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The Economic Costs of Alcohol and Drug Abuse in the United States - 1992

Health Care Costs

4.1 Synopsis


Treatment and prevention of alcohol and drug abuse problems and related health conditions are estimated to have cost almost $28.8 billion in 1992, of which about $18.8 billion was for alcohol problems and $9.9 billion was for drug abuse problems. Included in these estimates are the cost of specialty treatment, prevention, and support services for alcohol and drug abusers, as well as health care costs for treatment of the medical consequences of alcohol and drug abuse. Treatment of medical consequences includes inpatient and outpatient medical care, pharmaceuticals, and other services provided to persons suffering from conditions such as HIV/AIDS, infant drug or alcohol exposure, liver cirrhosis, and trauma. Findings from this analysis of health care costs are summarized in table 4.1 and include the following:

  • Treatment and prevention of alcohol and drug abuse disorders cost about $9.0 billion, and training, research, and insurance administration for treatment and prevention services cost another $1.0 billion.
  • Treatment of the medical consequences of alcohol and drug abuse cost about $18.8 billion.
  • Medical consequences of alcohol and drug abuse resulted in costs of $6.3 billion for hospitalizations and $4.9 billion for other health care services (e.g., ambulatory care and medications).
  • Special disease groups cost about $6.5 billion, including about $3.7 billion for drug abuse-related HIV/AIDS cases, $462 million for hepatitis, and $407 million for drug-exposed newborns.

Estimates reported in this study are greater than would have been expected given inflation from the previous estimate by Rice et al. (1990) for 1985 of $8.9 billion. Most of the differences can be attributed to (1) application of specific causal factors to estimate alcohol-related hospital days and other health care utilization and (2) inclusion of drug-related cases of HIV/AIDS, hepatitis, and drug-exposed newborns.


4.2 Specialty Treatment for Alcohol and Other Drugs


4.2.1 Alcohol and Drug Abuse Treatment

It is estimated that more than $7.1 billion was spent on specialty treatment services for alcohol and drug abusers in the United States in 1992. This study estimates that about $4.0 billion was spent to treat clients primarily for alcohol abuse or dependence and $3.1 billion was spent to treat clients primarily for drug abuse or dependence.

More than 11,000 treatment units in the United States provide rehabilitation, counseling, case management, and other types of services to persons and their families who have problems with alcohol or drug abuse. Many more individual physicians, psychologists, and social workers provide these types of specialty services. Harwood et al. (1994) estimated that in 1993, more than 3 million persons received 5.8 million episodes of specialty drug or alcohol treatment services in non-Federal hospital- and community-based treatment units. About 60 percent of the clients in treatment were there primarily for alcohol problems, whereas about 40 percent were in treatment primarily for drug abuse problems. These estimates are based on analyses of the 1991 National Drug and Alcohol Treatment Unit Survey (NDATUS), which were adjusted for survey and item nonresponse. Analyses of the National Ambulatory Medical Care Survey (NAMCS) also yielded numbers of visits to psychiatrists and physicians.

The primary analytic approach used by Harwood et al. in the 1994 report was to build on the data included in NDATUS, with adjustments for known limitations. The findings from NDATUS have then been compared with data from the other sources identified above, in order to identify alcohol and drug abuse treatment services beyond those reported to or deducible from NDATUS.

Most specialized alcohol and drug abuse treatment services are delivered by identified specialized providers, such as certified alcoholism and drug abuse counselors or programs including specialized hospitals (or units within hospitals), residential facilities, and various types of stand-alone ambulatory care providers. Such providers are classified under the rubric of the "specialty alcohol and drug abuse treatment system." In addition, a modest amount of care for alcohol and drug abuse disorders is delivered by other types of health care providers, including short-term general hospitals and mental health providers.

The following sections review the data sources selected for this study, adjustments made to these data, and the final calculations of costs for specialized alcohol and drug abuse treatment.

4.2.1.1 Data Sources and Overlaps

A number of distinct surveys collect and report data about service delivery and expenditures. The primary surveys for the specialty alcohol and drug abuse treatment system include the NDATUS and the Drug Services Research Survey (DSRS). These are the primary data sources and references used for this report in compiling estimates. In addition, they have been complemented by accessing data from the Inventory of Mental Health Organizations (IMHO), National Health Expenditures (NHE), Hospital Statistics (HS), National Hospital Discharge Survey (NHDS), and NAMCS.

