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Private Insurance Paying Less for Substance Abuse Treatment
added: 2007-07-21

Government agencies covered a growing share of the cost of substance abuse treatment over the past two decades, while the portion paid by private insurance showed a significant decline, according to a study published in Health Affairs.

Private Insurance Payments Declining: On average, private insurance payments for substance abuse treatment fell 1.6 percent each year. In 1986, private insurance paid $2.8 billion for drug and alcohol treatment; by 2003, it funded $2.1 billion in treatment - a 24 percent decline. The share of total substance abuse treatment costs paid by private insurance declined from 30 percent to 10 percent.

Public Sector Paying More: There is a distinct difference in spending trends between public and private organizations that pay for substance abuse treatment. On average, public sector expenditures increased 7.5 percent each year during the study period. Medicaid and other public sources contributed 50 percent of substance abuse treatment costs in the U.S. in 1986. Their portion climbed to 77 percent by 2003.
States Pay Largest Share: In 1986, Medicaid and other state and local agencies covered 39 percent of the total cost of drug and alcohol treatment.

By 2003, their share grew to 58 percent. One factor that may be driving this growth is an increase in substance abuse treatment mandated and paid for by correctional institutions - which generated 36 percent of referrals to specialty substance abuse facilities in 2004.

Substance Abuse Inpatient Care Declining: Much of the growth in publicly funded substance abuse treatment was attributable to increased expenditures for care delivered in outpatient settings. "Inpatient care for substance abuse is costly, and national spending on this type of treatment declined annually by 1.2 percent during the study period," said lead author Tami Mark, associate research director at Thomson Healthcare.

Overall Substance Abuse Spending Grew Relatively Slowly: Overall, spending for substance abuse treatment totaled $20.7 billion, an increase from $9.3 billion in 1986. This represents a 4.8 percent average annual growth rate in spending - lower than the overall healthcare expenditure growth rate of 8 percent and the economy's growth rate of 5.4 percent. In inflation-adjusted dollars, spending per person on substance abuse treatment averaged increases of 1.2 percent annually. About 22.5 million Americans suffer from a substance use disorder in any given year, and less than 4 million receive treatment.

Source: PR Newswire

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