|
STREETDRUGS UNIVERSITY |
|
Publishers Group |
|
Health Care Expenditures Overall, about 80 percent of personal health care expenditures are paid through private or public insurance in the United States. It is estimated that almost 90 percent of health care services for community-based treatment of drug and alcohol abuse (this excludes prison- and jail-based services to inmates) is paid through insurance or direct government financing of services. In addition, the Federal Government operates treatment services for veterans, dependents of the Department of Defense, and Native Americans. All alcohol and drug abuse prevention and training services have been allocated to government funding, of which it appears that about 85 percent is from Federal sources and 15 percent is from State and local sources (Office of National Drug Control Policy (ONDCP); National Association of State Alcohol and Drug Abuse Directors (NASADAD)). Virtually all drug and alcohol abuse research is federally supported. These values primarily represent budgets for NIDA and NIAAA (ONDCP; Office of Management and Budget). The costs of treating medical consequences attributed to drug and alcohol abuse have been allocated across sources of payment in proportion to national reimbursement patterns for all personal health services (National Center for Health Statistics). The costs of administering health insurance systems have been allocated in proportion to estimated payments by sources. Lifetime Earnings Much of this loss falls on the household members of the alcohol and drug abusers. However, nonabusing victims also constitute a major part of losses, including homicide victims, the 30 percent of motor vehicle crash fatalities who are passengers or nonintoxicated pedestrians, and certain drug-related AIDS cases (about 15 percent are heterosexual partners of injecting drug users and pediatric cases). Although life insurance offsets some of the loss of expected lifetime earnings, it is a small fraction. No estimates have been made of the number of households that receive social insurance because of the death of a member. However, it is also possible that relatively fewer drug and alcohol abusers have life insurance because of their relative youth, lifestyles, and problems in their work careers. Lost Earnings Lost earnings are generally thought to fall on the alcohol or drug abuser; however, it appears that only about 65 percent and 50 percent of such losses fall directly on the household of the alcohol or drug abusers, respectively. Out of the estimated losses in potential productivity (earnings plus nonmarket activities) from alcohol and drug abuse ($69.2 billion and $15.7 billion, respectively), governments are estimated to bear almost 30 to 35 percent of such losses through lost income and employment-related and sales tax payments. This loss only applies to losses of potential market productivity, which is about 85 percent of total potential productivity (the other 15 percent is from household productivity: this proportion is about 10 percent for males and 33 percent for females). The redistribution/allocation of lost earnings to government is based on shares of net national product (NNP) of $5.367 trillion. The NNP includes production based in the United States and excludes the import- and export-related components of the gross domestic and national product. The Federal Government received $936 billion (17.44 percent of NNP) and State and local governments received $706 billion (13.15 percent) from taxes, social insurance fund payments, and excise taxes (U.S. Bureau of the Census). The cost to government is further increased because of the value of social welfare transfer payments that are attributable to impairment or disability from drug and/or alcohol abuse. Although the value of transfer payments does not count in total costs to society (transfers represent almost equal gains to one part of society and losses to another part of society), it does shift part of the burden from alcohol and drug abusers and their families to the rest of society. This was about 3 to 4 percent (depending on the particular type of social welfare program) of beneficiaries/payments of the national social welfare system and was an estimated $3.5 billion and $5.6 billion for drug and alcohol abuse, respectively (section 6.3). Crime-Related Costs A national criminal justice system study has attributed $23.6 billion to alcohol and drug abuse, or about 25 percent of total national expenditures. Expenditures have been allocated across Federal, State, and local governments, based on the most recent Survey of Criminal Justice Expenditures and Personnel. For example, about 90 percent of prison inmates are in State institutions and 10 percent in Federal prisons. All jail inmates are in local institutions. Federal expenditures are also estimated from the National Drug Control Strategy (ONDCP) and alcohol control (the Bureau of Alcohol, Tobacco, and Firearms) from the Federal budget (Office of Management and Budget). Victim costs are estimated and reported in the respective tables and sections. These include victim loss of work time because of crime and, under mortality losses, the victim loss of present discounted value of expected lifetime productivity because of homicide. Another victim loss is the value of stolen and/or destroyed money and property. Social Welfare Administration The value of transfer payments has already been included under morbidity (above) as a government offset to personal lost earnings. The expense of administering the system, as well as of delivering direct services (such as family and child welfare services), is reported in this item. Drug- and alcohol-related expenses were estimated at $337 million and $683 million, respectively, or about 3 to 4 percent of total system administration expenses (depending on the type of social welfare program). About 80 percent of social welfare services and transfer payments are from Federal funds (U.S. Bureau of the Census); thus, 80 percent of administration costs is allocated to the Federal Government and 20 percent to State and local governments. Motor Vehicle Crashes and Fire Destruction Estimated losses attributable to alcohol problems of $13.6 billion include vehicle and roadway damage, legal and court costs, and insurance administration. The allocation