Pelago CEO & Co-Founder. Medical doctor by training, technology enthusiast at heart. Innovator of healthcare, technology and design.
Business leaders must confront a new reality: Substance use among employees is their problem. Historically, alcohol and substance use has been viewed as a personal issue rather than one that should be addressed in the workplace. But substance use is not only affecting the American workforce; it’s also exacting a financial toll on businesses.
My company recently conducted the Pelago 2023 Annual Substance Use Management Survey and found that 46% of American workers—about 72 million individuals—have experienced personal or family problems involving substance or alcohol use. Moreover, new research from the Centers for Disease Control and Prevention (CDC) suggests that the annual cost of substance use disorders (SUDs) is $15,640 per affected employee enrolled in employer-sponsored insurance—a cost that adds up to more than $35 billion annually. Those figures represent the minimum direct cost to employers and insurers, with the CDC data pointing to significant under-diagnosis.
These cost drivers stem from both treated and untreated SUDs. For treated SUDs, inpatient and outpatient facilities are usually out of network and of poor quality. Treatment costs (annually) range from a minimum of about $6,500 per the CDC study up to approximately $12,000 to $60,000 for 60- to 90-day inpatient rehabilitation programs. And fewer than 15% of addiction treatment providers offer Medication-Assisted Treatment, the standard of care in addiction treatment, which combines medications with behavioral therapy and counseling.
Compounding this problem is that only about 10% of people get access to the care they need, driving up healthcare costs for untreated SUDs. Employers spend an average of $8,817 annually in healthcare, turnover and replacement costs on each employee with an untreated SUD. This is directly related to the costly health consequences and complications of untreated SUDs, including pancreatitis, liver disease, cardiovascular issues and hypertension as well as obesity, depression and anxiety.
There are also alcohol- and substance-associated liabilities that are less quantifiable but no less significant. According to Pelago’s data, 1 in 6 U.S. workers report missing work because of a personal substance or alcohol use problem—this absenteeism can lead to reduced performance and poor employee retention. And while the survey reveals that nearly 2 in 3 workers (62%) believe their employer should offer support for substance or alcohol use management, there is a significant disconnect between employee needs and the workplace benefits offered: only 17% report having this support from their employer. In a troubled economy, leaders must understand that addressing employees’ need for substance use support can be cost-reductive.
But challenges remain. Access to care is a challenge for many U.S. workers. A survey by the Kaiser Family Foundation suggests that approximately 130 million Americans live in areas with a shortage of mental health professionals. Moreover, even those who do find treatment remain at serious risk: 90% of those with alcohol use disorders will relapse in the four-year period following treatment, according to the National Institute on Alcohol Abuse and Alcoholism. A number of studies suggest that relapse rates for people with an opioid addiction are even higher.
Employers can play a vital role in solving the substance use crisis, making a positive impact on the lives of their employees and managing the associated costs. Here are a few ways employers can help:
Combat stigma that acts as a barrier to care.
The stigma surrounding substance use and its treatment may be keeping your employees from getting the help they need. We found that 39% of workers believe, incorrectly, that rehab is the only way to treat a substance use disorder, and fewer than half feel they can ask their employer for help with personal issues. Employers are uniquely positioned to educate their workforce and mainstream the discussion and acceptance of substance use disorders by talking about it the way we talk about most any other health condition.
Expand benefits.
We must build context around the scale of the substance use problem, understanding that its impact extends beyond employees to their families. Our survey indicated that 37% of workers have a family member struggling with substance use, so organizations should look at expanding benefits programs beyond traditional inpatient and outpatient treatment programs to include more accessible substance use management solutions, like digital and telehealth-based solutions.
Account for the hidden costs.
The previously mentioned CDC study found that SUD costs represent the minimum direct cost employers and health insurers face, with hidden and related costs likely more than 10 times that amount, impacting mental and physical health. That’s because not all SUDs are diagnosed, and costs related to absenteeism, presenteeism, job retention and safety are not factored in. Companies looking for the hidden costs of SUDs will often find them among other health conditions such as diabetes, cancer, depression and other medical claims. These costs can then be identified and addressed with cost-reductive, substance-use benefits.
Moreover, the CDC suggests that employers explore cost-effective treatments for substance use by developing workplace-supported prevention, treatment and recovery programs. This involves building a business case for value-based substance use care that improves care quality and outcomes for members and their families. This process starts with a detailed claims and cost analysis to identify the full impacts of SUDs and a baseline for determining SUD benefits ROI. This way, organizations can identify and implement the best programs for SUD prevention and treatment while lowering associated medical costs.
In short, there’s a lot that employers can do to minimize the negative effect substance use has on the American workforce. Taking such steps is not simply the right thing to do, but also the smart thing to do for employers focused on ROI and the bottom line.
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