A Steep Cost: Opioid usage, abuse costs Indiana $43.3B
By Danielle Grady
of the Jeffersonville & New Albany News and Tribune
Usually, the Belden Inc. plant in Richmond only hires 15 people a year. But in 2016, the cabling and wire manufacturer needed to find 75.
That might not have been a problem several years ago, when residents in the community seemed more interested in working in manufacturing. Or when opioids hadn’t taken over.
Over the past three years, the percentage of applicants to the Richmond plant who have failed their drug tests has tripled to nine or 10 percent, said Leah Tate, a vice president of human resources for Belden’s western U.S. operations.
That, combined with a tight labor market in Indiana and an aging workforce at Belden, has occasionally forced the company to pay its remaining workers more in overtime and to delay shipments to customers.
It’s made them worry about losing business.
A $43.3 BILLION PROBLEM
Opioid misuse doesn’t just cost businesses, although it does. A lot.
The effect of the epidemic on employers is just one of several included in Ryan Brewer’s study about how much opioid misuse has cost Indiana.
Over the past 15 years, the damage to the state has totaled $43.3 billion, according to the report, which was published in May by the Indiana Business Research Center at Indiana University’s Kelley School of Business and was co-authored by Kayla Freeman, a doctoral candidate at Indiana University Bloomington.
In 2017, the cost was $4.3 billion, adding up to around $11 million per day. And Brewer, an associate professor of finance at Indiana University-Purdue University Columbus, expects that number to grow in 2018.
Brewer’s study is the most comprehensive estimate the state has for the cost of the opioid crisis, he believes. Brewer specializes in these studies, called valuations, where he determines the economic impact of something. Usually the subjects are lighter — sports or intellectual property. Opioid misuse was a different beast.
“This has been a very sobering topic for me,” he said.
The costs Brewer found in his study seeped into various aspects of life, from the public to the private sector.
Drug arrests, court proceedings, incarceration expenses and property losses cost Indiana $136 million a year, according to the study. In the health care world, non-lethal opioid overdoses, hospital stays, HIV contraction and neonatal care for dependent infants cost the state $571 million in 2016, with another $40 million a year going to rehabilitation.
These costs mean worse services and less to go around for other parts of Indiana communities, according to Brewer. For example, an EMS helping an overdose victim could be late responding to another emergency. Similarly, money that could have been going to a road is also needed to upgrade an overburdened jail.
In 2016, more money was also spent on funerals ($7.1 million) and on foster care ($61.2 million) as a result of the opioid crisis.
When it comes to businesses like Belden, though, the price is higher, especially in Indiana where Gov. Eric Holcomb’s office says there are 85,000 unfilled jobs.
The number of workers dying from opioid overdoses and of misusers losing or being unable to find jobs resulted in a $2.6 billion gross state product loss in 2016, meaning businesses in the state made less than they could have.
Some businesses might think twice about moving to Indiana because of this, Brewer said. For the ones that are here, innovation and growth could be strangled.
SMALL SCALE SOLUTION
Brewer didn’t create his study just for it to be published, he said. He wanted it to prompt changes.
In Richmond, the Belden plant has created its own solution to address high costs.
If an employee or an applicant fails a drug test, the company will pay for that person to go through a treatment program.
Once done, they’re placed in a low-risk job that doesn’t involve operating machinery. After passing a series of random drug screenings, they’re moved into a regular position. There, they’re only tested a few more times before becoming a full-fledged employee.
Currently, there are 17 people in Belden’s program, which launched in February. Six are now operating machinery.
The program was originally supposed to cost Belden $5,000 per employee, but that estimate has since risen as the company has run into additional costs, such as providing transportation for participants to attend treatment.
The increase doesn’t phase company VP Tate.
“I would say two things: One, it’s hard to put a cost on healing the community,” she said.
And two, a long-term inability to fill jobs would result in lost customers — and revenue — for Belden.
The website for state Sen. Jim Merritt, R-Indianapolis, describes him as a conservative guy who wants to keep Indiana’s fiscal system in check.
But after several years of looking into substance abuse and its effect on Indiana, he’s also the self-identified leader of the Indiana General Assembly’s push to address the opioid crisis. And he’s frank about what that’s going to cost.
“It’s not going to be cheap for Indiana to kill heroin,” he said.
Merritt is still an advocate for government efficiency, but money will have to be spent “here and there,” he said.
Not only does Brewer want to spur action with his opioid cost study, but he hopes that leaders can use it as a guide for what to spend on solutions at the local and state level. The study also includes a breakdown of costs per county.
Based on Brewer’s calculations, he thinks a $1 billion investment from the state would be appropriate. Indiana already spends that much on workforce development programs.
Merritt and the mayor of Columbus, Jim Lienhoop, both praise Brewer’s study, but they see it more as a way of showing their constituents the importance of addressing the opioid crisis.
“It’s more educational than giving somebody incentive to think about spending more money,” Merritt said. “I think it’s more stunning and probably a bit scary for people when they hear the number.”
That’s not to say money isn’t being spent.
It’s not even close to $1 billion, but the state set aside $10 million “in cash” last year to start addressing the epidemic, Merritt said. He thinks that next year, at least $10 to $15 million could be devoted to it.
A list from the governor’s office provided to CNHI Indiana Newspapers in January also shows that state agencies dedicated $100 million to fighting the epidemic in 2017.
The state is getting help from other sources, too. Two pieces of federal legislation, the 21st Century Cures act and the most recent omnibus spending bill, guaranteed Indiana $57 million.
Merritt said he would be open to the idea of the state spending $20 to $50 million of its own money next year, as well, if someone said that Indiana had to.
Opioid related bills that passed in the Legislature last session included funding nine more drug treatment centers in Indiana and three pilot programs that Merritt hopes will eventually be replicated across the state, including a sober living facility in Allen County and two programs for pregnant mothers to help keep their babies from being born dependent on drugs.
But not everything is happening on the state level.
In Bartholomew County, Lienhoop sees the economic effects of the opioid crisis in action: Columbus’ businesses struggle to find workers and residents face property damage.
Last year, he helped start an opioid response initiative called the Alliance for Substance Abuse Progress in Bartholomew County, or ASAP. So far, the group has launched over 40 programs, ranging from working with physicians on prescribing practices to expanding capacity for medication-assisted treatment, said Jeff Jones, ASAP’s leader.
The funding sources for the programs are just as varied: tax revenues, grants and even a $1 million fund set up by a local family.
Brewer’s study, Lienhoop said, will help him make a business-based case for solving the crisis to residents.
“Now, whether that directly will result in sort of justification for the funding remains to be seen,” he said.
At the end of Brewer’s study, he’s included a set of recommendations for actions to be taken against the opioid crisis.
That’s not normal for Brewer’s work, but he thought it was important.
He came up with the recommendations by attending think tanks, as well as meetings with mayors and health facilities across the state. They include updating requirements for medical students regarding pharmaceuticals and expanding drug education in schools.
The first suggestion, though, is for community leaders to avoid stigmatizing their citizens who are affected by the crisis.
“So many people are affected by this around our state that that’s not just an inhumane thing to do, it’s an economically costly thing to do,” he said.