Willingness to pay for drug rehabilitation: Implications for cost recovery

David Bishai (), J. Sindelar, E.P. Ricketts, S. Huettner, L. Cornelius, J.J. Lloyd, J.R. Havens, C.A. Latkin and S.A. Strathdee

Journal of Health Economics, 2008, vol. 27, issue 4, 959-972

Abstract: Objectives This study estimates the value that clients place on methadone maintenance and how this value varies with the effectiveness of treatment and availability of case management. We provide the first estimate of the price elasticity of the demand for drug treatment.Methods We interviewed 241 heroin users who had been referred to, but had not yet entered, methadone maintenance treatment in Baltimore, Maryland. We asked each subject to state a preference among three hypothetical treatment programs that varied across three domains: weekly fee paid by the client out-of-pocket ($5-$100), presence/absence of case management, and time spent heroin-free (3-24 months). Each subject was asked to complete 18 orthogonal comparisons. Subsequently each subject was asked if they likely would enroll in their preferred choice among the set of three. We computed the expected willingness to pay (WTP) as the probability of enrollment times the fee considered in each choice considered from a multivariate logistic model that controlled for product attributes. We also estimated the price elasticity of demand.Results The median expected fee subjects were willing to pay for a program that offered 3 months of heroin-free time was $7.30 per week, rising to $17.11 per week for programs that offered 24 months of heroin-free time. The availability of case management increased median WTP by $5.64 per week. The price elasticity was -0.39 (S.E. 0.042).Conclusions Clients will pay more for higher rates of treatment success and for the presence of case management. Clients are willing to pay for drug treatment but the median willingness to pay falls short of the estimated program costs of $82 per week. Thus a combined approach of user fees and subsidization may be the optimal financing strategy for the drug treatment system.

Date: 2008
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Working Paper: Willingness to Pay for Drug Rehabilitation: Implications for Cost Recovery (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:27:y:2008:i:4:p:959-972

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