This report from the Open Society Institute discusses how addiction treatment reduces health care costs.   

From the Open Society Institute:

Addiction is a pervasive yet treatable chronic health condition.  Often it occurs alongside other chronic diseases.  If untreated, the addicted person's medical care becomes more costly due to secondary health conditions.  When treated, addiction leads to better health care outcomes. 

This paper demonstrates how addiction treatment will contribute to containing costs in reforming America's health system.  Studies show that addiction treatment significantly reduces emergency room, inpatient and total health care costs. 

While the overall cost savings have not been documented, there are clear signs of the potential for savings.  For example:

• One out of every 14 hospital stays - 2.3 million stays - was related to substance disorders in 2004, a federal study found.
• Total medical costs were reduced 26 percent among one group of patients that received addiction treatment.
• A group of at-risk alcohol users who received brief counseling recorded 20 percent fewer emergency department visits and 37 percent fewer days of hospitalization.

Full Report: http://www.soros.org/initiatives/treatmentgap/articles_publications/publications/paper1_20090714/paper1_20090714.pdf 

This article assessed Medicaid physician fees between 2003 and 2008.  On average, fees increased 15.1 percent which was below the rate of general inflation and resulted in a reduction in real fees.  Medicaid fees closed a small portion of their gap relative to Medicare fees, resulting from increases in primary care and obstetrics. 

Zuckerman, S., A. F. Williams, et al. (2009). Trends in Medicaid physician fees, 2003-2008. Health Affairs, 28(3), w510-9. DOI: 10.1377/hlthaff.28.3.w510 http://content.healthaffairs.org/cgi/content/abstract/28/3/w510 

Authors: Stephen Zuckerman, Aimee F. Williams, Karen E. Stockley.

This study examines M/SU parity laws and their potential effect on out-of-pocket mental health treatment costs.  The study found modest yet important variation in out-of-pocket burden across states but note that prescription drugs account for nearly two-thirds of out-of-pocket spending and fall largely outside the scope of federal M/SU parity laws.  The authors conclude that M/SU parity laws will do little to reduce the observed burden or inter-state variation.  

Zuvekas, S. H., & Meyerhoefer, C. D. (2009). State variations in the out-of-pocket spending burden for outpatient mental health treatment. Health Affairs, 28(3), 713-22. DOI: 10.1377/hlthaff.28.3.713 http://content.healthaffairs.org/cgi/content/abstract/28/3/713 

Authors: Samuel H. Zuvekas, Chad D. Meyerhoefer.

This study examined the effects of prior authorization for second-generation anti-psychotic and anti-convulsant on utilization, discontinuations in therapy, and pharmacy costs among Maine Medicaid beneficiaries with bipolar disorder.  The study found that the prior authorization policy resulted in an 8 percent the prevalence of use of non-preferred second generation drugs but did not increase the rate of use for preferred drugs or the rate of switching.  The policy reduced total pharmacy reimbursements for bipolar disorder by $27 per patient during the eight-month policy period but the hazard rate of treatment discontinuation was higher than during the pre-policy period.  The authors conclude that the use of prior authorization in Maine may have increased patient risk without significant cost savings to the Medicaid program. 

Zhang, Y., A. S. Adams, et al. (2009). Effects of prior authorization on medication discontinuation among Medicaid beneficiaries with bipolar disorder. Psychiatric Services, 60(4), 520-7.  DOI: 10.1176/appi.ps.60.4.520 http://psychservices.psychiatryonline.org/cgi/content/abstract/60/4/520 

Authors: Yuting Zhang, Alyce S. Adams, Dennis Ross-Degnan, Fang Zhang, Stephen B. Soumerai. 

This report presents results from survey by the Center for Studying Health System Change that examines medical and health burdens of chronic conditions, including depression. The report notes that, in 2007, 30 percent of people with chronic conditions lived in families with trouble paying their medical bills, up from 21 percent in 2003.  In addition, the report notes that while rising health care costs affect uninsured individuals more adversely than those with insurance, uninsured individuals with chronic illnesses are increasingly affected. 

Tu, H. T. and Cohen, G. R. (2009). Financial and health burdens of chronic conditions grow. Tracking Report, (24), 1-6.

Download the full report at the Center for Health System Change: http://www.hschange.com/CONTENT/1049/1049.pdf

This statistical brief from the Agency from Healthcare Research and Quality (AHRQ) examines the five most costly children's conditions in 2006, including mental disorders.

Health care expenditures for the treatment of children’s ailments have been on the rise in the U.S. Traditionally, medical expenditures have been concentrated for the treatment of certain types of highly prevalent conditions or for which treatment often entails the use of high cost services. This Statistical Brief presents data from MEPSHC regarding medical expenditures associated with the five most costly conditions for children ages 0–17 in 2006. The five most costly conditions for children (mental disorders, asthma, trauma related disorders, acute bronchitis, and infectious diseases) were determined by totaling and ranking the expenses by condition for all medical care provided in 2006. Only differences between estimates that are statistically significant at the 0.05 level are discussed in the text.

Download the brief from AHRQ: http://www.meps.ahrq.gov/mepsweb/data_files/publications/st242/stat242.pdf