Impact of Substance Disorders on Medical Expenditures for Medicaid Beneficiaries with Behavioral Health Disorders

Objective: This study measured the impact of substance use disorders on Medicaid expenditures for behavioral and physical health care among beneficiaries with behavioral health disorders.

Methods: Claims for Medicaid beneficiaries with behavioral health diagnoses in 1999 from Arkansas, Colorado, Georgia, Indiana, New Jersey, and Washington were analyzed. Behavioral health and general medical expenditures for individuals with diagnoses of substance use disorders were compared with expenditures for those without such diagnoses. States were analyzed separately with adjustment for confounders.

Results: A total of 148,457 beneficiaries met selection criteria, and 43,457 (29.3%) had a substance use diagnosis. Compared with other beneficiaries with behavioral health disorders, individuals with diagnoses of substance use disorders had significantly higher expenditures for physical health problems in five of six states. Approximately half of the additional care and expenditures were for treatment of physical conditions. Differences declined but remained statistically significant after adjustment for higher overall disease burden among beneficiaries with addictions. Medical expenditures for individuals with diagnoses of substance use disorders increased significantly with age in five of six states, whereas behavioral health expenditures were stable or declined. Hospital admissions for psychiatric and general medical reasons were higher for those with diagnoses of substance use disorders.

Conclusions: The impact of addiction on Medicaid populations with behavioral health disorders is greater than the direct cost of mental health and addictions treatment. Higher medical expenditures can be partly attributed to greater prevalence of co-occurring physical disorders, but expenditures remained higher after adjustment for disease burden. Spending estimates based only on behavioral health diagnoses may significantly underestimate addictions-related costs, particularly for older adults.