SHORT-TERM DRUG-ABUSE TREATMENT COSTS AND UTILIZATION - A MULTI-EMPLOYER ANALYSIS

This report investigates three aspects of drug abuse treatment costs, with special emphasis on systematic differences among employers: (1) p redictors of drug abuse treatment costs; (2) differentials in drug abu se treatment costs across employers; and (3) differential impacts of p atient and employer characteristics on drug abuse treatment costs. MET HODS. The study used multiple regression analysis of behavioral cost f unctions. It decomposed cost differences into employer and variable ef fects using an algebraic method that accounted for differences in cost functions and in population characteristics. An insurance claims data base was used from 10 large self-insured employers for a 3-year period starting January 1989. RESULTS. Marginal inpatient costs generally ex ceeded average costs, leading to slightly increasing costs per day as length of stay increased. Marginal outpatient costs were generally abo ut the same as average costs, implying that outpatient drug treatment maintained constant unit costs as utilization increased. Decomposition of cost differences among employers suggested that observed differenc es among employers and/or their carriers (who administer the benefits for the self-insured employers) and providers appeared to be at least as important as differences among the characteristics or the utilizati on of the people that they cover. CONCLUSIONS. National health policie s aimed at reducing costs are likely to have differing impacts on diff erent employers. Employers with high costs relative to the characteris tics of their covered population may be able to achieve significant co st savings. Employers serving populations with greater risk factors ma y find it difficult to cut costs further.