Impacts of Insurance on the Demand and Utilization of Drug Abuse Treatment: Implications for Insurance Mandates

Allen Goodman, Janet Hankin, Eleanor Nishiura and James Sloan

International Journal of the Economics of Business, 1999, vol. 6, issue 3, 331-348

Abstract: This article addresses costs and utilization for mental health/substance abuse treatment, with particular emphasis on the emerging importance of self-insured coverage in the 1990s. We estimate drug abuse treatment demand and utilization with an insurance claims database from self-insured employers. The study population was selected from a large database consisting of health insurance claims for all treatment events starting 1 January 1989 and ending 31 December 1991. Approximately three-quarters of the increase in in-patient usage attributable to fractional co-insurance is due to increased usage per person (the other one-quarter refers to increased numbers of users). About half of the increase in outpatient usage is due to increased usage per person. In summary, our estimates provide useful measurements of the potential impacts of improved drug abuse treatment coverage. Although the potential induced in-patient expenditures and dead-weight losses are substantial compared to co-insurance rates of 0.5, losses can be trimmed by adjusting co-insurance, even at rates of approximately 0.1.

Keywords: Drug Abuse Treatment; Health Demand; Health Mandates; In-patient Setting; Out-patient Setting; Insurance Claims (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (3)

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DOI: 10.1080/13571519984115

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