Estimating the costs of substance abuse to the Medicaid hospital care program

The purpose of this study was to develop a model, using the epidemiologic tool of attributable risk, for estimating the cost of substance abuse to Medicaid.

Based on prior substance-use and morbidity research, population attributable risks for substance abuse-related diseases were calculated. (These risks measure the proportion of total disease cases attributable to smoking, drinking, and drug use.) The risks for each disease were applied to Medicaid hospital discharges and days on the 1991 National Hospital Discharge Survey that had these diseases as primary diagnoses. The cost of these substance abuse-related days were added to Medicaid hospital costs for direct treatment of substance abuse.

More than 60 medical conditions involving 1100 diagnoses were identified, at least in part, as attributable to substance abuse. Factoring these substance abuse-related conditions into hospital costs, 1 out of 5 Medicaid hospital days, or 4 million days, were spent on substance abuse-related care in 1991. In 1994, this would account for almost $8 billion in Medicaid expenditures.

The use of tobacco, alcohol, and drugs contributes significantly to hospital costs. To address rising costs, substance abuse treatment and prevention should be an integral part of any health care reform effort.