The Effects of Copayments on Substance Abuse Treatment Expenditures and Treatment Reoccurrence

OBJECTIVE: Employers can influence treatment decisions by adjusting characteristics of the structure of the benefits they offer, such as copayments. The authors estimated the relationship between copayment levels for substance abuse treatment and both the insurers' expenditures for treatment and the reoccurrence of treatment. METHODS: Retrospective data from a Midwestern behavioral health insurer were used to identify persons with a diagnosis of a substance use disorder. The claims data were used to construct episodes of treatment. Using the variation in copayment levels across 211 different employer groups, the authors used multiple regression models to estimate the effect of copayment levels on treatment expenditures and the likelihood of a treatment reoccurrence. RESULTS: Copayment levels had a significant effect on the reoccurrence of substance abuse treatment. Each 10 percent increase in copayment was associated with a 1 percent increase in the probability of reoccurrence. Copayment levels had a significant effect on current-episode treatment expenditures. Each 10 percent increase in copayment was associated with an 8.7 percent decrease in total per-episode expenditures. From the plan's perspective, a $1 increase in copayment for outpatient substance abuse treatment reduced per-episode spending by $110; however, roughly $13 is lost from that saving because of the increased likelihood of treatment reoccurrence. CONCLUSIONS: The longer a person is retained in substance abuse treatment, the greater the likelihood of recovery. Copayments may represent a barrier to retention in treatment. Higher copayments for substance abuse treatment make treatment reoccurrence more likely.