Association for Public Policy Analysis & Management

Childhood is a key developmental period in establishing lifelong health and human capital trajectories. Many substance use disorders (SUDs) emerge during this period, and treatment at this time can have lifecourse benefits. SUDs are common, for instance, 8.2% of the U.S. population meets diagnostic criteria. Substance misuse imposes costs on society including healthcare costs, crime, and lowered labor market productivity. The annual costs of substance misuse in the U.S. are estimated to be $544B.

Effective SUD treatments are available, but unmet need for treatment remains high. In the U.S. only 10% of needs for treatment are met for children ages 12 to 17. Although some individuals refuse or avoid treatment, cost and lack of insurance coverage for SUD treatment are critical barriers to treatment receipt among patients seeking treatment. Expanding insurance coverage, public and private, that includes SUD treatment services can allow individuals who face such barriers to access treatment and, in turn, reduce SUDs and associated harms.

This study is the first to explore the effects of state-level public and private insurance expansions on specialty SUD treatment utilization among children ages 12 to 18. A specialty SUD treatment facility is defined as a hospital, a residential SUD facility, an outpatient SUD treatment facility, or other facility with an SUD treatment program. We leverage expansions in public insurance eligibility and SUD treatment access generated by (i) U.S. states’ decisions to expand coverage to children through Medicaid and the State Children’s Health Insurance Program (SCHIP), and (ii) state laws that compel private insurers to cover SUD treatment at ‘parity’ with general healthcare services over the period 1996 to 2010.

Several findings emerge from our analysis. First, we document that public and private insurance expansions increase the number of SUD admissions among children ages 12 to 18. For example, passage of a state parity law leads to a 26% increase in annual admissions. Second, public expansions allow children to access more intensive forms of treatment than private expansions. Third, public and private expansions increase insurance coverage among children receiving specialty SUD treatment. Fourth, we find that public and private expansions alter the composition of children receiving treatment. Fifth, we find no evidence that public expansions to children crowd out adult patients; instead we document positive spillover effects for adults.

Our findings are immediately policy relevant. Given that the U.S. is considering how to provide affordable healthcare at reasonable cost, understanding how expansions affect service use and coverage within vulnerable populations is important. For example, there have been recent Congressional attempts to roll-back SUD treatment provisions of the ACA, which compelled most insurers to generously cover SUD treatment, and throughout its history SCHIP has been subject to substantial funding uncertainty. These proposals are being considered at a time with the country is in the midst of the largest drug overdose epidemic, chiefly related to opioids, in its history. Our findings may help policymakers considering reshaping both SUD treatment and children’s coverage within the context of a public health crisis related to opioid addiction.