The Opioid Crisis has Cost the US $631 Billion in 4 Years: Study
Thu, April 22, 2021

The Opioid Crisis has Cost the US $631 Billion in 4 Years: Study

Nearly 400,000 people in the US died from a drug overdose involving illicit opioid and prescription. / Photo by Steven Heap via 123rf


The Society of Actuaries, a professional organization of actuaries with a mission to provide expert advice and solutions to societal, business, and financial challenges, has released a report revealing that the total economic burden of the opioid crisis in the United States from 2015 to 2018 was at least $631 billion. Such an estimate was linked to the healthcare services to people impacted by the opioid use disorder, family and child assistance programs, criminal justice activities, lost productivity, education programs, and premature mortality.


The economic impact of non-medical opioid use in the US

In its analysis, the SOA stated that nearly 400,000 people in the US died from a drug overdose involving illicit opioid and prescription from 1999 to 2017 and the economy has also been impacted. Authors Stoddard Davenport, MPH, and a team from SOA estimated that nearly one-third or about $205 billion of the estimated economic burden in the US because of the opioid crisis was linked to excess in healthcare spending for people with opioid use disorder and infants born with neonatal opioid withdrawal syndrome and neonatal abstinence syndrome. It also accounted for the family members of those diagnosed with opioid use disorder.


Purpose of the team’s analysis

SOA’s managing director of research Dale Hall said that their analysis will provide an insight into the impact of the opioid crisis in different areas of the nation’s economy. The team’s goal is to help their member actuaries, who are business professionals who deal with the management and measurement of risk and uncertainty, as well as the stakeholders and insurers so they will have a better understanding of the opioid crisis and its implications. For example, their members can use the data for healthcare evaluation exercises and pricing exercises.

SOA also noted that mortality costs accounted for 40 percent or $253 billion of the estimated total economic impact. The cost was largely driven by the loss of lifetime earnings of people who died because of a drug overdose.


The opioid crisis was linked to excess in healthcare spending for people with opioid use disorder.  / Photo by Stephen Hull via 123rf


Who bears the economic burden?

The researchers believed that 29 percent or $186 billion of the total economic burden of the opioid crisis was shouldered by the local, state, and federal governments. The remaining percentage was borne by individuals and the private sector.

Government spending accounted for $36,568 in 2015, $47,049 in 2016, $49,348 in 2017, $52,812 in 2018, and $56,911 as middle estimate in 2019. Costs for individuals and the private sector accounted for $87,749 in 2015, $109,349 in 2016, $121,538 in 2017, $126,548 in 2018, and $131,470 middle estimate in 2019.

The financial burden of the opioid crisis from 2015 to 2018 does not end at lost productivity cost. It also accounts for the government-funded family and child assistance programs ($39 billion) and cost linked to criminal justice activities ($39 billion). 

The SOA researchers also said that the actual economic burden may even be higher than their estimates because they have not included the economic impacts in their study as they lack data. For their study, they focused more on healthcare costs, including commercial, Medicare, Medicaid, public insurance, and the uninsured. As to the lost productivity cost, they counted the healthcare spending for short-term disability, long-term disability, and workmen’s compensation.



Administrative activities: the largest source of wasted healthcare spending

A study that appeared in the Journal of the American Medical Association revealed that the administrative tasks required of medical professionals, nurses, and doctors are so time-consuming and complex that they waste hundreds of billions of dollars each year, which accounts for wasted healthcare spending. Administrative tasks such as recordkeeping, billing, medical coding, and other clerical duties result in about $266 billion excess in healthcare spending yearly.

The authors noted that an individual can be billed for their hospital room by every doctor, the rehab facility, and the ambulance company. Almost everyone is keeping their records and doing their billing that makes it hard for the medical professionals and the patient and adds up to the administrative cost as part of the nation’s healthcare spending. The JAMA article focused on the following waste dominants in healthcare: failure of care coordination, pricing failure, administrative complexity, abuse and fraud, and failure of care delivery.


Medical services by disease 

A separate report by the US Department of Commerce Bureau of Economic Analysis detailed the US healthcare spending by disease. A total of 14.8 percent of US healthcare spending in 2016 was for symptoms or ill-defined conditions, 11.1 percent for circulatory, 10.1 percent for musculoskeletal, 7.8 percent for nervous system or sense organs, 7.7 percent for respiratory, 7 percent for endocrinological, 6 percent for neoplasms, 5.9 percent for injury or poisoning, 5.4 percent for infectious diseases, 5.4 percent for digestive diseases, 5.2 percent for genitourinary, 4.6 percent for mental illness, 2.7 percent for skin or subcutaneous, 2.3 percent for pregnancy, birth complications, and childbirth, 2 percent for residual codes, 1.1 percent for blood and blood-forming organs, 0.4 percent for perinatal, and 0.4 percent for congenital anomalies.


To better measure the treatment prices and healthcare spending trends, the data focused on spending by diseases instead of the types of goods and services purchased, such as the drugs used or doctor’s office visits.