid for rehabilitation services (source: HHS Public Access).

Substance abuse is a major economic concern for the United States. While information available is limited to certain years, it’s clear that the impact of substance abuse is increasing year-over-year. Whether it’s fatalities due to overdose, changing insurance legislation, or the boom in rehabilitation facilities. It will be fascinating to see how this increasing challenge is handled by future generations.

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