Addiction Treatment Funding: Why Cutting Spending Could Lead To Higher Costs

The Case to Fund Addiction Treatment Right Now

Remember the old Fram oil filter commercial? “You can pay me now, or you can pay me later.” It featured an automobile mechanic in the process of rebuilding an engine, a costly and messy endeavor that could have been avoided—if the car’s owner had only changed his oil regularly and put in a Fram oil filter.

Similar “pay-a-little-now-or-a-lot-later” choices are common. Every homeowner knows that staining the deck every couple of years is a lot cheaper than having to tear it apart and replace it when it’s too mildewed, warped and rotten to salvage. And those who make decisions about health care spending must allocate resources, knowing that vaccines, preventative medicine and early intervention will save lives and cash later. In good times, these decisions are no-brainers: Waterproof the deck every year? Sure, and let’s bring in a professional to do it right. But in times when multiple needs compete for dwindling dollars, it can be agonizing to know that expenditures vital for our future aren't being made.

Nationally, we're in such a moment now, as we continue a long, tough slog through the economic doldrums and government spending is slashed. Treatment of substance use disorders is falling victim to short-term pressures on a staggering scale—and our failure to pay now will have a tragic impact.

The treatment community needs to work hard to help overcome the lingering stigma of substance use disorders and make sure that policymakers and the public know how cost-effective treatment can be. The early treatment of addictive disorders is one of the most cost-effective investments in medicine—since the costs of not treating these illnesses are immense, and only magnify over time. Untreated substance use disorders have ramifications way beyond those of most other diseases, turning the financial crisis into a societal one: the links between addiction and a host of other critical issues are direct and reciprocal: underfundings of critical services send shockwaves through other aspects of the health care system and the “safety net,” in a vicious circle of suffering. Substance use disorders cause tragedy on a human level, of course. But the financial cost to society is also enormous.

Consider the reciprocal relationship between substance use disorders and poverty; the connection between unemployment and addictive disorders; the links with homelessness, domestic violence and child abuse. Now factor in the impact of dually-diagnosed people—those suffering from mental illness as well as addiction—and the correlations between mental health and substance use disorders and suicidality.

One example relates to the alarming rise in teen substance abuse that we're seeing in the US, to add to all the other pressures kids face. Sadly, it's become all too common to hear in the media that another teenager has committed suicide. As we watch these stories the anchor will invariably note that “counselors are being sent in” to the high school to help the students cope. It’s easy to agree on the value of such counseling. But how much better if those same resources had been applied before the event? Sadly, while resources can always be found to deal with the aftermath of teen suicide, it's getting harder and harder to pay for programs that might help prevent it—like screening, early intervention and treatment. Driven by the poor economy and its impact on spending, this paradigm is playing itself out in many arenas.

In the realm of addiction, the model is unavoidably obvious: people suffering from addictive disorders require far greater expenditures of health care dollars than other members of the population—much of it directed towards emergency rooms and repeated hospitalizations. Then come the costs of treating liver disease, fetal alcohol syndrome, HIV/AIDS and hepatitis. What about car accidents and disability benefits? Substance use disorders drive up the cost of nursing home care. Even the family members of people with addictive disorders demonstrate elevated health care costs.

As for other arenas, addictive disorders have a huge negative impact in the workplace in terms of absenteeism, loss of productivity and unemployment. And let's connect the dots between substance use disorders and their impact on the criminal justice system, and the amount of money that's spent annually on police, courts and prisons as a direct result of the misuse of drugs and alcohol.

All this explains why substance use disorders are a perfect example of what economists and actuaries refer to as “cost offset”: the phenomenon in which the expenditure of dollars to treat one problem leads to less money being needed to deal with other problems. Cost offset has frequently been documented in general mental health treatment, since a very significant portion of expensive medical services are actually caused by untreated mental health issues which can be treated at less cost.

But the appropriate treatment of substance use disorders is really the poster child for cost offset, in that the expenses attributable to addiction go well beyond the health care system, reaching into all areas of life: family, work, criminal justice, education, the welfare system—you name it. When addictive disorders are addressed aggressively, benefits are reaped right down the chain of impact: people are healthier, medical costs are reduced and society profits, as the savings that result in crime reduction, health care, welfare dependency and other arenas can far exceed the cost of providing the treatment.

Some hope may be on the way. Recognition of the fact that mental health and substance use disorders are treatable conditions has been slow in coming, but a variety of mechanisms now in place are designed to address the discrimination in insurance plans against people with mental health and substance use disorders. The 2008 federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act was a giant step forward, preventing many, though not all, health plans from restricting mental health and substance use disorders and establishing the principle of a level playing field for behavioral and physical medicine.

And fortunately, this parity concept is extended by health care reform (the 2010 Affordable Care Act) into a variety of other plans—many of which will be part of the health care “exchanges” that are due to be established—and millions of Americans who don't currently have health insurance will be covered. The law mandates robust provision of services for mental health and substance use disorders, which must meet benchmarks established by mental health parity. Weaving parity into the Accountable Care Act, creating the health insurance exchanges, and mandating behavioral health treatment as an “Essential Health Benefits” in these plans should create a sea change in the way we care for mental health and substance use disorders. Still, this dramatic improvement could yet be blocked by budget cuts: six states have already announced that they will not expand Medicaid to give coverage to more needy people.

If the provisions of these laws are fully implemented, enforced and monitored, many lives will be changed for the better and millions of dollars will ultimately be saved. The danger is that underfunding, lack of enforcement, overly aggressive utilization reviews or wrangling over the nuances of “medical necessity”—all short-term cost-containment strategies—will slow or halt these important forward steps.

The dilution of these historic changes to the way substance use disorders are construed and treated will be less likely if both decision makers and the public know that substance use disorders are preventable and treatable. And most crucially, everyone must be aware of how logical and smart treatment is from a purely financial standpoint. The treatment community needs to make sure that they know. How can you do your part?

Richard Juman is a licensed clinical psychologist who has worked in the field of addiction for over 25 years, providing direct clinical care, supervision, program development and administration across multiple settings. A specialist in geriatric care and organizational change, he is also the president of the New York State Psychological Association. Email him here, and follow his tweets at @richardjuman.

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