Would A Focus On The Economics Of Cost From Alcohol and Drug Abuse In America Cause Us To Shift Approach To Reducing That Burden ?
Several articles past we were challenged to better define the costs of alcohol and other drug abuse and addiction. We thought that once that was done it would be interesting to also define who or what entities pay those costs and, then, who or what entities benefit from the availability of alcohol and other drugs. We wondered if arranging information this way would lead us to a different perspective on how a community might approach the issues of substance use differently than we do today.
We noted two caveats. First, we are not including nicotine abuse although we recognize that nicotine is more addictive and does more healthcare harm than any other drug. Second, we were reporting on what we judged to be responsible, reasoned and quality studies on this issue but were not attempting to arrive at a definitive, independent estimate. This does not suggest that our report is in any way incorrect (though we are open to challenges).
Discussing the cost to society and individuals, we showed that most studies measure the cost to American society in four, general components:
· Healthcare
· Criminal justice
· Business productivity
· Government spending
We also noted attempts to quantify Quality of Life costs that occur to the individual, their loved ones, their community. We certainly recognize these “costs” but did not attempt to include the quantification we discovered. We concluded that estimates of the costs to society from alcohol and other drugs, legal and illegal, that exceeded $750 billion annually were not unrealistic.
Turning to the discussion to who pays those costs, we reported that a large, single, focused cost falls to employers. The estimated $160 billion costs are largely in lost productivity. We discussed criminal justice costs and those fall in greatest proportion to State and local government. We reported that State and local government spent $274 billion on police, jails, courts and prisons. The federal government spent approximately $52 billion on similar costs. We previously reported that alcohol and drugs contributed between 40% and 80% of crime varying by category.
In the case of healthcare spending we noted that private insurance paid 29% of the bill, Centers for Medicare and Medicaid Services 39% and individuals 11%. Reports are that insurance premiums are paid by the federal government 33%, households 28%, State and local government 15%, and private sources 6%. We previously reported about the burden presented to healthcare by alcohol and other drug abuse.
As we began discussions of who benefits from the availability of alcohol and other drugs, we were careful not to suggest blame for the attendant costs already detailed. Alcohol and increasingly cannabis are accepted social activities and in our economic system they are provided at a profit. The pharmaceutical industry exists to aid healthcare providers in attending to the nation’s health and, similarly, operate at a profit. Excepting the incidences of malfeasance, this does not make them responsible for the damage done by their product where that damage exists.
With this caveat, we reported that alcohol sales in the U.S. are estimated at $84.2 billion and legal cannabis sales at $30.1 billion. Sales of prescribed opioids by pharmaceutical companies are estimated at $24.8 billion and drugs for medical assisted treatment at $11.2 billion. The downstream economic impact of alcohol beverage sales is estimated at $250 billion and legal cannabis at $88.3 billion. Tax revenues from alcohol accrue to State and local government at an estimated $8.2 billion and the federal government at $11.1 billion. Tax revenue from legal cannabis sales was estimated to be $4.4 billion for State and local government.
As was the case with quantifying harm to individuals we did not attempt to quantify the benefits of alcohol and other drug use to the individuals who use these products responsibly and/or “as prescribed”. We did note that the previously reported health benefits of alcohol have been debunked through recent studies.
We did not include any economic benefit from illegal drug sales. Although we may not have included these underground economic benefits regardless, it turns out that estimates of total, illegal drug sales in the U.S. are surprisingly difficult to find. We did report our surprise that totaling the economic “benefits” of alcohol and other drug sales they were less than the economic “costs”.
Given these reports, might there by synergies among the cost, who pays those costs and who benefits from alcohol and cannabis sales as well as pharmaceuticals, which would inform a community approach to lessening the damage and costs of alcohol and drugs differently than efforts we pursue today?
One, example of an approach today is detailed in the 2024 National Drug Control Strategy issued by the Whitehouse under the Biden Administration that included several components of a model, national strategy. These included:
· Strengthening Prevention and Early Education
This section emphasizes elementary and secondary education efforts
· Expanding Access to Evidenced Based Harm Reduction Strategies
Programs included here focus, naturally, on current users
· Expanding Access to Evidenced Based Treatment
Promoting research and making more available successful strategies that currently exist
· Building a Recovery Ready Nation
Supporting community agencies and employers that remove barriers to those seeking treatment and in recovery
· Reducing the Supply of Illegal Drugs Entering the Country
Interdiction at the national borders
· Improving the Response of the Criminal Justice System
This section discussed efforts for the incarcerated and those recently released
This is a comprehensive approach obviously informed by current thinking in the field and building on previous efforts. It is not our intent to criticize. Allow us a few points that inform our thinking resulting from our recent articles.
