Patients who received treatment through a managed behavioral-healthcare program saw their Medicaid costs fall from an average of $5,402 per year to an average of $3,627 per year, said study author Lawrence Walter of Kaiser's Division of Research. The study also found that Medicaid patients with addiction problems had medical costs that were 60 percent higher than non-Medicaid patients prior to entering outpatient treatment.

"Previous studies have shown similar reductions in healthcare costs as a result of providing substance-abuse treatment, but this study also showed that the reductions in medical costs are across all areas, including hospital stays, visits to the emergency room, and medical clinics," said Walter. "The reductions in cost are not because of a shift in costs from one area to another."

Researchers compared a group of 197 Medicaid patients with a group of non-Medicaid patients. Each group was tracked for a year before and three years after getting addiction treatment at Kaiser's Vallejo Chemical Dependency Recovery Program in Oakland, Calif.

The study was funded by the of the Robert Wood Johnson Foundation's Substance Abuse Policy Research Program. It appears in the July 2005 issue of the Journal of Behavioral Health Services and Research.

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