of alcohol-related motor vehicle health care costs and mortality (lost lifetime earnings) have been included in estimates under prior sections. All roadway damage ($3.8 billion) was assigned to State and local governments, which are primarily responsible for the upkeep on highways. Insurance administration ($3.1 billion) was assigned directly to private insurance. It was assumed that 90 percent of vehicle damage (estimated at $3.8 billion) was paid by private insurance and 10 percent was borne by victims of drunk drivers. Most States have laws requiring automobile liability insurance, although policies commonly do not cover collision or have high deductibles. Automobile insurance premiums (including liability) were $104.5 billion (U.S. Bureau of the Census), which is several times greater than estimated vehicle damage, suggesting that it is justified to assume that most of this cost was borne by private insurance. Alcohol abusers may pay higher insurance premiums as a result of driving infractions, but this has not been examined. It was assumed that of the $2.9 billion in legal and court costs, 20 percent were State and local costs for court expenses and that alcohol abusers and victims of alcohol-related crashes had equal levels of expenses (about $1.15 billion each). For the burden of fire damage ($1.6 billion), it is assumed that 90 percent of the alcohol-related fire damage was paid by private insurance and 10 percent was borne by nonabusing victims of such incidents. Fire insurance premiums were $7.1 billion - just about equal to the value of structural fire losses (U.S. Bureau of the Census), which suggests that insurance does pay for most fire losses. Victims of Crime Crime losses estimated at $1 billion for alcohol and $2 billion for drugs were attributed to crime victims (those not fatally attacked) in the form of lost earnings. Homicide costs are included elsewhere under the costs of premature mortality and were addressed earlier in this report. Conceivably, some - if not much - of the earnings losses were borne by insurance mechanisms, such as sick leave or disability insurance, but for purposes of these calculations, it is assumed that victims bore all of these costs. Another cost borne by victims of drug-related property crime is lost cash and property valued at $2.55 billion. Another $427 million was lost because of alcohol-related property crime. Together, these losses totaled about 30 percent of the stolen property. This value likewise accrues to the benefit of those engaging in crime and serves to offset lost legitimate income. Insurance might offset some of these losses as well. Such losses are again a transfer - albeit involuntary - from one segment of society to another. Thus, the value is not included directly in the calculation of the total economic costs to society, but it does figure in the calculations of who bears what part of the total burden. Incarceration and Crime Career Losses A substantial amount of potential productivity is lost to the economy from incarceration of alcohol and drug abusers ($5.4 billion and $17.9 billion, respectively). Almost 600,000 inmates were incarcerated because of drug- and alcohol-defined and related crimes (460,000 and 140,000, respectively). Although this $23 billion in lost potential productivity (almost $39,000 per inmate-year) initially constitutes a loss to the inmate, the burden is shifted somewhat because of losses in government tax and insurance trust revenues. This loss of potential tax revenue - estimated at almost $12,000 per inmate-year - compounds the cost of keeping inmates incarcerated, which is about $20,000 per year. It is also likely that members of alcohol and drug abusers' households may require or receive social welfare payments because a potential income earner is incarcerated. However, these costs have not been estimated. The drug economy also involves significant losses of potential market productivity - about $19 billion - associated with a full-time equivalent of 600,000 drug abusers dropping out of the legitimate economy in order to engage in the drug economy and/or in a career of income-generating predatory crime (i.e., theft). As before, these losses are partially shifted to government because of losses in tax revenues and contributions to social welfare funds. Where the alcohol and drug abusers engage in income-generating predatory crime, this income is taken directly from their victims, and the cost is directly shifted. Drug abusers and alcohol abusers stole an estimated $2.55 billion and $427 million, respectively, in cash and property through personal crimes, and this was borne by victims. No estimates are available for commercial theft losses. However, the economic impact of consensual criminal activities, such as drug activities, prostitution, and illegal gambling, is less specific than that of predatory crime. Although the legitimate economy incurs a loss, the individuals engaged in the "underground economy" are generating income for themselves. The estimated loss of legitimate potential earnings may be completely offset. Government may still realize tax revenue from sales and excise taxes on legitimate goods and services purchased by drug abusers. The loss associated with dropping out of the legitimate economy may be primarily from losses of income taxes and employment-related contributions to social insurance trust funds. This study does not make any attribution of economic benefits to participants from such activities. Clearly, important conceptual issues remain to be addressed concerning such activities that are beyond the charge of the current study. Summary The economic costs of drug and alcohol problems are distributed across all of society. Although significant costs arguably fall primarily on the abusers, more than one-half of all of the costs are shifted to other institutions and members of society. Even the costs that are most likely to fall on the drug and alcohol abusers themselves may be shifted at least partially to members of their households, such as children and spouses. It has not been possible in this study to estimate the losses that fall on employers; prior studies have also been unable to develop such estimates. |
|
Burden on All Others |
|
To contact us: |
|
Phone: 763 473-0646 Fax: (763) 404-0725 E-mail: info@streetdrugs.org |
