The cost of the opioid overdose crisis to the U.S. economy in 2015 was a whopping US$504 billion, or 2.8 percent of GDP for the year, says a report released Monday (November 20) by the Council of Economic Advisors (CEA), an advisory body to the president of the United States.
This half-trillion dollar re-estimation of the economic cost to the U.S. of the opioid crisis is more than six times greater than the largest earlier estimate (US$78.5 billion) calculated four years ago, for 2013.
The CEA’s report, titled The Underestimated Cost of the Opioid Crisis, explains that the sixfold increase of its cost estimate is the result of using more complete and up-to-date data that reflects the tremendous increase of overdose deaths since 2013, as well as the inclusion of what it says is the most important component of economic loss—the fatalities resulting from overdoses.
The report argues that the component of overdose deaths has been largely missing from earlier valuations, such as the $78.5 billion of Curtis Florence et al. 2016, which focused mainly on the costs to the health-care and criminal justice systems.
According to the executive summary:
This paper estimates the economic cost of these deaths using conventional economic estimates for valuing life routinely used by U.S. Federal agencies. It also adjusts for underreporting of opioids in overdose deaths, includes heroin-related fatalities, and incorporates nonfatal costs of opioid misuse.
In fact, almost all of the increase in the CEA’s estimate (85.6 percent) is the result of its novel attempt to put a dollar value on the lives lost to drug overdose deaths.
A sketchy effort to put a price on the death of a drug addict
The CEA report endeavours to place a dollar figure on the many lives lost to opioid overdoses by using a cost/benefit model called the “value of a statistical life” (VSL), which basically estimates how much wealth people will trade for a given reduced risk of death.
As the CEA explains, many U.S. federal agencies routinely rely on VSL measures to estimate the expected fatality risk-reduction benefits of a proposed regulation, policy, or program.
However, in using VSL to place a dollar value on the human lives lost to opioid overdoses, the CEA admits that it diverges from the previous scientific literature. It is also seems to diverge from previous U.S. government practice as well.
As the U.S. Environmental Protection Agency (EPA) explains its approach to Mortality Risk Valuation:
The EPA does not place a dollar value on individual lives. Rather, when conducting a benefit-cost analysis of new environmental policies, the Agency uses estimates of how much people are willing to pay for small reductions in their risks of dying from adverse health conditions that may be caused by environmental pollution.
In the scientific literature, these estimates of willingness to pay for small reductions in mortality risks are often referred to as the ‘value of a statistical life.'
The CEA readily admits the subjective nature of VSL, explaining that no two federal agencies calculate it the same way.
Not only is VSL dependent on specific, case-related factors, including the kinds of risks to be avoided, but VSL calculations are often informed by actual surveys of risk groups.
The CEA does not say whether or not it has surveyed the population at risk of opioid overdoses to gauge how much members of this group would pay to reduce their risk of dying.
Instead the CEA report includes a range of cost estimates of opioid overdose fatalities, based on four different VSL assumptions:
Age-dependent: $431.7 billion
Low: $221.6 billion
Middle: $393.9 billion
High: $549.8 billion
There were, says the CEA, 33,091 officially reported opioid-involved overdose deaths in the United States in 2015, with most deaths occurring among the 25- to 55-year-old age range.
For the purposes of its cost estimate, the CEA bumped up overdose fatalities for 2015 to 41,033, based on 2017 research by Dr. Christopher Ruhm suggesting that 2014 overdose deaths were 24 percent higher than reported. And CEA weighted its age-related VSL according to methods outlined by Joseph E. Aldy and W. Kip Viscusi.
Using assumptions from Curtis Florence’s 2016 opioid cost estimate for 2013, the CEA, arrived at an average cost to U.S. society of $30,000 per each of 2.4 million people with nonfatal opioid disorders in 2015, for a total cost of $72.3 billion.
So the cost of the opioid overdose crisis to the U.S. economy in 2015, according to the U.S. president’s Council of Economic Advisors, equals US$72.3 billion for nonfatal opioid disorders plus one of the four VSLs for fatal overdoses.
It so happens that the CEA prefers the age-dependent VSL—for the total cost of US$504 billion that it headlines. But, according to the CEA’s own range, the cost could be anywhere from US$293.9 billion to US$622.1 billion.
Shifting the cost from the quick to the dead
Everyone agrees that since 2013, the overdose crisis has significantly worsened in the United States. The reported death toll from all types of drug overdoses has been increasing every year: 43,982 in 2013, 47,055 in 2014 and 52,404 in 2015—a three-year increase of just under seven percent.
It’s harder to quantify the increased effort and expense over the same period that has gone into preventing even more overdose deaths. But it seems very likely that the nonfatal costs of the opioid overdose crisis—including harm reduction, naloxoneand emergency response—have skyrocketed in the last few years.
For example, the United States saw an estimated 37,485 fatal drug overdoses in 2009, compared to 52,404 in 2015—a 39.79 percent increase. Over the same seven-year period the cost of treating one opioid overdose admission in U.S. hospital intensive care units jumped 58 percent—from $58,500 to $92,400.
Thus the cost of one ICU admission to treat a nonfatal opioid overdose is over three times higher than the entire annual cost to society that the CEA assigns to each person with with a nonfatal opioid disorder.
A call to action or an excuse to do nothing?
With dead drug users accounting for fully 85.6 percent of CEA’s estimate of the cost of the overdose crisis in 2015 and only 14.4 percent due to living drug users, it’s hard not to conclude that the CEA’s 2015 estimate is intended to shift the majority of the cost of the opioid overdose crisis to overdose victims. But why?
While the CEA’s cost estimate includes no guiding conclusions, one interpretation is that fatal overdoses are costing the U.S. economy upwards of half a trillion dollars in economic benefits annually and that something needs to be done to stop the killing. This, at least, is how I would like to read it.
However, on October 26, when President Donald Trump declared the opioid overdose crisis a national health emergency he did so in a way that did not unlock any new funding to fight the emergency.
Instead, according to CNN, he harped on the need for more law enforcement and the construction of a wall along the U.S.-Mexico border. And he called for “creativity” in combating opioid use—like the creation of a “really tough, really big, really great” advertising campaign to encourage people to just say no to drugs in the first place.
None of which will conceivably make a dent in the overdose death rate.
Arguably the Trump administration—reactionary as it is—would prefer to “let nature take its course” where the overdose crisis is concerned. The administration certainly does not seem inclined to fund harm-reduction programs such as supervised injection sites, which are proven to keep people with nonfatal opioid disorders from becoming fatalities.
Could the CEA’s attempt to severely minimize the negative impact on the U.S. economy of living drug users actually be part of a wrong-headed strategy by the administration to minimize the need to spend any money at all? After all, there is little point in spending government dollars on dead drug users.