Follow the money

March 24, 2016

By Anthony Moore

Here’s a health policy math problem: Of the 201 million Americans under the age of 65 who are covered by private health insurance plans, chiefly through their employers, roughly 8 percent have a diagnosable alcohol or substance use disorder (SUD). Yet despite this substantial figure, in 2009, how is it that only 0.4 percent of private insurance company spending went toward SUD treatment?

These numbers are all too familiar to associate research professor Cindy Thomas and professor Dominic Hodgkin, whose work focuses on state and national health reform, pharmacy policy and insurance benefit design. Thomas and Hodgkin at the Institute for Behavioral Health, along with colleagues at Truven Health Analytics, wanted to know whether that 0.4 percent has budged since 2009—a period that saw both the end of the Great Recession and the enactment of the Affordable Care Act—and whether SUD treatment spending is correlated with overall healthcare spending.

photo of Cindy Thomas

“What we found, and why the findings are so important, is that while spending for all other health services increased at a slower and slower rate, spending for substance use treatment services took a completely different direction, going up and up, accelerating,” says Thomas.

When you break down the study’s findings, per capita spending on SUD treatment services from 2004 through 2012 increased 14.7 percent annually while general healthcare spending only increased 5.5 percent. Despite this increase, by 2012 SUD treatment spending still represented less than 1 percent of total healthcare spending—a marginal improvement on the 2009 rate.

As Thomas’ study shows, though, the discrepancy can be explained: overall healthcare spending through private insurance increased at a slower rate in recent years because, among a myriad of reasons, there are more high-deductible healthcare plans, and the health system is changing incentives toward payment for more efficient use of services. This means that insurers and patients are now more careful about the services they use, and hospital admission is more carefully scrutinized. During slower economic times, fewer people are enrolled in private healthcare plans due to layoffs and cutbacks.

On the other hand, there are clear reasons for the spending growth in SUD treatment. First, the Affordable Care Act mandates that young adults age 18-25 (the age group most likely overall to develop an SUD) must be allowed to join their parents’ insurance plans. Second, the current opioid epidemic—nearly unavoidable in the headlines—has proved to be more than a passing issue. In fact, SUD is increasing at a rate of 50 percent per year (though from a small baseline), compared to a 20 percent annual increase for alcohol abuse. (When a commercial for a medication to treat opioid-induced constipation runs during the Super Bowl, even the casual observer might start to think that the U.S. has an opioid problem.)

“We looked under the hood and found that outpatient visits have been on the rise, partly due to the growing enrollment of young adults since 2010,” Thomas explains. She notes that the CDC first marked a dramatic rise in opioid use in the U.S. that same year. “We can't attribute the rise in SUD spending to any one factor, but those young adults’ use of services doubled from 2010 to 2012, and prices are increasing. We did not, however, expect there to be such a dramatic difference from overall health spending.”

So why does that spending gap persist? And more specifically, what explains the huge divide between the need for SUD services and the services actually provided?

“Historically there's been a huge treatment gap, and there's a long history of trying to figure it out,” Thomas says, citing the stigma associated with SUD and also the availability of services. “Federal regulations say that insurers have to cover SUD services, but people don't always know they're available and don't always access them. Say you’re a primary care doctor out in rural Iowa—who are you going to send someone to?”

The study, titled “Growth in Spending on Substance Use Disorder Treatment Services for the Privately Insured Population,” was funded by the U.S. Substance Abuse and Mental Health Services Administration, and is now available online in the Elsevier journal Drug and Alcohol Dependence. In it, Thomas and Hodgkin say “individuals with private health insurance still may not receive adequate levels of treatment for SUDs.” Separately, Thomas does see a silver lining.

“While all general health services have slowed in growth over the last several years, substance use treatment spending has rapidly increased,” she says. “It could mean there are more people with SUDs, yes, but this also could mean that access is improving, so more people are getting treatment.”