Opioid misuse, labor market outcomes, and means-tested public expenditures: a conceptual framework

As the opioid epidemic has drawn increased attention, many researchers are attempting to estimate the financial burden of opioid misuse. These estimates have become particularly relevant as state and local governments have begun to take legal action against pharmaceutical manufacturers, distributors, and others who are identified as being potentially responsible for the worsening epidemic. An important category of costs includes those related to the effect of opioid misuse on labor market outcomes and productivity. Most published estimates of opioid-attributable productivity losses estimate the financial burden borne by society, failing to distinguish between costs internalized by individuals and those that spill over to third parties, such as state and federal governments. This article provides an overview and a conceptual framework for 2 types of labor market-related costs borne by state and federal governments that typically have not been incorporated into existing estimates, which may represent important categories of expenditures. Because detailed estimates of lost tax revenue are available elsewhere, this article focuses largely on whether, and how, to incorporate opioid-related expenses incurred by means-tested government programs into more general estimates of the economic harm created by the opioid epidemic.