February 7, 2018, Governing
To date, the opioid crisis has led to the filing of over 100 lawsuits by state and local governments and American Indian nations. Figuring out the costs of the opioid crisis is not easy, reports Liz Farmer in Governing. But estimates of total costs, when including the economic value of lives lost, have topped $500 billion a year nationally. A new study by the American Enterprise Institute (AEI) breaks these numbers down by state. For instance, the estimated cost for West Virginia, the state with the highest rate of opioid-related fatalities, is $4,793 per capita, an amount equivalent to 12 percent of the state’s overall gross domestic product.
Some expenses are direct and easy to quantify. For example, Farmer writes, “Pennsylvania estimates it is spending $5 million a year on the overdose-reversal drug naloxone.” He also highlights the case of Middletown, Ohio, where “City Councilman Dan Picard estimates that each ambulance run for an overdose costs the city $1,140, which includes the cost of naloxone and wear-and-tear on the ambulance. From October 2016 to October 2017, Middletown answered 916 overdose calls, taking more than $1 million out of its $30 million annual budget.”
But most expenses are harder to measure. These include such big-ticket items as health care, social services, and criminal justice spending. Medicaid is particularly heavily impacted. As Farmer details,
In November, S&P Global Ratings looked at Medicaid spending, which the authors reasoned was one of the few available state-by-state comparison measurements on the opioid crisis. The report noted that 3 in 10 non-elderly adults on Medicaid struggled with opioid addiction in 2015—double the rate of 2010. In West Virginia, the total number of substance abuse patients in its Medicaid population more than tripled in just two years to 100,209 in 2017. S&P concluded that Kentucky, New Hampshire, Ohio, Rhode Island, and West Virginia, which have some of the nation’s highest overdose death rates, are likely to see the biggest impact on their finances.
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Overall, relying on the AEI study cited above, Farmer says that in per capita spending terms, “the top five places residents shouldering the biggest burden are, in order, West Virginia, the District of Columbia, Maryland, Ohio, and Connecticut.”
As for county governments, efforts to assess financial impact have been spotty, “mainly because governments don’t start tallying up their opioid-related spending until it becomes a noticeable part of the budget,” writes Farmer.
According to Joe Roualdes, head of communications for the data platform OpenGov, local governments are often “caught by surprise when drug-related deaths start to occur, causing public safety expenses to spike. It then takes counties a certain amount of time to develop a plan, reduce drug-related deaths and get their budgets back on track.” Roualdes directs a research team that is seeking to understand the impact drug-related deaths have on county budgets in both Ohio and Pennsylvania.
Mark Chalos, a Nashville-based attorney consulting with counties that are considering filing lawsuits against pharmaceutical companies, notes that “many counties are blowing through their autopsy budgets and as a result, no longer conduct one for every suspected drug overdose. Just speaking anecdotally, there could be twice as many opioid overdose deaths than we’re recording or even more than that. That’s the problem with having a lack of data—you can only speculate.”
Among the indirect costs, too, Farmer notes, are the ones affecting children, such as children who enter the foster care system after losing one or more parents to an overdose. Additional intangible costs include “the emotional toll the crisis takes on emergency responders, and the lost economic productivity for cities and towns.” Farmer adds that, “In Ohio, accounting for all those intangibles could mean the state is losing $6 billion to nearly $8 billion annually, according to the C. William Swank Program in Rural-Urban Policy at Ohio State,” which based its estimate on 2015 numbers. As Farmer points out, the 2016 numbers would like be higher, as overdose deaths in Ohio climbed that year an additional 33 percent.—Steve Dubb