Addiction is a major problem in the United States, with almost 21 million Americans suffering from alcoholism, drug addiction or both. Right now, it’s only getting worse.
CDC data demonstrates that the COVID-19 pandemic exacerbated the addiction crisis, with overdose deaths (most of which were opioid-related) accelerating in 2020. This data illustrates the urgent public health crisis that addiction has become — and that’s before consideration of the second and third-order effects that impact all Americans.
Direct cash policies that put money into people’s hands may be a key tool in helping Americans impacted by alcoholism and drug use by increasing access to treatment and minimizing the root social causes of addiction.
Those who struggle with substance abuse need skilled medical and psychiatric help to get sober and prevent relapses, but drug treatment is costly. Both inpatient rehabilitation programs range in cost from $14,000 to $27,000, and outpatient treatment can range from free to $500 per session according to the American Addictions Center.
Health insurance may cover some of the cost, but typically won’t not all cover all expenses. While that may be helpful to some, not everyone has health insurance. Once initial treatment ends, people in recovery generally require ongoing therapy to manage their disease and ensure long-term sobriety. These sessions are costly, and often not fully covered by insurance.
Recovering from addiction is also time-consuming. As of 2018, 25% of Americans received no paid time off, which means the traditional 30 days of treatment inside a rehabilitation center would result in a month of lost wages along with the cost of treatment. There are outpatient programs that meet on nights and weekends, but this would still lead to missed work for people with multiple jobs.
With all of these financial obstacles standing between people and treatment, it’s clear how further financial insecurity compounded by the COVID-19 pandemic has made those barriers even higher.
From a broader perspective, there are significant savings associated with policy aimed at getting people with substance abuse issues the help they need. The National Institute of Health says 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 from treating addiction can exceed costs by a ratio of 12 to 1, creating a clear incentive for the federal government to involve itself in fighting addiction with taxpayer dollars. Major savings to the individual and to society also stem from fewer interpersonal conflicts; greater workplace productivity; and fewer drug-related accidents, including overdoses and deaths.
With this context in mind, it becomes clear to see how direct cash policies would help offset the cost of treatment and missed work for addicts focused on recovery, while addressing public concerns related to curbing addiction.
Policies that put money directly into people’s hands can alleviate financial stress, which reduces a major risk factor for both buying and selling drugs. But perhaps the most powerful way direct cash transfers can aid in overcoming addiction is by preventing addiction in the first place.
Extreme stress and hopelessness about the future are often cited as contributing factors to drug and alcohol addiction, and an inability to make ends meet through traditional employment increases the likelihood that an individual will turn to selling drugs, fueling the addiction crisis further.
Overcoming addiction is physically, mentally and emotionally taxing. It takes focus and dedication. And despite the glossy brochures for some luxury rehabilitation centers, no one would seriously consider time spent in rehab a vacation.
This work provides value to the patient and their family, but it also provides value to their community and society as a whole. The total economic cost of addiction in the United States, factoring in productivity loss, healthcare and law enforcement costs (among others) is estimated at 1.45 trillion dollars a year, which is almost the entire annual cost of a basic income.
A common criticism of policies like basic income is that if you give people money, “they’ll spend it on drugs.” However, this concern is based on stereotypes of low-income people and misconceptions about the relationship between poverty and addiction, not facts.
Studies of cash transfer programs around the world have shown that recipients do not increase spending on what economists call “temptation substances.” In actuality, direct cash policies have the potential to be a powerful tool in the fight against drug and alcohol addiction.
We can expect that the implementation of future direct cash policies would have a significant impact on the ability of those suffering from addiction being able to access treatment — and as a result, we can be healthier and more financially secure while saving federal dollars all at once.