The Opioid Crisis Delivers a $1 Trillion Shock to the US
Irina Ivanova CBS News October 25, 2018
President Donald Trump on Wednesday signed another bill that aims to stem America's opioid crisis. It comes as overdose deaths from the drugs have continued to surge. Roughly 70,000 people died from overdoses last year, according to the Centers for Disease Control and Prevention, a 10 percent jump from 2016 -- that's more than the total number of U.S. military deaths in all 15 years of the Vietnam war.
In some communities, concerns about drugs rate higher than anything else. One in four Americans living in rural areas say drug addiction or abuse in their community is a top issue, recent polling from NPR and the Robert Wood Johnson Foundation shows. "This has never been reported before," the poll's co-director said.
While the human tragedy of the opioid crisis is incalculable, the economic impact on the U.S. and on families can be estimated. In 2017, opioid addiction cost $115 billion, according to an analysis issued earlier this year by Altarum, a health care research nonprofit.
Those losses represent only the direct costs of the epidemic, said Corey Rhyan, a senior analyst at Altarum. That means treating overdoses in the emergency room, long-term treatment for drug addiction, caring for children whose parents' substance abuse has made them unable to work, counting the value of wages lost -- or, in many cases, death.
Since 2001, the opioid crisis' direct costs have topped $1 trillion, Altarum calculated.
"I would argue that's a conservative estimate," Rhyan said. "Obviously, any dollar value needs to be viewed alongside the enormous and unthinkable human costs of the epidemic."
Labor force dropouts
A look at how opioid addiction is affecting the job market underscores its adverse impact on the economy as a whole. Despite rock-bottom unemployment and solid economic growth, many Americans have dropped out of the workforce. People between the age of 25 and 54, known as "prime-age workers," are employed or looking for work at much lower rates than their peers in other developed countries, according a recent OECD report.
Except for people 55 and over, Americans of all age groups are less active in the labor force than they were in 2001.
"The biggest structural change in the U.S. in the last few years is this astonishing increase in opioid addiction," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
The epidemic helps answer another question that has been puzzling economists: Why the robust job market and its need for more workers has failed to pull more Americans off the sidelines and into jobs.
"People talk about a mismatch in supply and demand -- that we want more construction workers but we haven't got them, or we need people in the Midwest and have unemployed people in the Southeast. But those are not big enough," Shepherdson said.
He estimates that without the opioid crisis, the nation's unemployment rate today would be 5 percent or 5.5 percent instead of its current rate of 3.7 percent. That's because more many workers currently out of the labor force due to opioid addiction would almost certainly be looking for work; also, people without jobs would then be officially counted among the unemployed.
Finally hitting bottom?
Government officials have recently suggested that the opioid epidemic is leveling off. "We are so far from the end of the epidemic, but we are perhaps, at the end of the beginning," Health and Human Services Secretary Alex Azar said Tuesday.
The Centers for Disease Control and Prevention recently released numbers showing that the number of overdose deaths has stayed the same for each of the past three months, meaning the crisis could be peaking.
Opioid abuse by Americans who do have jobs also appears to be dropping. Quest Diagnostics, the largest workforce drug-testing lab, indicates that the rate of tests coming back positive for opioids peaked in 2011. That year, 1.1 percent of all urine tests among the general workforce were positive. Last year, the rate had fallen by almost half, to 0.57 percent. By contrast, that could mean fewer drug users are working, or that businesses that hire large numbers of drug users have simply stopped testing for them.
OxyContin, the prescription pain reliever that many point to as the catalyst for the addiction crisis, has generated about $35 billion in sales since Purdue Pharma launched the drug more than two decades ago.
It remains to be seen how much of that Purdue will keep. Hundreds of lawsuits have been filed against the drugmaker, other pharmaceutical firms, drug retailers and medical providers stemming from opioids.