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Supplements Deaths, Dollars, and Diverted Resources: Examining the Heavy Price of the Opioid Epidemic
The Economic Burden of the Opioid Epidemic on States: The Case of Medicaid
Douglas L. Leslie, PhD; Djibril M. Ba, MPH; Edeanya Agbese, MPH; Xueyi Xing, PhD; and Guodong Liu, PhD
Estimated Costs to the Pennsylvania Criminal Justice System Resulting From the Opioid Crisis
Gary Zajac, PhD; Samaan Aveh Nur, BA; Derek A. Kreager, PhD; and Glenn Sterner, PhD
Considering the Child Welfare System Burden From Opioid Misuse: Research Priorities for Estimating Public Costs
Daniel Max Crowley, PhD; Christian M. Connell, PhD; Damon Jones, PhD; and Michael W. Donovan, MA
The Opioid Epidemic, Neonatal Abstinence Syndrome, and Estimated Costs for Special Education Services
Paul L. Morgan, PhD; and Yangyang Wang, MA
Currently Reading
Opioid Misuse, Labor Market Outcomes, and Means-Tested Public Expenditures: A Conceptual Framework
Joel E. Segel, PhD; Yunfeng Shi, PhD; John R. Moran, PhD; and Dennis P. Scanlon, PhD
Preventing the Next Crisis: Six Critical Questions About the Opioid Epidemic That Need Answers
Dennis P. Scanlon, PhD; and Christopher S. Hollenbeak, PhD
Beyond Rescue, Treatment, and Prevention: Understanding the Broader Impact of the Opioid Epidemic at the State Level
Laura Fassbender, BPH; Gwendolyn B. Zander, Esq; and Rachel L. Levine, MD
The Cost of the Opioid Epidemic, In Context
Sarah Kawasaki, MD; and Joshua M. Sharfstein, MD
The Opioid Epidemic: The Cost of Services Versus the Cost of Despair
Alonzo L. Plough, PhD, MPH

Opioid Misuse, Labor Market Outcomes, and Means-Tested Public Expenditures: A Conceptual Framework

Joel E. Segel, PhD; Yunfeng Shi, PhD; John R. Moran, PhD; and Dennis P. Scanlon, PhD
In terms of potential governmental expenditures, most disability claims are paid by federal sources such as the Social Security Administration’s Supplemental Security Income Program and Social Security Disability Insurance,22 but many states also provide supplemental income to disabled individuals who are eligible for federal assistance.23 Further, state and federal governments may have additional expenses when they provide their employees with supplemental disability insurance.24,37

Importantly, individuals are not eligible for federal disability coverage if “drug addiction or alcoholism is a contributing factor material to the determination that the claimant is disabled.”26 Therefore, the primary mechanism by which opioid misuse could lead to increased disability payments is that an injured employee becomes eligible due to an injury but experiences a longer disability period due to opioid misuse. It remains unknown whether opioids lead to longer disability spells,45,48-51 with several important studies still in progress. Given the mixed evidence regarding the effect of opioid misuse on extended disability periods, it is unclear how large opioid-attributable costs for disability benefits may be. This cost is likely to be larger for the federal government than for state governments due to the relatively smaller fraction of disability benefits supported by state funding.

Workers’ Compensation

While workers’ compensation claims may be associated with opioid use, no clear conceptual link exists between opioid misuse and elevated governmental expenditures on workers’ compensation; this is primarily because, as was the case with unemployment insurance, costs are generally borne by employers. Again, direct costs may exist where the state or federal government is the employer. Moreover, although some evidence ties opioid use to higher workers’ compensation claims,27,52 it is difficult to disentangle the role of opioid misuse in causing workplace injuries from their role in appropriately medicating workers with existing injuries unrelated to prior opioid use, both of which would yield a positive correlation between use and claims. A final possibility is that existing injuries could lead to opioid use and subsequent misuse, which in turn could impede one’s ability to work and thus increase the size of the workers’ compensation claim.

Publicly Funded Health Insurance

Opioid-attributable declines in income may also result in individuals or families becoming eligible for means-tested, publicly funded health insurance. The 2 largest programs are Medicaid and the Children’s Health Insurance Program (CHIP).17 Previous studies have emphasized the funding Medicaid (or potentially other public payers) provides for opioid misuse treatment,53,54 including a study by Leslie et al55 in this volume. Here, we focus on how opioid misuse may lower household income and potentially increase enrollment in Medicaid or CHIP, including family members who are not using opioids. Although both Medicaid and CHIP are state programs, they include significant federal matching funds, and, in both cases, eligibility, funding, and the types of plans available vary significantly by state.28,29 Additionally, we note that although Medicare is also a large health insurance program that includes significant federal funding, eligibility is largely based on age and is not initiated by opioid-related declines in labor force participation. One relevant exception is disabled individuals who become eligible for Medicare.56 To the extent that opioid misuse leads to greater Medicare eligibility due to disability, Medicare could bear increased cost. Lastly, the Affordable Care Act includes both premium and cost-sharing subsidies that may be available to low-income individuals who purchase health insurance through the individual marketplace. Although no study has directly estimated the impact of opioid misuse on greater eligibility and use of publicly funded health insurance, it potentially represents a significant expense to both state and federal governments.

