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In a new report, The White House Council of Economic Advisers is the first to take the economic cost of lives lost into account.
The White House’s Council of Economic Advisers says the opioid epidemic cost the United States economy more than $504 billion in 2015—nearly 3 percent of the gross domestic product in that same year.
The CEA estimate is more than six times higher than the most recent analysis that preceded it. The last time a study of the epidemic’s cost was examined, researchers found that the crisis had cost $79.9 billion. That study was carried out in 2016 and was based on 2013 data.
The cost figure identified by the CEA is higher for a few reasons. First, the epidemic has grown much more severe since 2013. In fact, in the last decade, the number of overdose deaths has doubled. Additionally, the CEA figure is higher because it takes into account the economic impact of illicit opioid misuse, including heroin, whereas previous estimates focused exclusively on the misuse of prescription opioids.
Most notably, however, the CEA analysis is higher because, first, previous studies underestimated the economic cost of the loss of life from this epidemic, and second, those previous estimates did not account for the underreporting of opioid deaths.
To assign a monetary value to those lives that have been lost, the CEA used “value of a statistical life” measurements. The federal government typically uses VSL measures to carry out analysis of proposed regulations or policy to get a sense for how that policy bears out in terms of fatality risk-reduction. When it came time to add up all of the factors that contributed to the monetary cost of the epidemic, at $431.7 billion, the fatality cost was the largest.
The CEA analysis relied upon previous research which found that actual opioid-related death rates were 24 percent higher than what was being reported in official tallies. This underreporting is due in part to imprecise categories on death certificates and the difficulties associated with post-mortem toxicology screening.
The CEA also plans to run future economic analysis of any proposed interventions to the crisis. It should be noted, however, that the Trump administration has not yet allocated any new funds to address the problem.
Quinn Libson is a Staff Correspondent for Government Executive’s Route Fifty and is based in Washington, D.C.