Addiction and mental-health treatment spending accounted for 7.8 percent of all U.S. health care expenditures in 1997, down from 8.8 percent in 1987, according to National Estimates for Mental Health, Alcohol and Substance Abuse Treatment, a recently released report from the Substance Abuse and Mental Health Services Administration (SAMHSA). Overall public-sector spending on these services did grow during this period, but at a slower rate than spending on other types of health care.

In fact, spending on substance-abuse services grew at half the rate of expenditures for other health services; growth has been particularly slow since 1992, just barely exceeding the annual inflation rate.

In 1997, the U.S. spent $85.3 billion on treatment of behavioral disorders, including $73.4 billion on mental illness and $11.9 billion on alcohol and other drug abuse. "What we are spending on substance abuse treatment is not much, and trending downward," said H. Westley Clark, M.D., J.D., M.P.H., director of SAMHSA's Center for Substance Abuse Treatment (CSAT) at a press conference last month.

In 1996, Congress ended Medicaid's Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) programs for people suffering from addiction, meaning the overall federal funding picture for treatment has been even less rosy since the end of the study period in 1997.

Despite the lagging public-sector commitment to funding substance-abuse and mental-health services, however, public sources of funding -- including the federal block grant, Medicaid, Medicare, federal programs for veterans and the military, and state and local programs -- continue to represent almost two-thirds of U.S. spending on addiction treatment, and more than half of mental-health treatment.

Government's share of overall treatment spending increased during the 10-year study period. But Joan Dilionardi, Ph.D., a senior social science analyst with CSAT and the project officer on the report, tells Join Together that while the federal government pays about 36 percent of all treatment costs, the growth in state and local funding has slowed appreciably. Between 1987 and 1997, state and local funding of these programs declined 0.1 percent annually, which Clark attributes to the adoption of managed care in public-sector programs. While non-federal governmental sources continue to provide 28 percent of treatment funding, says Dilionardi, the slowdown is "particularly troubling given the current economy and the literature that shows how widely alcohol and other drugs impact society."

Some observers may point to the declines in spending and see evidence that managed care is working to keep both public- and private-sector costs under control; the biggest decreases in addiction treatment spending, for example, was on costly hospital-based services, particularly inpatient care. But Dilionardi disagrees.

"It's hard to consider this a good thing when you look at the results of the National Household Survey on Drug Abuse, the epidemic of drug use and the number of people with drug problems, and the gap between the number of people in treatment versus the number who need treatment," she said, adding, "The unmet need is very well-documented." SAMHSA estimates that in 1997 there were 3.6 million Americans who needed addiction treatment but weren't able to get help.

Dilionardi sees a need to better educate employers about the costs of untreated addiction so that they will require their insurers to provide comprehensive coverage of treatment services to employees. A recent federal study showed that covering addiction-related services on par with other health care services would only increase insurance premiums 2 percent annually, she noted.

Where the Money Went

Despite the inroads achieved by managed care, hospitals continue to receive the biggest chunk of U.S. spending on addiction treatment services -- 40 percent of the total. Specialized addiction treatment programs received 33 percent; programs that primarily provide mental health services received 9 percent.

In contrast, little addiction treatment funding went to independent practitioners such as psychiatrists, psychologists, counselors, social workers and nurse practitioners. In fact, non-psychiatric (general practice) physicians received more than twice as much funding as psychiatrists or other non-physician professionals to treat addiction problems. "What this suggests is there are significant barriers to specialty providers who provide the majority of care and provide access to the system," said Dilionardi.

Among these barriers are high co-payments and deductibles and limits on insurance reimbursement. Dilionardi said patients and their families typically pay more than 40 percent of the cost of seeing non-physician professionals.