A critical analytic issue is that there are overlaps in the coverage of several of these surveys. For example, hospitals, as the major health delivery institutions in the health care system, are covered by NDATUS, DSRS, IMHO, HS, and NHDS. Another major overlap involves freestanding facilities reporting to NDATUS, DSRS, and IMHO. For purposes of this report, these data sources and surveys have been carefully analyzed and compared in order to construct a comprehensive estimate of what kind of treatment is being delivered, in what amounts, and by what kind of providers.

Some experts have questioned whether NDATUS data on hospitals is of comparable quality to that for other types of alcohol and drug abuse providers. Based on this analysis, it appears that with adjustments, NDATUS provides estimates of at least adequate quality. Analysis of NDATUS with adjustments indicates that 17,500 patients are in hospital treatment on a given night and that a total of 296,000 unduplicated patients received hospital inpatient care in 1991. Because of relapse and the need for multiple treatment episodes, there were an estimated 593,000 hospital admissions for specialized alcohol and drug abuse treatment.

One class of providers that NDATUS does not include is that of mental health professionals in private practice, including psychiatrists, psychologists, and social workers. The best data available are for psychiatrists in private practice. NAMCS studies a nationally representative sample of medical doctors in private practice. An estimated 43,000 psychiatrists are practicing in the United States (American Medical Association 1992), of whom an estimated 45 percent are engaged in private practice, seeing an average of 1,440 appointments per year (Dorwart et al. 1992).

Private-practice psychologists and social workers also may treat alcohol and drug abusers. There are 42,000 and 72,000, respectively, of such private practitioners engaged primarily in private practice (Health Resources and Services Administration 1991). Fees paid to psychologists and social workers are assumed to be 50 percent and 75 percent less per visit than those for psychiatrists.

In addition, there are about 35,000 alcohol and drug abuse counselors, according to the National Association of Alcoholism and Drug Abuse Counselors. The vast majority of these professionals primarily practice within programs; therefore, these services are included in the data reported in NDATUS. Relatively few of these professionals also have private practices. Moreover, some of these professionals probably are counted in national estimates of private-practice psychologists and social workers because these are the disciplines in which many counselors have their advanced training. Therefore, separate estimates have not been developed for alcohol and drug abuse counselors.

Finally, little or no data exist concerning the extent and cost of self-help group participation and operation. Groups such as Alcoholics Anonymous provide help for persons with alcohol or drug abuse problems; other types of groups help family members and other persons who are affected by alcohol and drug abuse. Some groups are convened through traditional treatment programs, and any costs are reflected in those programs' operating costs. Other groups rely on volunteers and meet (typically) in donated meeting space. The cost of using the space, as well as books or other materials acquired by self-help participants, could be tallied, but such data are not currently available.

4.2.1.2 Adjustments to Data Sources

Three kinds of adjustments were made to the data sources used in this study: adjustments for program nonresponse, adjustments for survey item nonresponse, and adjustments to control for client relapse to treatment.

4.2.1.2.1 Program Nonresponse

The 1991 NDATUS census of specialized alcohol and drug abuse treatment units achieved a response rate of 81 percent. All estimates (programs, current clients, annual unduplicated clients, and annual revenues) were adjusted up by 23.5 percent (computed as 100/81 percent). It is assumed for this analysis that nonresponse indicated failure of a program to complete the survey rather than nonexistence of a program. This assumption seems justified because before the NDATUS survey was mailed out, intensive work was put into identifying the universe of operating programs by contacts with State licensing authorities and associations of types of providers in compiling the census for the survey.

Moreover, although the 1991 NDATUS did obtain data from 1,307 community mental health centers, analysis of the IMHO indicated that even after adjusting for program nonresponse, NDATUS underestimated clients served and revenues for alcohol and drug abuse treatment services by about one-third. This adjustment is contained in all of the estimates presented in this report.

4.2.1.2.2 Item Nonresponse

Item nonresponse on selected variables was dealt with by statistical analysis. In particular, annual unduplicated clients and annual program revenues were affected, with item response rates of 62 and 82 percent, respectively. Imputed values were developed by regressing unduplicated clients and total program revenue, respectively, on current clients (by modality of treatment). There are strong differences in these relationships by modality, as would be expected.