Nutrition and Employee Training Programs

Lower family incomes due to opioid misuse may also lead to eligibility for, and therefore greater use of, food assistance and job training programs. The largest food assistance program is the Supplemental Nutrition Assistance Program, which is funded by the federal government, with states covering administrative costs.17,30 The federal government also funds the Special Supplemental Nutrition Program for Women, Infants, and Children, the National School Lunch Program, and the National School Breakfast Program, as well as a variety of other programs.31 On the job training side, the federal government covers significant employment training programs through TANF,32 but states vary in whether and which additional training programs they offer. Many state job training programs target dislocated workers or firms that hire low-income workers and may be less relevant for those exiting the labor force due to opioid misuse.25,33,34 Similar to the other cost categories, little evidence exists regarding the effect of opioid misuse on expenditures by either of these types of programs.

Gross Cost Estimates

We estimate that between 2000 and 2016, opioid misuse reduced state tax revenue by $11.8 billion, including $10.1 billion in lost income tax revenue and $1.7 billion in lost sales tax revenue.16 In this survey article, we do not attempt to empirically estimate the impact of opioid misuse on state and federal spending on means-tested programs, but instead provide an overview of programs that, based on their eligibility criteria, funding mechanisms, and other rules, are most vulnerable to adverse impacts from the opioid epidemic. However, if detailed state- or county-level data on means-tested program participation were available, we could envision how future studies might estimate these costs. Using an approach similar to the one employed by Krueger to estimate the effect of opioid misuse on increased labor force exits,10 or others that adopt an instrumental variables strategy to isolate exogenous geographic variation in opioid use,11,12 one could use state- or county-level variation in opioid prescribing to estimate their effect on means-tested program participation. Combining the resulting estimates with state and federal budget data, it should be possible to estimate the change in public expenditures due to increased participation. A major challenge in many cases is identifying county-level sources for means-tested program participation data.

Future Directions

To date, studies that analyze the effect of opioid misuse on governmental expenditures, including forgone tax revenue, have focused on how increased prescribing may have led to worse labor market outcomes. However, with the concurrent decline in prescribing and increase in treatment, an important question for future research is how treatment affects labor market outcomes, state and federal tax revenues, and participation in the means-tested public programs discussed in this article. For example, does the effect vary by treatment type? Does medication-assisted therapy improve labor market outcomes more than other forms of treatment? A related question is the extent to which opioid-related arrests and convictions may moderate this effect if having a criminal record limits an individual’s ability to return to the labor force or limits their earning ability. States continue to implement a number of opioid mitigation strategies, such as prescription drug monitoring programs,57 increased funding for treatment and access to naloxone, and criminal justice diversion programs, among others. It remains to be seen whether these programs will lead to improved labor market outcomes, thereby partially offsetting the cost of such programs and in the process reducing the impact of the opioid epidemic on state and federal budgets more generally.

Although we highlight a number of factors to consider when estimating the effect of opioid misuse on disability, workers’ compensation, and various means-tested assistance programs, future research is needed to expand on these ideas, as limited research has been published to date. Other state and federal assistance programs may also be important, but we note that obtaining reliable estimates will be difficult if relevant data sources are not available. Therefore, partnerships with state and federal governments may be necessary to produce an accurate accounting of the full impact of the opioid epidemic on state and federal budgets. 

Funding: This project was supported by the Commonwealth of Pennsylvania under the project “Estimation of Societal Costs to States Due to Opioid Epidemic” as well as by a Strategic Planning Implementation award from the Penn State University Office of the Provost, “Integrated Data Systems Solutions for Health Equity.”
Acknowledgments: We thank Laura Wolf for excellent research assistance.
Author affiliations: The Pennsylvania State University (JES, YS, JRM, DPS).
Funding: This project was supported by the Commonwealth of Pennsylvania under the project “Estimation of Societal Costs to States Due to Opioid Epidemic,” as well as by a Strategic Planning Implementation Award from the Penn State University Office of the Provost, “Integrated Data Systems Solutions for Health Equity.”
Authorship information: Concept and design (DPS, JES, JRM, YS) drafting of the manuscript (DPS, JES, JRM, YS); critical revision of the manuscript for important intellectual content (DPS, JES, JRM, YS).
Address correspondence:
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