The Financial Burden of the Opioid Epidemic

The opioid epidemic cost the U.S. economy at least $631 billion from 2015 to 2018, according to a Society of Actuaries’ (SOA) analysis of non-medical opioid use during this timeframe.

In addition, the SOA report projected future costs of the opioid epidemic for 2019 based on three scenarios reflecting how the crisis may develop moving forward. Predictions resulted with a midpoint cost estimate of $188 billion and the low and high cost estimates ranging from $172 billion to $214 billion.

This study is the first from the SOA’s Mortality and Longevity Strategic Research Program, which builds on existing research examining the factors affecting models and mortality predictions, including the analysis of longevity trends.

Key findings from the study include the financial burden of the opioid epidemic across the following areas of the economy between 2015 and 2018:

• Healthcare. Nearly one-third of the estimated economic burden, which was $205 billion, is attributable to excess healthcare spending for individuals with opioid use disorder (OUD), infants born with neonatal abstinence syndrome or neonatal opioid withdrawal syndrome (NAS/NOWS) and for other family members of those with diagnosed OUD.

• Premature Mortality. Mortality costs accounted for 40% of the estimated economic impact ($253 billion), predominantly driven by lost lifetime earnings for those who died prematurely due to drug overdoses involving opioids.

• Criminal Justice Activities: Costs associated with criminal justice activities, including police protection and legal adjudication activities, lost property due to crime. Correctional facility expenditures totaled $39 billion, roughly 6% of the total cost from 2015 to 2018.

• Child and Family Assistance and Education Programs. Costs associated with government-funded child and family assistance programs and education programs contributed another $39 billion over the four-year period.

• Lost Productivity. Lost productivity costs composed the remaining 15% of total costs from 2015 through 2018, totaling $96 billion. Lost productivity costs are associated with absenteeism, reduced labor force participation, incarceration for opioid-related crimes and employer costs for disability and workers’ compensation benefits to employees with opioid use disorder.  Related:  The Impact of Preoperative Opioid Use on Patient Outcomes

Related: The Impact of Preoperative Opioid Use on Patient Outcomes

Based on the SOA’s midpoint cost estimate for 2019 at $188 billion, and its low and high cost estimates ranging from $172 billion to $214 billion, the estimates reflect a potential range of outcomes for key assumptions such as the prevalence of opioid use disorder and the number of opioid overdose deaths in 2019. The estimates are intended to represent a few potential scenarios rather than the minimum or maximum of possible outcomes.

"As stakeholders seek to understand and address the opioid epidemic, this analysis provides insight into the tremendous impact across all areas of our economy,” says Dale Hall, FSA, CERA, MAAA, CFA and managing director of research with the Society of Actuaries. “Actuaries have long played a vital role in measuring population-level risks and will continue to work with the healthcare industry to evaluate the impact of the opioid epidemic on pricing, valuation and other crucial calculations moving forward.”

The SOA’s analysis is based on a range of data sources, including administrative claims data, federal surveys and databases, as well as prior peer-reviewed literature to determine the total economic burden.

However, the analysis does not include economic impacts for which there is a lack of adequate data, such as reductions in household (non-paid) productivity, reductions in on-the-job productivity (presenteeism) or reductions in quality of life for those impacted directly or indirectly by opioid use disorder.

The SOA will continue to analyze new data as it is available, to arm actuaries and external stakeholders with crucial insight into the financial impact of the opioid epidemic.

For additional information, including the full SOA analysis and report, visit www.soa.org/resources/research-reports/2019/econ-impact-non-medical-opioid-use/