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The Economic Impact Of Addiction

Isaac Alexis, M.D., AAMA, AMP-BC

Medically reviewed by

Isaac Alexis, M.D., AAMA, AMP-BC

January 29, 2019

Addiction can wreak havoc on an individual in several ways including emotionally, mentally, physically, and not least of all, economically. The reality is that this damage goes well beyond the person suffering from addiction and creates a socioeconomic burden within our country and communities.

The Personal Hardships Of An Addiction

A drug or alcohol addiction most always takes an immense financial toll on a person’s life. As a person’s use increases the monetary demands rise as well—the financial strife can extend into almost every area of their life, affecting not only their economic well-being, but that of their family, as well.

Cost Of The Substance Itself: The cost of buying drugs or alcohol adds up fast, especially for a person who is using on a daily basis; as their tolerance increases, the amount they need to achieve the desired effect rises, thus requiring a larger payout.

Cost Of Treatment: Rehabilitation programs cost money, though the cost may be overwhelming, what you must realize, is that in the long run—with the vast amount of ways a drug addiction can become financially depleting—it can be cheaper than the drug use itself. Thousands of programs accept a variety of insurance for rehabilitation and some even make payment arrangements to make the treatment more accessible.

Toll On Family Members: If the drug user has a joint banking account with a loved one—such as a checking, savings, or credit card account—they may spend large amounts of money or max the cards out in their pursuit to use; in worst-case scenarios this can cause bankruptcy or foreclosure as people struggle to make ends meet.

Sometimes, as a person’s addiction reaches certain proportions, they find that they do not have enough money to cover the amount of drugs they need to fulfill their cravings. At times in these circumstances, they may steal money or even objects from their family to pawn—including sentimental heirlooms—to provide a way in which to keep their habit going. In terms of the latter, it is hard to even put a value on the broken trust and emotional loss of these family treasures.

If the sole or joint provider has to go away for their drug use, either to rehab or jail, the partner who remains will be responsible for taking over certain bills and expenses; if there are children involved the person may now have to pay for childcare.

Legal Ramifications: Being addicted to drugs or alcohol is a dangerous game, one that oftentimes embroils the user in legal troubles that carry hefty fees and financial obligations. A person may be arrested, lose their driver’s license or school financial aid, or incur tickets and fines; many times these situations may require the assistance of a lawyer.

If faced with legal proceedings, some individuals may even encounter having a professional license revoked, especially those within certain fields including, but not limited to those in public safety, medical, or transportation oriented careers. Your criminal record may follow you, impeding your ability to obtain a job.

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Healthcare And Medical Expenses: As drug use progresses, the chance of developing health issues increases, as does the severity of the circumstances. A person is also more at risk for endangering themselves, including a heightened risk of automobile accidents and fatalities.

The subsequent trips to the doctor, hospitalization, and prescriptions add up. Studies show that people who struggle with an addiction have higher rates of physical and mental health problems and increased risk of contracting an infectious disease.

Insurance: If you’ve had an automobile accident due to drug or alcohol use, your auto insurance rates will spike. People who have a documented history of drug use or addiction may have a harder time getting affordable health insurance rates; this use can also affect your chances of getting life insurance—they may use it as grounds to decline you.

Bills: An addicted person, when faced with the decision to either buy drugs or pay bills may often choose the former. They might use their cash for drugs and live beyond their means by racking up credit card debt. Additionally, as they’re either under the influence or suffering from the drug’s effects, a person may forget to pay a bill, even if they have the money. These things can result in late fees, garnished wages, interrupted service, a reduced credit score– which may increase future interest rates –or even foreclosure.

Wages and Employment: Chronic drug use disrupts focus, ambition, and critical thinking skills. A person who is not at the top of their game may miss the chance for a raise or promotion and may suffer significant financial loss over the years to come because of it. They may be prone to miss work, at times to the point that it can jeopardize their job.

An addiction can also affect a person’s educational goals; as the drug use progresses they may either fail or drop out of school. Having an advanced degree can significantly increase the amount of money a person makes over the course of their life; in 2011, U.S. News and World Report stated that a person with a bachelors degree makes an average of nearly $1 million more over the course of their life than a person with only a high school diploma.

Disrupts Future Stability: Most people, if finances permit, strive to put some amount of money away. This money may be for a future purchase—such as a down payment for a house—or for their retirement. For someone facing an addiction, this is often an impossible task, not only do they often spend it on the drugs before it can get that far, but the drug use itself may disrupt their mental acuity and judgement, making it harder for them to make financially sound choices or investments. They may also dissolve their savings, IRA, or 401K as a means to pay for their drug-debt or to buy more drugs.

Disproportionately Affects The Poor: What we see is that substance abuse and addiction exerts a greater toll on those that fall within the poverty range. For them, financially supporting any addiction—whether it be to the nicotine in cigarettes, or cocaine—depletes a larger percentage of their monthly finances than for someone that is more well off.

Additionally, studies show that we learn by example; children within these circumstances may be more apt to develop an addiction themselves; paired with the likelihood that they may have learned poor money managing skills, this can set them up for financial hardships as well.

The Social And Economic Impact Of Drug Addiction

An addiction doesn’t just affect the individual or those who are directly involved in their life. Our nation’s economy, businesses and healthcare system, and our communities and families all face– in varying capacities– financial repercussions and responsibilities incurred from drug and alcohol use. The National Institute on Drug Abuse (NIDA) has found that “abuse of tobacco, alcohol, and illicit drugs is costly to our nation, exacting more than $700 billion annually in costs related to crime, lost work productivity and health care.”

