New Futures Economic Report

Report Release Date: May 8, 2017

Click here for our press release on the report.

Executive summary

            Since the release of PolEcon’s 2014 report on the costs of substance misuse in New Hampshire, awareness of the damage that substance misuse inflicts on individuals, families, communities, and the state’s economy has increased significantly. A dramatic rise in the number of drug-related deaths in New Hampshire has focused the state’s attention on the dangerous rise in opiate and opioid abuse occurring, not only in New Hampshire, but across the nation and has prompted public policy efforts to address the problem. Headline news reports of heroin, fentanyl, and other drug-related deaths in the Granite State are startling and disturbing, but as horrific as the number of drug-related deaths are, they still represent only a fraction of the personal, economic, and social costs of drug and alcohol misuse in New Hampshire. Since our 2014 report, there is also an increasing awareness of the constraints that demographics and slow labor force growth are placing on New Hampshire’s economy; highlighting the need to maximize labor force participation and the productivity of New Hampshire residents. Substance misuse both reduces labor force participation and reduces worker productivity.

Table 1

Summary of NH Costs of Substance Misuse in 2014  ($ Millions)

 

 

Annual Costs

Lifetime Costs

Related to Annual  Impacts

Productivity

 

 

 

 

Impaired Productivity

$1,496.16

 

 

Absenteeism

$62.40

 

 

Subtotal

$1,558.56

 

 

Premature Death*

 

$604.66

Health Care

 

 

 

 

Substance Misuse Treatment

$44.74

 

 

Medical Care

$269.78

 

 

Insurance Administration

$22.55

 

 

Subtotal

$337.07

 

 

 

 

 

Criminal Justice

 

 

 

 

Police Protection

$156.76

 

 

Judicial System

$33.14

 

 

Corrections

$101.70

 

 

Cost to Crime Victims

$10.09

 

 

Victim Productivity Loss

$4.85

 

 

Subtotal

$306.54

 

Other Costs

 

 

 

 

Motor Vehicle Crashes

$72.62

 

 

State and Local Tax Revenue

$87.60

 

 

Subtotal

$160.22

 

 

Grand Total

$2,362.39

$2,967.05

 

NH Gross State Product

($ Millions 2014)

$71,153

 

 

Costs as a % of GSP

   3.32%

 

 

*Included in separate total because of difference in accounting

            In 2016, policymakers in the State of New Hampshire took a number of important steps to confront the increasing problem of substance misuse in the state.  As a result of state and national policies enacted in recent years, there are now greater opportunities for New Hampshire residents to receive needed treatment and recovery supports for substance use disorders.

            This report updates the 2014 analysis of the economic costs that substance misuse imposes on the State of New Hampshire.  The report also documents the impact the Affordable Care Act (ACA) requirements for insurance coverage of substance use disorder and mental health treatment services, as well as the expansion of Medicaid, have had on substance misuse treatment rates in New Hampshire.  Finally, the report examines how treatment capacity has expanded in response to ACA requirements for the inclusion substance use disorder treatment in health insurance coverage and the expansion of Medicaid in the state.

            In updating our 2014 report on the cost borne by citizens, businesses, government, and the larger New Hampshire economy as a result of the misuse of alcohol and drugs, this report uses additional data and improved methodologies to again estimate the costs attributable to substance misuse in four broad areas: the productivity of individuals and businesses, criminal justice, health care, and other costs.  The costs to New Hampshire of substance abuse have increased from $1.84 billion to $2.36 billion (not including $604.6 million in costs related to premature deaths) since our last report, an amount equal to over $21,000 annually for every individual in the state who is dependent upon or abuses alcohol or drugs. The annual cost of drug and alcohol misuse in New Hampshire is equal to over three percent (3.32%) of the state’s annual gross state product. 

            Although the total cost of substance misuse in New Hampshire continues to rise, there have been some encouraging developments since the release of our previous report in November 2014.  Reductions in crime rates and automobile crashes have resulted in small reductions in a few substance misuse cost categories.  In addition, there have been small reductions in reported substance abuse and dependency among younger subgroups of New Hampshire’s population.   Reductions in youth substance misuse may be attributed to an increase in funding for prevention efforts throughout the state over the past several years and should encourage policymakers to continue New Hampshire’s investment in evidence-based prevention efforts.  However, reductions in substance misuse rates among New Hampshire’s youth cannot discount the increases in substance abuse and dependency among older Granite Staters (age 26 and above) that have resulted in an overall increase in the rate of reported substance misuse and dependency among New Hampshire residents since our last report. 

           This report reiterates the fact that the greatest cost of substance misuse in New Hampshire is in the form of the lost productivity of individuals in the state who are dependent on or who abuse alcohol or drugs. Productivity losses attributable to substance misuse cost the state about $1.6 billion in 2014. Nationally and in New Hampshire, the longer-term prospects for economic growth are being challenged by two primary forces, slow growth in the labor force and declining growth in productivity (output per worker).  By reducing the number of individuals in New Hampshire’s labor force and by decreasing the skills and productivity of individuals who are in the labor force, substance misuse in New Hampshire exacerbates key demographic and human resource issues that contribute to slower economic growth in the state.  The importance of maximizing labor force participation and the productivity of workers in New Hampshire is illustrated in Figure 1, which shows past and projected labor force growth in New Hampshire and the United States.  As the chart demonstrates, slow labor force growth is the “new normal” for the New Hampshire and United States economies.

           Since our 2014 report, the Affordable Care Act has been fully implemented, resulting in increased access to affordable health insurance and coverage for substance use disorder treatment for many New Hampshire residents.  In addition, New Hampshire expanded its Medicaid program, which also provided increased opportunities for substance use disorder treatment in the state. Substance use disorder treatment in New Hampshire has increased sharply in response to these policies. Findings in this report suggest that changes in the availability of health insurance and coverage for substance use disorder treatment have also helped to expand substance use disorder treatment capacity in the state by contributing to an increase in the number of treatment providers. That said, this report also addresses concerns about how workforce issues may limit the ability of these providers to increase capacity and meet the growing need for treatment services in the state. 

Please see the attachments below for the full report as well as graphs.