The 5,449 programs with data on unduplicated clients reported serving 1.77 million clients in the prior year. Imputations for the 3,386 programs with missing estimates of unduplicated clients added 1.24 million clients, for a 70-percent increase. The second adjustment of 23.5 percent for program nonresponse increased the total to 3.72 million. This estimate was later adjusted downward to about 3.0 million to account for patients that were probably treated by more than one program over the course of the year.

4.2.1.2.3 Adjustments for Returns to Treatment

The estimates of annual unduplicated clients and of admissions were also adjusted to account for patients who received multiple types of treatment and/or relapsed and were readmitted to treatment within a year. The DSRS (Institute for Health Policy 1993) found that more than 50 percent of patients admitted to treatment had received treatment from the same or another program within the 12 months before the current treatment. These previously admitted clients had an average of 1.4 to 1.5 admissions in the prior year. Thus, on average, alcohol and drug abuse patients had about 1.9 treatment admissions per year (including the episode counted by DSRS).

The national estimates of annual unduplicated clients and annual admissions are highly sensitive to whether relapsed clients were readmitted to the same or different treatment programs. For example, calculations from NDATUS (adjusted for item and program nonresponse, as explained above) indicated that there were about 3.7 million annual unduplicated clients. If it is assumed that relapse always resulted in admission to the same treatment program (and as a result there is no duplication of clients treated in data for different programs), then the 3.7 million persons had 1.9 treatment episodes each, for a national total of about 7 million episodes.

However, if relapsing clients always enter a different treatment program, then the estimate of 3.7 million unduplicated clients must be adjusted down (divided by 1.9 episodes per person) to account for clients that were treated in more than one program in a year. Thus 1.9 million unduplicated clients (3.7 million divided by 1.9 episodes per person) would have received a total of 3.7 million treatment admissions. If it is assumed that relapsing clients are equally likely to enter the same or a different program, then the national totals are 2.5 million unduplicated clients receiving 4.8 million treatment episodes.

This study has assumed that relapsing clients usually (in 75 percent of the cases) reenter the same treatment program. The logic for this assumption is that clients have previously received help from the institution and are believed to be more likely to turn to therapists and institutions that have helped them at least once before. This assumption implies that the estimate of 3.7 million unduplicated clients is actually 3.0 million after adjustment and that these clients had a total of 5.7 million treatment admissions.

4.2.1.3 Estimates of Service Use and Costs

Table 4.2 displays the number of clients in each type of care as reported by NDATUS. Because various types of treatment have different lengths of stay, the distribution of clients across modalities is different for "current clients" and "annual unduplicated clients." For example, outpatients tend to stay in treatment for much longer periods than inpatients. About 90 percent of current clients are enrolled in outpatient treatment. However, over the course of a year, only about two-thirds of clients are in outpatient treatment. The estimates of annual unduplicated clients and of admissions have been adjusted to account for patients who receive multiple types of treatment and/or relapse and are readmitted to treatment in a year.

Several Federal- and State-funded institutions and health care arrangements also provide or cover alcohol and drug abuse treatment services for the military, veterans, prisoners, and Native Americans. The Office of National Drug Control Policy (ONDCP) reports each year on Federal expenditures for drug abuse treatment services in the Department of Defense, Department of Veterans Affairs, Department of Justice, and the Indian Health Service. ONDCP's estimates have been doubled to account for the proportion of alcohol-only current clients served through these Federal agencies.

Specialty alcohol and drug abuse treatment services provided in 1992 cost an estimated $7.2 billion, of which $4.1 billion was primarily for alcohol abuse treatment and $3.1 billion was primarily for drug abuse treatment (see table 4.3). These cost estimates are based on the cost per client generated from analyses of the 1991 NDATUS by Harwood et al. (1994), adjusted for inflation to 1992, and budget figures reported by ONDCP for Federal agencies. Using NDATUS, Harwood et al. (1994) calculated that the per diem cost for a hospital-based treatment bed was between $340 and $440 (depending on source of payment). In contrast, previous studies (e.g., Rice et al. 1990) have used the much higher average per diem cost for a non-alcohol- and drug-abuse treatment bed in general acute care hospitals, which was $816 in 1992 (exclusive of independent physician expenses). An analysis of outpatient visits to psychiatrists, psychologists, social workers, and other physicians primarily for alcohol or drug abuse are included in section 4.3.3. Costs for these services are included in table 4.3.

