The Cost of the Opioid Epidemic

Q&A with R. Dale Hall December 2019/January 2020

Photo: istock.com/Stuart Ritchie

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The Society of Actuaries (SOA) Managing Director of Research, R. Dale Hall, FSA, CERA, MAAA, discusses the SOA’s report, titled “Economic Impact of Non-Medical Opioid Use in the United States,” which was published in October 2019. The report has received attention from the press.

What are the overall findings of the analysis on opioids?

Hall: The SOA issued this report to analyze the cost of non-medical opioid use in the United States. We estimate the economic cost to be at least $631 billion from 2015 to 2018. To develop this research, our Project Oversight Group worked with the authors from Milliman to review a wide range of public and proprietary data sources. These included peer-reviewed literature, administrative claims data, federal surveys, databases and reports.

In addition to the economic consequences, these cost estimates helped identify the human toll of the opioid crisis. By our estimates, there were as many as four million people in the United States with opioid use disorder in 2019. That means nearly one out of every 80 Americans may suffer from some form of opioid addiction, and it also notably has an impact on the health of their families.

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What are the leading costs from the opioid epidemic?

Hall: While there are several financial areas to consider, we focused this research analysis on the following costs: health care spending, mortality, criminal justice, assistance programs and lost productivity in the workforce.

For example, we estimate that $205 billion is attributed to health spending for people with some form of opioid use disorder. Additionally, we estimate nearly $253 billion in mortality costs arising from premature deaths due to opioid disorders, $39 billion from costs associated with police and legal, and another $39 billion for government-funded assistance programs. This is aside from the estimated $96 billion of lost productivity, including from disability benefits and absenteeism.

We also have projected costs for the opioid epidemic in 2019 based on three different scenarios, depending on how the crisis unfolds. We anticipate costs ranging from $172 billion up to $214 billion for 2019.

How does this project align with the SOA’s strategic research programs?

Hall: This research analysis on opioids was part of the broader research on longevity topics from the SOA Mortality & Longevity Strategic Research Program. We unveiled this opioid research as part of the program launch in October. This project builds on existing research that examines the factors affecting mortality models and predictions, including the analysis of longevity trends.

Since then, we also have released updates to the joint Actuaries Longevity Illustrator from the SOA and the American Academy of Actuaries, as well as the final reports for mortality tables for privately sponsored retirement plans. Stay tuned for further research as part of this mortality and longevity program.

R. Dale Hall, FSA, CERA, MAAA, is SOA managing director of Research.