We have discussed interdiction previously. At that time we applauded sincere efforts to reduce supply but noted (a) that it was notoriously difficult and (b) that demand would likely be met regardless of the success of interdiction at the national border. Further, studies tell us that America’s drug use is driven one-third by availability of supply (the easier it is to get ….) and two-thirds by demand. Our complaint in that article, not necessarily applicable here, is that it seemed that the emphasis was on supply while at the same time the availability of treatment to address the demand side was declining. We leave matters of interdiction to others.
We also applaud efforts at prevention. It stands to reason that efforts mounted over the past few decades have contributed to the continuing decline in adolescent use of alcohol, other illegal drugs and nicotine. We do note that this report focuses on school aged children and adolescents where a strategy focused on other populations is likely needed.
The other four planks of that strategy have traditionally addressed those individuals who have traversed far along the path of alcohol and other drug abuse and addiction. This is a long term perspective resulting from two influences. One is American medicine which has evolved to treat diseases, conditions and injuries after they have evidenced as opposed to stressing wellness and prevention before diseases evidence. The increase in type 2 diabetes is one obvious example. Of course, early intervention through diagnostic testing has evolved and primary care professionals do stress wellness. Americans, obviously, on the whole do not heed this advice.
The other influence that drives focus after the point that abuse and addiction has evolved is the twelve step program. Twelve Step, peer help, self-help programs are well established as the most successful approach to alcohol and other drug addiction treatment effort yet developed. When the first program, Alcoholics Anonymous, was developed, members tended to have traversed far down the scale of social, spiritual, economic, employment and physical deterioration. The founders and adherents believed that one had to “hit bottom” before their program of recovery and its recommendations would appeal. Over the decades AA and its offspring NA, GA, Al-Anon, Nar-Anon, Gam-Anon et al have recognized that people can get off that escalator earlier and at varying stages of abuse and addiction, but even today they refer to those new members as “high bottom” addicts.
Though obvious, perhaps a few points. First, not every person who abuses alcohol or other drugs develops the full brain connection we call addiction. As we have discussed in earlier articles, the NIH estimates that here are in excess of 50 million binge drinkers and heavy drinkers in America. NIH also estimates that between 70% and 75% of recreational cannabis users may be regular and heavy users but are not dependent (although one notes that the research on cannabis is nascent compared to alcohol). There is research by the Prevention Research Institute that suggests that abuse behaviors will eventually result in addiction in most individuals, but they also recommend strategies to avoid the outcome based on behavioral changes. There are also emerging strategies that hold out the possibility that abusers can modify their behavior with the benefit of information and/or therapy. There are other approaches that combine cognitive behavioral therapy with pharmaceuticals to allow users to continue to use without abusing. Furthermore, not every young person who shows up for work or other function hungover or buzzed is an addict and they may benefit from information about mature, adult behavior. A comprehensive strategy for reducing the harms of alcohol and other drug abuse should not focus solely or even heavily on addicts alone.
Another issue that has evolved not from the strategies themselves but from implementation is fragmentation of effort. The discussion of Building A Recovery Ready Nation recommends supporting community-based non-profits and that has happened in a fragmented way. In any community in America one could find dozens, maybe scores of agencies funding or providing direct services to individuals abusing alcohol or other drugs. These agencies might include direct service providers on a residential or outpatient basis, transitional living, homeless shelters, school based and community based education efforts, jail and prison based programs. All of these efforts are to be applauded but they are often underfunded, compete for scarce resources at the expense of collaboration, and sometimes conflict. A study by the California Health Care Foundation from 2021 discussed how these fragmented systems are not only costly and inefficient, but how they often are contradictory and leave the client more helpless than when the first contacted the many agencies.