4.2.2 Prevention

Federal, State, local, and private sources $1.8 billion in 1992, of which $1.1 billion was allocated Programs for the prevention of alcohol and drug abuse problems are estimated to have cost to alcohol problems and the balance to drug abuse problems.

Federal, State, local, and private sources pay for programs to prevent alcohol and drug abuse. Federal prevention expenditures include the Federal Center for Substance Abuse Prevention as well as support through a 15-percent "set aside" in the Alcohol and Drug Abuse Prevention and Treatment Block Grants given to States and Department of Education programs. States also support prevention services. ONDCP (1995) estimates of Federal prevention expenditures are reported in table 4.4. Non-Federal prevention expenditures reported in table 4.4 include any State, local, and private expenditures on prevention activities that may have been reported by States for 1992 (National Association of State Alcohol and Drug Abuse Directors 1994). To calculate non-Federal prevention expenditures, block grant set-asides for prevention and a prorated proportion of other Federal revenues were deducted from the total State and local expenditures on prevention services. There are no nationally representative data bases of alcohol and drug abuse prevention service providers in the United States, as there are for treatment services. Allocations to alcohol abuse versus drug abuse are based on the estimated primary reason for treatment admissions described in section 4.2.1.

4.2.3 Support for Specialty Alcohol and Drug Services

Approximately $983 million, or 13.7 percent of the total costs associated with specialty alcohol and drug abuse treatment, was spent on training professionals, conducting research and development, and administering insurance benefits (see table 4.5).

4.2.3.1 Training

It cost approximately an estimated $122 million to train new and existing alcohol and drug abuse treatment and allied professionals in 1992. An estimated $73.3 million was allocated to alcohol abuse, and $48.8 million was allocated to drug abuse.

The cost of alcohol and drug abuse training includes initial and continuing education for the following:

  • Alcohol and drug abuse counselors,
  • Other professionals working in alcohol and drug abuse programs and clinics,
  • Mental health professionals not working in alcohol and drug abuse programs and clinics,
  • Other health professionals not working alcohol and drug abuse programs and clinics,
  • Law enforcement/criminal justice professionals, and
  • Clergy.

Also included are certain Federal expenditures for training and staff development.

Harwood and Salinsky (1994) estimated the number of new and existing alcohol and drug abuse treatment counselors and training costs. Typically, 60 hours of CEU's (continuing education units) over a 2-year period or 30 hours per year are required for existing counselors to become credentialed in alcohol and drug abuse counseling. New counselors require an average of 250 hours to become credentialed as alcohol and drug abuse counselors. It is estimated that 60 percent of the estimated 5,000 new counselors completed alcohol and drug abuse training.

The majority of training for counselors is delivered by associations and at conferences. It was estimated that a typical day of alcohol and drug abuse counseling training or conference attendance includes about 6 contact hours. It is also estimated that the cost for a training day is about $100. This estimate is based on the cost of attending the National Association of Alcoholism and Drug Abuse Counselors conferences, although the actual costs of training provided through educational institutions could be higher than $100 per day. Although counselors may pay less than $100 per day out of their own pockets, the actual cost for publicly provided or publicly subsidized training is still estimated to be no less than $100 per day. At an average of 6 contact hours per day of training, the cost per contact hour is $16.67.

The cost of training new alcohol and drug abuse counselors is therefore estimated to be $12.5 million. Moreover, it is estimated that $29 million was spent training the 58,000 existing counselors (approximately $500 per person per year is spent on training and continuing education for existing alcohol and drug abuse counselors, who receive a minimum of 30 hours per year of training).

The cost and quantity of training provided to other professionals who work in alcohol and drug abuse treatment programs were estimated using Harwood and Salinsky (1994) and NDATUS data (Substance Abuse and Mental Health Services Administration [SAMHSA] 1993a). Other professionals receiving training in alcohol and drug abuse include psychiatrists, other physicians, registered nurses, other medical personnel, psychologists, social workers, occupational therapists, and employee assistance counselors. Estimates of the number of staff in alcohol and drug abuse treatment units were adjusted upward by 28 percent to account for nonresponse in program staffing data in the 1991 NDATUS.

