Huge cost of opioid epidemic

15 April 2019

New research from Pennsylvania State University has reported that the opioid epidemic may have cost US state and federal governments as much as $37.8 billion in lost tax revenue.

The study found that opioid-related reduction in employment cost the government billions in lost tax revenue between the years 2000 and 2016.

The state of Pennsylvania was found to be one of most affected areas, losing around $638.2 million in income and sales taxes. Results were published in the journal Medical Care.

Previous research has investigated the costs associated with treatment for addiction and other associated medical care, Joel Segel, assistant professor of Health Policy and Administration, wanted to explore this in terms of tax revenues.

“This is a cost that was maybe not thought about as explicitly before, and a cost that governments could potentially try to recoup,” said Segel. “Instead of focusing on the cost of treating people with opioid use disorder, you could think about it in terms of a potential benefit to getting people healthy, back on their feet, and back in the workforce”

The Penn State researchers found 1.6 million fewer people participated in the workforce between 2000 and 2016, resulting in a loss of $11.8 billion to state governments and $26 billion to federal governments in tax revenue.

“We wanted to take a systematic approach to how we could think about some of the tax revenue that is lost if someone is unable to work due to opioid use,” Segel said. “This could be an important consideration for either state or federal budgets.”

The research highlights the importance of substance abuse treatment programmes. “Not only are treatment programs beneficial to the individual and to society, but if you're thinking about the total cost of these treatment programs, future earnings from tax revenue could help offset a piece of that,” Segel said.



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