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1412_Michael-Howard

Drug, Alcohol Abuse Costs Alaska’s Economy $1.2 Billion

By | October 29, 2012

A new report finds that alcohol and drug abuse cost Alaska’s economy $1.2 billion in 2010. That number includes direct, immediate costs, such as the $217.7 million spent on criminal justice and protective services and $237.3 million on health care costs. But the report, which was commissioned by the Alaska Mental Health Board and the Advisory Board on Alcoholism and Drug Abuse, says the largest impact comes from lost productivity. What that means is the number of hours in which a person could have been working and producing goods and services that contribute to the economy, but didn’t.

Lost productivity “includes things like premature death due to alcoholism and drug abuse, diminished productivity due to impairments,” explained Kate Burkhart, the executive director of the Advisory Board. “So that’s things like days lost at work, excessive sick leave, the inability to hold a steady job, days lost at work because of jail or time in treatment. So those are actually costs most directly felt by our business community.”

In total, lost productivity cost the state’s economy $673.2 million. That number is based on national and statewide data that estimates a person’s average lifetime earnings based on age and gender and how much they would contribute back to the economy if they were alive and working. It accounts for contributions to the home, too, such as housework and childcare.

The numbers also take into account the impacts that substance abuse in adults can have by way of long-term effects on their children. “Children who go up in families with an addict parent often experience lifetime consequences from this adverse childhood experience,” Burkhart said. “So they do more poorly in school, they may not pursue a post-secondary education, and so their economic opportunities are more limited. It creates this sort of vicious cycle where the ability to participate in the economy can be limited at the beginning of life, not just at adulthood.”

Burkhart said the goal of the report is to provide hard data to communities and to policy makers about the impacts of alcohol and drug abuse. “Substance abuse isn’t something that just affects a certain group of Alaskans. It actually ripples through our entire economy and community structure and has a direct impact on all of us.”

Only about 43 percent of the 17,0000 Alaskans who have serious substance abuse disorders are considered low-income and eligible for state assistance programs. The state spent more than $35 million on substance abuse treatment and recovery programs for low-income Alaskans in 2010, but not for the 57 percent of people who are not low-income. Burkhart said that since the $1.2 billion in estimated economic loss is attributed to everyone with substance abuse problems, you can’t directly compare the amount spent on treatment to the amount lost to the economy.

The report, which was compiled by the McDowell group, provides direction on how to steer new prevention activities, Burkhart said. “There is a need for us to take a stronger look at how to engage the business community in substance abuse prevention and mitigating that negative impact.”

Other costs to the state calculated by the study include $50.5 million spent on traffic crashes, including legal costs, property damage, and loss to household productivity. $13.2 million went toward public assistance and social services. In 2010, the legal sale of alcohol contributed $112.5 million to the economy via taxes and wages. $19.5 million of that went to the Alcohol and Other Drug Abuse Treatment and Prevention Fund.

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