To this end, and considering the costs to society, who pays those costs, and who benefits, and hoping to add to current, recommended approaches such as that from the Biden Whitehouse, it occurs to us that efforts to address abusers earlier in the cycle of abuse, using early indicators to identify opportunities for that intervention, and providing education and information to populations other than school aged children might be added to current efforts or used in stand-alone fashion. A shift in emphasis is suggested.
First, from our research about costs and who pays the cost, Focus on Employers. Employers represent a promising target for action for several reasons. Business tends to have the capacity and history of acting when its own benefit is demonstrated. They are accessible through commonweal organizations such as the Chamber of Commerce network and through specific industry associations. The National Safety Council provides unbiased, respected evidence about the current cost. Business is acutely aware of rising healthcare costs which are projected to increase in 2026 by yet another 10% or more.
Several Human Resource organizations and the National Institutes for Health have defined programs that can be adopted in turnkey fashion. Drug testing which was once cumbersome (such as urine) or unreliable (such as cheek swabs) have advanced to the point where point of intervention testing is easy and reliable. Businesses have shied from these kinds of programs recently because it is increasingly difficult to replace employees, especially those in trades where advanced training is required. Yet, the National Safety Council data show that retention is enhanced as a result of workplace drug and alcohol programs.
Business may have resistance to the expense of mounting a new program. The natural sources of support are healthcare insurers, liability insurers and local government. Insurers bear the cost of healthcare payments that result from alcohol and drug abuse and the effect on premiums, and liability insurers bear the cost of high premiums and reinsurance. Local government bears the cost of vehicle and other crime that occurs in their jurisdictions. Working through the local Chamber and professional associations a focused effort might offer temporary business tax reductions that would offset the cost of mounting these programs. Healthcare and liability insurers could establish rebate programs based on initial implementation and downstream results. Eventually lower premiums should result.
Thinking about creating better community awareness, Focus on Codependents. Various sources tell us that there are more than 200 million Americans in close relation to one of the 40 million people suffering from substance use disorder. Historically the focus on codependency centered on their purported enabling behaviors. The codependent with a very real condition ended up being blamed for coddling the addict and then providing hindrance to sustained recovery. Fortunately, that kind of thinking is now changing (too slowly perhaps) and several studies focus on the healthcare issues of the codependent themselves and their role in promoting recovery, especially providing the impetus for initial action. We have previously reported that a respected colleague notes that most individuals approaching recovery did not “see the light” but “felt the heat”. Working through houses of worship, social organizations, businesses, schools and the PTA, programs to inform individuals and families about codependency, programs of treatment and recovery, and opportunities for intervention can be developed and conducted.
The beneficiaries of reduced stress on the healthcare system from successful codependency treatment and, hopefully, from additional substance abuse treatment and recovery are healthcare insurers, healthcare, businesses and government who pay the healthcare insurance and direct expense, and the government that experiences less crime from substance abuse. While healthcare insurers typically do not reimburse for codependency treatment, they can easily see the other effects in behavioral health and physical health (although admittedly we have not come across such studies).
In the arena of crime, Increase the Breadth of First Offender Intervention. We have previously reviewed studies that link the use and abuse of alcohol and other drugs to crime. It is estimated that 1 in 3 crimes are committed while under the influence and that 80% of offenders have an alcohol or other drug use issue. Two-thirds of domestic violence involves alcohol or other drugs, 37% of assaults including sexual assault, 40% of child abuse, 15% of robberies and 40% of homicides all are influenced similarly. These are in addition to the obvious offenses of public intoxication and driving under the influence the latter estimated to include cannabis in 16% of the cases.
Many communities have diversion programs for direct alcohol and other drug use such as DUI. These programs have been researched and found successful. We might expand those programs to include those offenses noted here for first time offenders especially where violence is not involved or is a lesser part of the charge. There can be no “diversion” approach in the case of homicide. Offenses including public intoxication, driving under the influence, robbery, domestic violence, abuse and neglect should all be considered for diversion and remediation.
Increase the Focus on Parents and Guardians. While adolescent alcohol drug and nicotine use has decreased steadily for more than twenty years, there is still far too much use at far too early an age. This use is not harmless experimentation but stunts physical, intellectual and emotional development, can lead to risky behaviors even with one use, and can be deadly. We have noted previously that while it is convenient to blame things such as “peer pressure” and “youthful rebelliousness”, the greatest contributors to teen alcohol and other drug use are parental behavior and attitudes. Further, the difficult job of parenting does not come with a manual on how to talk to children before or after use of these harmful substances. We have many ways to access parental education through school organizations, houses of worship, community organizations, pediatricians’ offices and there are off-the-shelf curricula to deploy.
