Buck Stops Here: Tracing substance abuse spending by public & private payers, 1986 to 2005

At an average annual growth rate of 4.6% since 1986, the total public and private investment in substance abuse treatment spending has not kept pace with the 8% growth rate of all health spending. This presentation will review the shifts in substance abuse treatment expenditures by the major public and private payers from 1986 to 2005. Supported by the federal Substance Abuse and Mental Health Services Administration, the historical estimates employ numerous nationally representative databases and use statistical and actuarial methods to develop estimates of expenditures that can be compared to the National Health Expenditure Accounts. Payer estimates to be discussed are: private insurance, out-of-pocket, Medicare, Medicaid, other state and local government, and the Federal government. The proportion of public versus private spending on substance abuse treatment, once about equivalent, has shifted dramatically to public financing. Public spending (mostly State/local and Medicaid funding) accounted for 80% of all substance abuse spending in 2005, up from 57% in 1986. Private sources paid for 43% of all treatment spending in 1986, whereas in 2005, all private sources paid only 20%. A study of MarketScan large employer claims data base revealed declines in treatment use paid by private insurance: inpatient services, down 53%; outpatient services, down 17.5%; and psychotropic drugs, down 10%. The presentation will also discuss a 2006 survey of substance abuse benefits, showing that although 88% of covered workers have some benefits, 81% of these workers had limits on inpatient and/or outpatient coverage. The implications of these trends will be discussed.