Alcoholism Treatment Offset Effects: An Insurance Perspective

Abstract

This study investigates whether alcoholism treatment costs are offset by reductions in other medical treatment costs by comparing people treated for alcoholism with a matched comparison group. The alcoholism treatment group is defined by diagnoses of alcohol dependence, abuse, or psychoses from health insurance claims filed between January 1980 and June 1987. A comparison sample was matched on age, gender, and insurance coverage. In this primarily methodological study, expected costs for nonalcoholism treatments were calculated from standardized regressions. Offset effects were measured from the insurer’s perspective through differences in expected total nonalcoholism treatment costs in the periods preceding and following alcoholism treatment. Members of the alcoholism treatment group were more likely than the comparison group to be hospitalized and to need other (nonalcoholism) medical treatment, thus incurring higher total costs. Offset effects emerged for patients with alcohol abuse and without mental psychosis comorbidities.