Measure, Measure, Measure. Our assumption is that after reviewing the costs to society from alcohol and other drug abuse most readers had not considered many of those costs though they seemed intuitive after reading. We do not now focus about that damage beyond a few obvious items like the incidence of DUI. If a community is to undertake efforts to reduce alcohol and drug abuse, then the community members involved and those supporting the effort financially deserve to know if the effort achieved the intended outcomes. As always in these kinds of efforts measurement is overlooked as the outcomes are assumed and measurement itself is expensive.
One measurement technique involved in community alcohol and other drug abuse is the community assessment methodology and needs calculator, CAST, developed by the Public Health division of the Centers for Disease Control. CAST lists several criteria by which to measure community health vis alcohol and other drug abuse. We also have the list of crimes in which alcohol and drugs play an outsized role. In the realm of direct healthcare we have the list of those diseases which often result from these kinds of abuse.
Perhaps a good start to an outcomes list might include these categories and measures:
Community Wellness including changes in homeless population, changes in Foster Care population, incidence of Domestic Violence, incidence of Public Intoxication and DUI,
high school graduation rate, school aged food insecurity, school violence, auto accidents
Criminal Justice including incarceration rates, drug related arrests, open container arrests, incidence of DUI, robberies, assaults, jail and prison recidivism
Health including incidence of overdose, chronic liver disease, suicide, and newborns with drugs present, payout for alcohol and drug related ICD-10 codes
Employment including unemployment rate, job turnover, employer healthcare spend, on-the-job accidents
These outcomes and others will take time to evidence, and we should set realistic expectations about time frames even as we measure early in these efforts.
Create one, continuing focus. Fragmentation is expensive. Stop and go efforts are expensive and ineffective. The ability to form and sustain coalitions of those who will support these efforts and those who will carry them out, measurement, monitoring and appropriate accountability require a central, empowered locus. To their credit, our hometown of Louisville, Kentucky has appointed a Deputy Mayor for Behavioral Health. A central, ongoing point of focus seems essential to persistence and success.
Build meaningful, nonjudgmental coalitions. Finally, the question of who should pay for these efforts is important. Too often our community approaches include only those providers of services for those already along the progress of abuse and addiction alone and they are supported with tax dollars, Medicaid and private foundations. Too frequently we ignore those who pay the price for substance abuse. Placing the financial burden solely on the taxpayer will fail in our low tax, high program need environment. When we build these coalitions those entities who pay the cost for abuse, and those who benefit from alcohol and drug availability, who join in such an effort deserve to know that these programs are successful and they should have insight into those programs that are established. This should include an accounting for the use of alcohol and cannabis sales tax receipts already levied and collected as well as settlement monies such as the recent, opioid settlement. Those who pay the cost of alcohol and other drug abuse include employers, health insurers, hospitals, schools, colleges and the taxpayer. Those who benefit from sales of alcohol and cannabis are sellers, restaurants, distributors, and the general business community. Include them in these efforts.
These, additional recommendations could be deployed as “one off” efforts or as part of a comprehensive approach. A focus on employers, parental education, broadening the use of first offender programs could all be stand alone. The payback on employer programs could be substantial and yield quick results once launched.
These suggestions are not intended to be at the expense of programs such as the White House program reported in this article. Access to treatment where a precipitating event creates opportunity such as programs in prisons remain important to intervening, setting people on new paths in their lives and reducing the costs of relapse and criminal recidivism.
It also bears saying that we are appreciative of the various programs active in many communities are performing extraordinary service with far too little support against dauting numbers. Those who serve in schools, treatment programs, police, courts and jails, those who serve the homeless are pitching in every day. They are making a difference. Despite those efforts, we spend more than $750 billion on the damage done annually.
We hope that this thinking informs and makes a difference. Ideally, those in a position to take advantage will take these ideas, current programs and efforts, and their own thoughts and go at this issue in an informed, sustained, and successful fashion.
Gene Gilchrist
January 2026
