Quantifying How Much the Opioid Epidemic Costs Governments

Governments of all sizes across the U.S. are struggling with the opioid epidemic.

Our more than 1,900 customers build, manage, and share their budgets in OpenGov, which gives us unique insight into how much the opioid epidemic is costing governments.

So in Jan., we identified states that have a high number of drug-overdose deaths (using CDC data) and a large number of cities and counties that use OpenGov to build and manage their budgets, track their performance, and engage citizens. Ohio, Kentucky, Pennsylvania, Maryland, and Massachusetts rose to the top. Then we analyzed public-safety expenses and drug overdose death rates between 2010 and 2016 in 20 cities and counties across those states.

Our goal was to determine how much the opioid epidemic was costing those governments, and provide governments across the U.S. with insights that can help them fight the opioid epidemic.

Full disclosure: this research is challenging because there are hidden costs. For example, one fire chief told me his department receives an annual grant from the state to purchase Narcan. That expense isn’t tracked in the city’s budget because they aren’t technically paying for it. That's why we focused our research on public safety expenses -- there is less room for error because we’re analyzing less expenses. Still, the findings of our research are likely conservative because there are hidden costs that aren't captured in our research.

Strong Correlation Between Expenses and Death Rates

Our first key finding was that every three drug-overdose deaths equals (on average) a 1% or $130,000-$140,000 increase in public safety expenses.

The chart to the left below (Adjusted Deaths by State) shows death rates state by state between 2010 and 2016. This is the data from the CDC.

The chart to the right below (Public Safety Expenses by State) shows public safety expenses by state between 2010 and 2016. On average, public safety expenses rose 19% or $11 million per agency between 2010 and 2016 (2.9% or $1.7 million annually).

As you can see, there is a strong correlation between the two: as deaths start to climb, so do public safety expenses. Governments involved in the research told us this is likely do to a spike in hiring to address the rise in deaths (for example, hiring more emergency responders to respond to calls, and hiring program managers to develop programs to remedy the situation).

The Three-Year Gap

Another key findings was that there’s approximately a three-year gap between when drug-overdose deaths and public safety expenses start to spike, and when public safety expenses start to plateau.

We aren't exactly sure why there is a three-year gap. But one government we shared the research with suggested it takes about three years for the hires governments make and the programs they develop to fight the opioid epidemic to start having an impact.

One thing is for sure though: that gap is costly.

Strong Correlation with Police Expenses

Police expenses (like overtime pay, supplies, and vehicles) are more strongly correlated with drug-overdose death increase rates than EMS expenses (like dispatch, overtime pay, and vehicles). However, EMS expenses rose 1% for every death -- a significantly larger effect size.

On average, police expenses rose 15% or $4.3 million per agency between 2010 and 2016 (2.3% or $660,000 annually), and EMS rose 17% or $800k per agency (2.7% or $130,000 annually).

The chart to the left shows public safety expenses broken out by expense type (like police, fire, and EMS) between 2010 and 2016.

As I mentioned earlier, this research is challenging because there are hidden costs. When we spoke to the governments involved in this research, all of them told us they want to be able to track exactly how much their government spends on fighting the opioid epidemic so they can better gauge which programs are working and should receive more funding.

That's why we're excited to introduce Strategic Initiatives later this year. It's a capability within the OpenGov Cloud that will help governments track expenses and outcomes by initiative rather than by department. So for example, a government could track expenses and outcomes related to their opioid initiative. The goal is to help governments better gauge the ROI of their initiatives.

Governing Writer Liz Farmer published an article yesterday titled "How to Calculate What Opioid Overdoses Cost Government" that features this research. It also highlights some great work being done by Dan Cortez, who is the Community Engagement Specialist for the City of Chelsea, MA. So be sure to check it out!