|
 Summary
on Substance Abuse Savings to state tax payers
here.
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter
6
Chapter
7
References
CHAPTER 1. INTRODUCTION AND BACKGROUND
1.1
The Social Cost of Alcoholism and Drug Abuse.
In recent years, mounting evidence has
confirmed that alcohol and drug abuse are involved in a host of
medical, psychological, and social problems that engender major
economic costs for the country. It has been estimated that the
national costs associated with alcoholism and addiction for 1992
were nearly 250 billion dollars with projections for 1995 estimated
to exceed 276 billion dollars (U.S. Department of Health and Human
Services, 1998). The states pay a large share of the public
spending caused by public abuse and addiction. The National
Center on Addiction and Substance Abuse at Columbia University
estimated that in 1998, of the $620 billion total state’s spending,
$81.3 billion (or 13.1 percent) was used to deal with substance
abuse and addiction (The National Center, 2001).
 The Center makes an important distinction between the direct
expenditures on substance abuse programs and the indirect
expenditures, which are paid to cover the problems caused by
substance abuse.
The Center reports that in 1998, out of the
$81.3 billion spent by the states, 96 percent went to shoveling up
the wreckage of substance abuse and addiction and only 4 percent was
used to prevent and treat it. According to the Center,
nationally substance abuse accounted for the following allocation of
state expenditures.
-
$30.7 billion in the
justice system (77 percent of justice spending).
-
$16.5 billion in
education costs (10 percent of education spending).
-
$15.2 billion in health
costs (25 percent of health spending).
-
$7.7 billion in child
and family assistance (32 percent of child/family assistance
spending).
-
$5.9 billion in mental
health and developmental disabilities (31 percent of mental health
spending).
-
$1.5 billion in public
safety (26 percent of public safety spending) and $400 million for
the state workforce.
The Center argues that a huge share of these
expenditures is unnecessary because substance abuse treatment is
cost-effective. The expansion of treatment programs will cause
such a reduction in drug use and associated problems that states
will save money. As Joseph Califano, Chairman and President of
the Center puts it:
The choice for governors and state legislators is this; either
continue to tax their constituents for funds to shovel up the
wreckage of alcohol, drug and nicotine abuse and addiction or recast
their priorities to focus on preventing and treating such abuse and
addiction.
1.2
Value for Money and Economic Evaluations
The cost of alcoholism and drug abuse illness in the studies cited
above suggests that the expansion of alcoholism and drug abuse
treatment programs could yield potentially large cost-savings to
state governments. As shown in Chapter 4 below, there are good
reasons to believe that these cost-of-illness studies are upwardly
biased. But even so, the potential cost-savings from
successful alcoholism and drug abuse treatment programs are
enormous. The extent to which such cost-savings can be
realized, of course, depends upon the effectiveness of treatments
provided.
While State expenditures for prevention and treatment for alcoholism
and drug abuse programs represent only 4 percent of the total social
costs of such programs, the absolute amount is substantial and these
programs must compete with other agencies and programs for State
funds. Policymakers and the public now recognize that every
dollar spent on alcohol and drug abuse programs is no longer
available for spending on education, crime control, or
infrastructure improvement. To justify increased funding,
program administrators are being asked to show that their program is
cost-effective or cost-beneficial. As Drummond, et al. (1977,
p. 8) explain:
… the real cost of any programme is not the number of dollars
appearing on the programme budget, but rather the outcomes
achievable in some other programme which have been forgone by
commiting the resources in question to the first programme. It
is this “opportunity cost” which economic evaluation seeks to
estimate and to compare with programme benefits.
Public and private decision makers need economic evaluations to
assess policies designed to reduce the costs of alcoholism and drug
abuse. They need to learn which programs are cost-effective
and which treatments work best for which clients. Without
measurement and comparisons of outputs and inputs, they have little
upon which to base any judgment about value for money. This
does not imply, however, that public expenditures on alcohol and
drug abuse treatment programs should be based strictly on their
cost-effectiveness. These programs will have to compete with
other claimants for public funds in the political process (Gerstein
1991).
1.3
Study Overview and Objectives
This study has three major parts. The first part will be an
extensive and critical review of the existing literature on
cost-effectiveness and cost-benefit analysis of alcohol and drug
abuse treatment programs. As discussed below, the quality of
the existing studies vary significantly, and the objective of this
exercise is to obtain the most reliable estimates of the
cost-effectiveness and cost-benefits of these programs.
The second part of the study will survey the Louisiana substance
abuse treatment system to determine who receives what kinds of
treatments for different drugs at what cost and who in need does
not. In the third part, we will use the best estimates of the
cost-effectiveness and cost-benefits of the different types of
alcohol and drug abuse programs to estimate the potential
cost-savings to the state from the existing programs or expansions
in the programs based on the assumption that the Louisiana programs
are equally as cost-effective as the literature suggests.
1.4
Outline of the Study
The next two chapters are intended to help the reader to understand
the nature and weaknesses of the existing literature on the economic
evaluations of alcohol and drug abuse treatment programs.
Chapter 2 discusses the kinds of questions economic evaluations seek
to answer and the basic types of evaluation models. Chapter 3
assesses various methodological issues involved in evaluating the
effectiveness of alcohol and drug abuse treatment programs.
Chapter 4 provides an analysis of the available research evidence on
the social costs of alcohol and drug abuse. This analysis will
provide us with an understanding of the potential cost-savings to
State governments from successful alcohol and drug abuse programs.
Chapters 5 and 6 review the exiting literature on evaluations of
alcoholism and drug abuse programs and treatments. The intent
is to learn which programs and treatments are cost-effective.
In the final chapter, we review and interpret the findings of the
study and their implications for Louisiana’s substance abuse
treatment programs.
Figure 3.1 Components of economic evaluation in health
care
Chapter 1
Chapter 2
Chapter 3
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