Expenditure effects of changes in Medicaid benefit coverage: an alcohol and substance abuse example

An evaluation of the effect on total health care costs of a Medicaid demonstration project to provide coverage for alcoholism and substance abuse was conducted in Illinois in 1985. A pre/post-treatment analysis of expenditures for a subgroup of demonstration clients suggests that the addition of the alcohol and drug benefit did not result in higher total expenditures. [An important policy implication is that, when medical services substitute for one another, costs savings (increases) will not necessarily be realized when benefit packages are cut (expanded).]