Limitations of single payer

A new Journal of Substance Abuse Treatment paper by Humphreys, Wagner, and Gage titled “If substance use disorder treatment more than offsets its costs, why don’t more medical centers want to provide it?” has a very good literature review on the benefits of treating substance use disorders.

Holder and colleagues’ (Holder, 1987; Holder & Blose, 1986) pioneering work, which has been replicated across a range of care settings and addictive substances (Parthasarathy, Weisner, Hu, & Moore, 2001), shows that patients’ health care utilization typically drops after SUD [substance use disorder] treatment. Other research, which has broadened the lens to include the economic value of treatment in reducing crime, unemployment, and welfare payments (Ettner et al., 2006; Godfrey, Stewart & Gossop, 2004), has concluded that that the savings of SUD treatment exceed its costs many times over. Yet, as this very research base was accumulating and being trumpeted by treatment advocates (including the authors of this article), the funding and scope of SUD treatment declined in the United States (Chen, Wagner, & Barnett, 2001; D’Aunno & Vaughn, 1995; Etheridge, Craddock, Dunteman, & Hubbard, 1995; Mark, Levit, Vandivort-Warren, Coffey, & Buck, 2007; Mark, Levit, Vandivort-Warren, Buck, & Coffey, 2011; Meara & Frank, 2005; McLellan, Meyers, Hagan, & Durell, 1996). What is the answer to the frustrating riddle of why health care systems often refuse to invest in something that is known to generate such a handsome return?

It’s a great question, with a perfectly logical answer, which the authors provide:

Most notably, decision makers might understand that SUD treatment saves “society” money, yet not be willing to invest in it because their purview is over one small slice of society. If, for example, one is held responsible to keep a hospital budget in balance, spending scarce funds on SUD treatment does not become more attractive just because it saves money for the prison system.

This is similar to another problem in the health insurance system. What incentive does an insurer have in investing in preventative care or in providing incentives for healthier living if that insurer’s policyholders may end up covered by another organization (public or private) later? This is an argument for single payer health insurance.

Notice, however, that the SUD treatment problem is different. Even if the hospitals are government run or funded, if their budgets are separate from that provided to the Justice Department, say, the problem raised above still exists. There is a “single payer” — government — but it doesn’t solve the problem because different programs or departments within the government have separate budgets.

In a word, there are externalities — positive in the case of SUD treatment — not captured by the medical center. Now that the problem is recognized, how do we solve it? If single payer isn’t the answer, what is?


Holder, H. D. (1987). Alcoholism treatment and potential health care cost saving. Med Care, 25, 52–71.

Holder, H. D., & Blose, J. O. (1986). Alcoholism treatment and total health care utilization and costs. A four-year longitudinal analysis of federal employees. JAMA, 256, 1456–1460.

Parthasarathy, S., Weisner, C., Hu, T. W., & Moore, C. (2001). Association of outpatient alcohol and drug treatment with health care utilization and cost: Revisiting the offset  hypothesis. J Stud Alcohol, 62, 89–97.

Ettner, S. L., Huang, D., Evans, E., Ash, D. R., Hardy, M., Jourabchi, M., et al. (2006). Benefit–Cost in the California treatment outcome project: Does substance abuse treatment “pay for itself”? Health Serv Res, 41, 192–213.

Godfrey, C., Stewart, D., & Gossop, M. (2004). Economic analysis of costs and consequences of the treatment of drug misuse: 2-Year outcome data from the National Treatment Outcome Research Study (NTORS). Addiction, 99, 697–707.

Chen, S., Wagner, T. H., & Barnett, P. G. (2001). The effect of reforms on spending for veterans’ substance abuse treatment, 1993–1999. Health Affairs (Millwood), 20, 169–175.

D’Aunno, T., & Vaughn, T. E. (1995). An organizational analysis of service patterns in outpatient drug abuse treatment units. J Subst Abuse, 7, 27–42.

Etheridge, R. M., Craddock, S. G., Dunteman, G. H., & Hubbard, R. L. (1995). Treatment services in two national studies of community-based drug abuse treatment programs. J Subst Abuse, 7, 9–26.

Mark, T. L., Levit, K. R., Vandivort-Warren, R., Buck, J. A., & Coffey, R. M. (2011). Changes in US spending on mental health And substance abuse treatment, 1986–2005, and implications for policy. Health Affairs, 30, 284–292.

Meara, E., & Frank, R. G. (2005). Spending on substance abuse treatment: How much is enough? Addiction, 100, 1240–1248.

McLellan, A., Meyers, K., Hagan, T.,&Durell, J. (1996). Local data supports national trend of decline in substance abuse system. Connection, 5, 8.

Hidden information below


Email Address*