An estimated 65,900 other professionals in alcohol and drug abuse settings receive about 20 percent (6 hours) of the 30 CEU hours per year required of alcohol and drug abuse counselors within specialized alcohol and drug abuse treatment units. The extent to which alcohol and drug abuse training is incorporated into the continuing education activities of other professionals working in alcohol and drug abuse treatment settings is unclear. For professionals other than alcohol and drug abuse counselors working in alcohol and drug abuse treatment settings, the level of alcohol and drug abuse counseling training is very low. For social workers and psychiatrists, the extent of the training received specifically on alcohol and drug abuse topics is unknown. Although many psychology training programs offer some type of course(s) related to alcohol and drug abuse, how much these opportunities are utilized by students is not clear.

It is assumed that on average, the 994,400 mental health professionals not working in alcohol and drug abuse treatment settings receive about 2 hours of alcohol and drug abuse training per year. Although mental health professionals receive 25 to 30 hours of training each year in their profession, alcohol and drug abuse is a small part of the curriculum and training. These professionals include psychiatrists, psychiatric nurses, psychologists, social workers, and professional counselors (master's degree and above) (Manderscheid and Sonnenschein 1992).

On average, an estimated 2.8 million other health professionals receive about 0.5 hours of alcohol and drug abuse-related training per year. Other health professionals not working in alcohol and drug abuse treatment settings receive even less alcohol and drug abuse-related training than mental health professionals not working in alcohol and drug abuse treatment settings. Other health professionals not working in alcohol and drug abuse treatment settings include nurses (registered nurses, licensed practical nurses, vocational nurses, and registered nurses), physicians (family practice/general practice, internal medicine, pediatricians, obstetricians/gynecologists, preventive medicine, emergency medicine, and other physicians), pharmacists, physician assistants, occupational therapists, and physical therapists (Harwood and Salinsky 1994).

Alcohol and drug abuse-related training are not major parts of professional development for the 1.7 million law enforcement professionals and 340,000 clergy; therefore, it is assumed that those professionals receive, on average, 0.5 hours of training per year. Although most law enforcement/criminal justice professionals encounter alcohol and drug abuse on a daily basis in their professions, they receive relatively little professional training in alcohol and drug abuse topics. Criminal justice/law enforcement professionals include law enforcement officers, judges, prosecutors, corrections officers, probation/parole officers, and public defenders. Statistics for the number of criminal justice/law enforcement professionals were obtained from Bureau of Justice Statistics data (U.S. Department of Justice 1994g). Finally, it is estimated that on average, clergy - pastoral counselors such as ministers, pastors, priests, and others - receive 0.5 hours of training per year (Harwood and Salinsky 1994).

All costs for training are allocated to either alcohol or drug abuse, based on the estimated primary problems faced by patients entering the non-Federal treatment system (discussed in section 4.2.1).

4.2.3.2 Research and Administrative Support

In 1992, Federal sources spent about $536 million on research and development, and public and private insurance agencies spent about $325 million for administration of specialty treatment insurance benefits.

During 1992, the Federal Government spent $157.5 million for drug abuse prevention research and $194.5 million for drug abuse treatment research through the National Institute on Drug Abuse (NIDA) (ONDCP 1995). Moreover, the Federal Government spent $184 million for research into the prevention and treatment of alcohol abuse through the National Institute on Alcohol Abuse and Alcoholism (NIAAA) (separate estimates of prevention and treatment were not available) (Office of Management and Budget 1993). Spending for basic and applied research supported by NIDA and NIAAA are included in these amounts.

In addition, expenditures on community-based treatment reported previously reflect only the amounts received by treatment providers. Private and public insurance programs and State and county administrative agencies also incur costs in reimbursing services and administering programs. The U.S. Public Health Service has estimated that approximately 4.8 percent of total health expenditures in the United States in 1992 went to the administration of private and public insurance programs (Levit et al. 1996). Therefore, it is estimated that $325 million was spent on insurance administration for community-based treatment, of which $195.7 million is allocated to alcohol abuse treatment and $129.4 is allocated to drug abuse treatment.

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