The future of treatment spending

Health Affairs looks at the future of substance abuse treatment spending. The future looks pretty grim:

Growth in SA spending is forecasted to average 5.0 percent between 2003 and 2014, slightly faster than the rate of 4.8 percent in the 1986-2003 historical period. Over the next decade, SA spending growth is expected to continue to increase at slower rates than MH health spending, mainly because pharmacotherapy, which has driven increases in MH spending, currently plays only a small role in SA treatment. This is expected to result in an SA share that falls from 1.3 to 1.0 percent of all-health spending. Moreover, growth in SA spending increases at a slower pace than growth in the economy, with the SA share of GDP falling slightly between 2003 and 2014.

Some of the analysis is already a bit dated, give the recent passage of parity legislation:

Historically, a dominating characteristic of private SA spending has been the lack of funding increases from private health insurance, which declined an average of 1.6 percent annually between 1986 and 2003. We expect private insurance SA spending growth to accelerate somewhat during the projection period–to 1.3 percent annually. However, actual spending in 2014 is anticipated to be below that estimated for 1986, and the private health insurance share of SA spending is expected to continue falling (from 10 percent in 2003 to 7 percent in 2014). Barriers to SA insurance coverage exist that are not present in medical/surgical coverage, including annual and lifetime limits for inpatient hospital stays and outpatient visits, and higher cost sharing through deductibles and coinsurance.

Specialty treatment settings are increasingly relied on as a share of spending, but, anecdotally, this makes no sense. Specialty treatment settings are disappearing and McClellan has documented the instability of the treatment system, including high rates of program closure. The definition for SSACs must be pretty inclusive.

Specialty SA centers (SSACs) have emerged as major providers in the delivery of SA treatment, with spending for their services increasing from 19 percent of SA spending in 1986 to a projected 42 percent in 2014. SSACs are multidimensional facilities that deliver services ranging from outpatient care to residential services. Programs can include those targeted to special populations (for example, people with HIV/AIDS or opiate addictions). SA spending on treatment in SSACs is forecasted to increase at a 5.3 percent average annual rate over the projection period, similar to the overall SA annual growth rate between 1993 and 2003.

Spending for SA hospital treatment fell from 48 percent of SA spending in 1986 to 24 percent in 2003, where the share is expected to remain in 2014. SSACs likely supplied the outpatient treatment venue for people who previously would have been treated in expensive hospital settings.

Parity has been passed since this paper was written and it’s likely a lot more will change by 2013. It seems likely that some sort of universal coverage be enacted in the next 5 years and we can hope that decent addiction treatment will be covered.