Against the backdrop of domestic political infighting and geopolitical concerns, the drug epidemic unfolding in the United States is getting nowhere near enough attention as it deserves.
As covered a few weeks ago, according to the Washington Post, the opioid epidemic has killed an estimated 180,000 people between 2000 to 2015 from overdoses, more than three times the number of Americans who died during the Vietnam War.
The cost of this epidemic is spiraling out of control. Goldman Sachs has estimated that based on recent studies by Birnbaum et al., Rice et al., and Florence et al., the total economic cost of opioid addiction was $78.5 billion for 2013 alone. Since then, the crisis has grown significantly, and a total cost of $100 billion can be considered to be a more up-to-date and conservative estimate.
But this figure is nothing compared to the estimates from the Center for Network Therapy on the total cost of the US epidemic.
Opioid Epidemic Costing US More Than Medicare And Medicaid Together
According to new figures from the CNT, the total cost of illicit drug abuse within the US could have reached as much as $1 trillion during 2015. This figure is based on a 2011 Department of Justice National Drug Intelligence Center report titled, The Economic Impact of Illegal Drug Use on American Society. This report placed the total cost of illicit drug use to the US economy at $193 billion in 2007, more than double the estimated cost of opioid addiction in 2013 as estimated by Goldman. Unfortunately, the illicit drug market has grown substantially over the past ten years, and the number of overdose deaths has increased by 230% over this period, which, according to the CNT indicates that the cost of illicit drug use hit an estimated $445 billion for 2015. This figure only counts for costs associated with illicit drug use, and it does not account for the abuse of legal prescription treatments such as prescription opiates and benzodiazepines for the treatment of anxiety. The astonishing fact is that only 42% of overdose deaths are attributable to illicit drugs, the remainder is a result of the abuse of perfectly legal treatments. Based on this fact, the total cost of drug use to the US economy could have topped $1 trillion in 2015.
To put this enormous figure into some perspective, the federal budget for the fiscal year 2018 calls for government spending of $4.09 trillion. Of this total, Social Security payments cost $1 trillion and federal health care programs Medicare and Medicaid cost $582 billion and $404 billion respectively. Current payroll taxes are estimated to provide only $892 billion of income. In other words, drug abuse in the US could be costing the country as much every year as the government Social Security program or Medicare and Medicaid costs.
Published on: Jul 7, 2017
According to The Washington Post, the opioid epidemic has killed an estimated 180,000 people between 2000 to 2015 from overdoses, more than three times the number of Americans who died during the Vietnam War. As well as the number of registered deaths from prescription medication, thousands more have died from overdoses of heroin and fentanyl. The situation is becoming so bad that lawmakers and now filing civil cases against manufacturers distributors and drugstore chains that supply opioid products in the $13 billion a year industry. 24 states, cities and counties have filed suits in the past year.
And according to Goldman Sachs, aside from the health and humanitarian crisis the US opioid academic has caused, addiction to these drugs is weighing on economic growth and the jobs market.
Opioid Epidemic Has An Economic Cost
According to a new research report from the bank titled The Opioid Epidemic and the US Economy, Goldman’s economics analysts note that the opioid epidemic has been “intertwined with the story of declining prime-age participation, especially for men.” The report notes that while the increase in the number of prime-age people, especially men, who are not in the labor force is well-known, no visible links have been drawn between the explosion in opioid overdose deaths and a declining labor force participation rate. Nonetheless, research shows that “nearly half of prime-age men who are not in the workforce take pain medication daily, two-thirds of whom take prescription pain medications.”
The report goes on to highlight data on substance abuse treatment episodes “reinforces the narrative” with “admissions of individuals not in the labor force, 58% described themselves as being out of the labor force for “other” reasons—meaning they are not students, disabled, retired, inmates, or homemakers—and 47% of these admissions were for opioids, well above the average rate.” According to one survey, at the beginning of this year 1.8 million workers were out of the labor force for “other” reasons and roughly 881,000 of these workers said that they had taken an opioid the day before the survey.
This data has been backed up by a survey from the Federal Reserve which found in its survey of businesses in May that employers were having a tough time filling low-skilled positions. While a lack of skills among applicants was the most cited reason for being unable to fill a position, the second most popular reason was that applicants couldn’t pass a drug test.
The economic consequences of the opioid epidemic stretch far beyond the labor market. Goldman points to recent studies by Birnbaum et al., Rice et al., and Florence et al., which estimated the total economic cost of opioid addiction at .5 billion in 2013 alone. Unfortunately, “the crisis has grown significantly since then”, making 0 billion a conservative estimate of the cost, more than the Federal education costs.
By Rupert Hargreaves