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How Much Is the Opioid Crisis Costing Governments?

Some of its expenses are easy to quantify. But most aren’t.

It's hard to put a number on the cost of the opioid epidemic to states.
Anyone who's familiar with addiction knows that it's insidious: It sneakily takes hold until the addict suddenly doesn't recognize his life anymore. Paying for addiction is like that, too.

"The costs build up slowly over time, so you almost don't even notice it," says Mark Chalos, a Nashville-based partner at Lieff Cabraser Heimann & Bernstein LLP, a law firm counseling counties considering opioid-related lawsuits. "But when our people really started to dig into the budgets, they realized the costs are more significant."

Of course, there are the easier costs to quantify.

For example, Pennsylvania estimates it is spending $5 million a year on the overdose-reversal drug naloxone. And in Middletown, Ohio, 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 opioid-related costs on things like health care, social services and criminal justice spending are harder to measure. That hasn't stopped some groups from trying. If governments can get a more complete picture of how much they're really spending on the epidemic, it could help them argue for more funding.

At the state level, a few reports have surfaced in recent months.

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.

Meanwhile, the American Enterprise Institute (AEI) estimates that the top five places residents shouldering the biggest burden are, in order, West Virginia, the District of Columbia, Maryland, Ohio and Connecticut. 

The institute, which will release the full results of its study later this month, incorporated data on the societal cost of opioids from a 2016 Centers for Disease Control and Prevention report and a more recent report from the White House Council of Economic Advisers. Together, those reports concluded the epidemic cost the country a half-trillion dollars in 2015 alone. AEI breaks that down considering state-by-state variation in opioid overdose deaths, opioid abuse disorders, health-care costs, criminal justice costs and worker productivity. The result was a range of $465 per resident in Nebraska to $4,793 per resident in West Virginia.

At the local level, efforts to draw out the financial impact have been varied, mainly because governments don't start tallying up their opioid-related spending until it becomes a noticeable part of the budget. 

Local governments are also often "caught by surprise when drug-related deaths start to occur, causing public safety expenses to spike," says Joe Roualdes, head of communications for the data platform OpenGov, whose research team is analyzing the impact drug-related deaths have on county budgets in Ohio and Pennsylvania. "It then takes counties a certain amount of time to develop a plan, reduce drug-related deaths and get their budgets back on track."

In Nashville, for example, many counties are blowing through their autopsy budgets and as a result, no longer conduct one for every suspected drug overdose. In other words, Chalos says, someone could die with a needle in her arm, but unless there is a witness or a toxicology test, the death will simply be recorded as drug-related and not get linked to opioids.

"Just speaking anecdotally, there could be twice as many opioid overdose deaths than we're recording," Chalos says, "or even more than that. That's the problem with having a lack of data -- you can only speculate."

But the most difficult piece to quantify is the indirect costs, such as the children who become wards of the state after losing one or more parents to an overdose, the emotional toll the crisis takes on emergency responders, and the lost economic productivity for cities and towns. 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. The figure includes lifetime lost productivity of those who died from an opioid overdose in 2015. It is likely higher now as overdose deaths in Ohio spiked by 33 percent in 2016.

As one factory owner in Youngstown, Ohio, put it: "There are good-paying jobs and opportunity for people in our area. We just can't find people to show up who can pass a drug test."

Liz Farmer, a former Governing staff writer covering fiscal policy, helps lead the Pew Charitable Trusts’ state fiscal health project’s Fiscal 50 online resource.
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