Here, we illustrate the ways that an addiction creates a state of economic turmoil for these groups.

Within The Workforce: In addition to the many losses that an addiction may bring upon a person, their behavior also financially stresses the entities that employ them. The Substance Abuse and Mental Health Services Administration (SAMHSA) estimates that of those who struggle with a drug or alcohol problem, 75 percent of them are currently working.

The University of Pennsylvania Health System (UPHS) cites another frightening statistic—they estimate that 10 percent to 23 percent of those in the American workforce use while on the job, causing detriment on several levels.

First, working under the influence puts a person—and those engaging in any activity with them—at greater risk for injury; if an employee is injured they may then subsequently lose income, thus endangering the financial status of both them and their families who may then require state or federal assistance to stay afloat. Here, the employer suffers from the reduced workforce and unanticipated commitment of time or money that may be needed to train a replacement in the person’s absence.

Secondly, their levels of productivity are greatly decreased; the errors, oversights, and missed deadlines that result can cost their employer a fair amount of money. Even for those who do not use drugs while on the job, their employer may still encounter setbacks as a person’s focus, enthusiasm, and energy may all be adversely impacted by their use in their off hours. As a person seeks medical treatment, drug rehabilitation, or even in the most severe of instances—disability, an employer is forced to contend with their leave and absorb the financial repercussions the absence creates.

A study published by the International Narcotics Control Board (INCB) found that in 2011 our nation incurred expenses totaling $120 billion for lost productivity; this equates to 62 percent of the total financial burden attributed to drugs. The Partnership for Drug-Free Kids estimated it even higher—their expectations are upwards of $276 billion a year.

Criminal Component: Sometimes—as a person’s addiction takes greater control over their life, and as their need and desire to obtain and use drugs intensifies—a person may turn to criminal activities as a means to either obtain drugs or money to purchase them. These illegal activities put them in jeopardy of facing a drug conviction, which may then place them within our nation’s correctional system. The INCB study states that in the U.S., “17 per cent [sic] of state prisoners and 18 per cent [sic] of federal inmates said they had committed the offense for which they were currently serving a sentence to obtain money for drugs.”

These situations cost not only our country’s money, but place significant and sometimes overwhelming financial burdens on an individual’s place of employment or their family as they strive to stay on their feet while the person is away. And for those who leave children behind with no one to care for them, our system incurs an even greater price as it shoulders the cost of placing the children in foster care.

The Office of National Drug Control Policy lists economic loss due “to criminal investigation, prosecution and incarceration, and victim costs.” This totals $61 billion annually; a cost that we as Americans all absorb in part through taxes. As a person uses illicit drugs, it fuels the illicit drug market. Staffing and training law enforcement to contend with these concerns takes a significant portion of taxpayer money, a demand that rises as the drug trade increases.

Health Care And Insurance: The UPHS suggested, as supported by certain studies, that “10 percent of the population accounts for 75 percent of the nation’s health care costs and the high[-]cost people tend to be smokers and alcohol abusers.” NIDA reports that abuse of tobacco exerts a $130 billion cost, alcohol $25 billion, and illicit drugs $11 billion.

Environmental Concerns: The cost of manufacturing illicit drugs and disposing of the byproducts involved in this process is of concern as well. These chemicals can pollute our water and soil, which may then affect humans, vegetation, and animal life. The people affected may require medical assistance which again costs money. Some drugs—such as marijuana, opiates derived from the opium poppies, and cocaine—require large areas of land. These are areas of land that could be otherwise used for farming or growing food crops. Though harder to quantify these financial costs, it’s clear that these things too place a toll on our economy.

How Can Treatment Help Alleviate These Financial Concerns?

Time and time again evidence illustrates the vast importance of drug addiction treatment. In addition to assisting an individual in finding and learning methods to overcome their addiction and drug use, it helps to reduce the financial costs associated with the health, governmental, and social ramifications of this drug use.

NIDA shows us exactly how this investment can alleviate social financial burdens; they report that “according to several conservative estimates, every dollar invested in addiction treatment programs yields a return of between $4 and $7 in reduced drug-related crime, criminal justice costs, and theft. When savings related to healthcare are included, total savings can exceed costs by a ratio of 12 to 1.”

The rising price of incarcerating an individual due to a drug-related crime and the cost associated with providing social programs and welfare support to them and their families puts a vast stress on our country’s tax burden. NIDA speaks to this, saying that “the average cost for 1 full year of methadone maintenance treatment is approximately $4,700 per patient, whereas 1 full year of imprisonment costs approximately $24,000 per person.”

The earlier a person receives help, the better. The longer a person abuses drugs, the more damage the drugs exert on their body, thus the higher the possibility is that they will need some form of medical treatment. In addition to the health benefits, treatment has positive social implications, as well—helping a person to overcome their addiction may potentially keep them from situations and events that cam precipitate social and governmental expenses and issues.

As a person undergoes treatment they are taught vital skills and receive critical support that can help them learn to overcome their addiction and have a successful recovery, thus allowing them in many instances to successfully integrate back into their lives and responsibilities.

We Can Conquer Addiction Together

An addiction can be massively daunting to handle on your own; struggling with both an addiction and financial difficulties can even be more overwhelming. If you’re concerned that your drug use, or that of someone you love, is reaching proportions that threaten financial stability, please don’t wait until things get even more out of control. At we’re standing by to help educate you on the rehabilitation options that can allow you to once again gain control over your life, addiction, and finances. Contact us today to take that first step towards recovery.

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