SUDs Cost Employer Health Insurance $35 Billion Per Year

Substance use disorders (SUDs) cost employer-sponsored health insurance plans $35.3 billion in the United States in 2018, a study in JAMA Network Open has found. Alcohol use disorder (AUD) was found to be the most costly at $10.2 billion a year, followed by opioid use disorder at $7.3 billion a year.

Centers for Disease Control and Prevention

“Given the substantial annual direct medical cost that SUD incurs in the U.S. population with employer-sponsored health insurance, all employers and health insurance payers can consider the cost-effectiveness of prevention and treatment strategies,” said study researcher Cora Peterson, Ph.D., M.Sc., a senior health economist in the Division of Injury Prevention at the Centers for Disease Control and Prevention (CDC) Injury Center.

Peterson and colleagues examined data from Merative MarketScan 2018 Commercial Claims and Encounters Databases, which report expenditures for inpatient services, outpatient services, and outpatient medications from approximately 350 health insurance payers. The researchers compared the total medical costs of 210,225 people who had an SUD diagnosis with those of 1,049,539 people who did not have an SUD diagnosis. These figures reflect all medical care received. For people with SUDs, the vast majority of these costs were for comorbid medical disorders, as only 12% of people with SUDs actually received treatment for them.

The mean total annual medical expenditure was roughly $26,000 per person with an SUD diagnosis, compared with roughly $10,400 per person without an SUD diagnosis. The annual attributable mean cost of any SUD diagnosis (including multiple SUD diagnoses) was roughly $15,640. Having an SUD diagnosis was associated with costs of roughly $6,500 for inpatient services, $8,600 for outpatient services, and $1,500 for outpatient medications.

The researchers wrote that their findings likely underestimated the actual medical costs that employers and their health insurance payers face because only 1% of the study population had an SUD diagnosis, compared with 11% of workers who self-reported an SUD in previous research that was conducted by the Substance Abuse and Mental Health Services Administration.

“Medical expenditures for SUDs represent the minimum direct cost that employers and health insurers face because not all people with SUDs have a diagnosis, and costs related to absenteeism, presenteeism, job retention, and mortality are not addressed,” Peterson and colleagues wrote.

Putting Costs Into Perspective

Peterson told Psychiatric News that the results provide fodder for determining ways to improve SUD prevention and treatment.

“Employers and health care payers can use the findings to assess the likely cost-effectiveness of both incorporating public health prevention strategies in the workplace and eliminating future medical costs of affected workers’ SUD by investing in effective treatment,” Peterson said.

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Robert Feder M.D., a psychiatrist in Manchester, N.H., and a member of APA’s Council on Addiction Psychiatry, is not holding his breath on insurance companies investing in effective treatment for SUD.

“Findings like these suggest that it would be cost-effective for insurance companies to do something about all of this, but they make treatment for substance use disorders difficult. They require prior authorization for any type of treatment program, and they generally deny long or expensive inpatient or residential treatment,” said Feder, who was not involved in the research.

“Despite what health insurance companies would like people to believe, they are in business primarily to make money, not improve people’s health. If they can get away with it, they will do whatever increases their profits—and they do get away with not paying for inpatient or residential treatment because of the stigma associated with substance use disorders and mental illness,” Feder said. “People don’t shout as loudly about this as they would if the insurance companies didn’t pay for treatments for conditions like cancer or heart disease.”

Indeed, the argument can be made that covering inpatient or residential SUD treatment would cost insurance companies about the same as, and in many cases, far less than covering treatment for other conditions.

For example, the researchers found that among people who did not have an SUD, insurance companies paid the following each year on average:

• $17,966 per person with hypertension

• $23,096 per person with diabetes

• $35,535 per person with peripheral vascular disease

• $72,828 per person with cerebrovascular disease

• $105,525 per person with moderate to severe liver disease

• $135,223 per person with metastatic cancer

• $147,478 per person with severe kidney failure

• $378,986 per person with congestive heart failure

In contrast, according to the National Center for Drug Abuse Statistics, a 30-day inpatient SUD treatment program costs between $5,000 to $20,000, with an average of $12,500. A 60- to 90-day program costs from $12,000 to $60,000, with an average of $36,000.

According to the 2021 National Survey on Drug Use and Health, 46.3 million people in the United States aged 12 or older met DSM-5 criteria for having a substance use disorder in the past year, including 29.5 million people who were classified as having AUD and 24 million people who were classified as having SUD. In contrast, according to the CDC, 116 million have hypertension and 37.3 million have diabetes.

Peterson and colleagues noted that the $35.3 billion in medical costs associated with SUD diagnoses are a small fraction of the $1.1 trillion paid by private insurance in 2018 for personal health care expenditures.

“The cost of strategies to support employees and their health insurance dependents to prevent and treat SUDs can be considered in terms of potentially offsetting the existing high medical cost of SUDs,” they wrote.

Peterson and colleagues did not report any outside funding for their research. ■