Cleveland Federal Reserve Bank Report Identifies Economic Challenge of Opioid Crisis

The Cleveland Federal Reserve Bank released a groundbreaking report on the impact of the opioid crisis on the Fourth Federal Reserve District that includes Kentucky, Ohio, Pennsylvania and West Virginia.  The findings of the Cleveland Federal Reserve Bank were troubling to say the least and provide a clear policy mandate for local, state and federal policy makers to address this issue.  Key findings of the Cleveland Federal Reserve Bank included:

  • Drug overdoses are now the leading cause of death for Americans under 50.1 In the Fourth Federal Reserve District states of Kentucky, Ohio, Pennsylvania, and West Virginia, opioid overdose deaths are occurring at rates that exceed the 2016 national average of 13.2 deaths per 100,000 people.
  • Opioid overdose deaths in Kentucky, Ohio, and West Virginia are at least 1.5 times more frequent than the national average.
  • The cost of the opioid crisis is devastating to many more than those who abuse the drugs: an estimate of the total societal costs of prescription opioid abuse was $78.5 billion in 2013 alone, with $20 billion of that sum attributed to lost productivity and production.
  • An estimate from the Council of Economic Advisors, using different assumptions, found the economic cost of the epidemic to be $504 billion in 2015, and, with most estimates in the billions, it is clear there are significant economic impacts on human capital as well as state and local finances.
  • From 1999 to 2016, opioid overdose deaths in the nation increased 528 percent, and unfortunately, during that same period, opioid overdose deaths increased markedly faster in all Fourth District states: In Pennsylvania, opioid overdose deaths increased 736 percent; in Kentucky, Ohio, and West Virginia, opioid overdose deaths increased by more than 1,000 percent.
  • Moreover, in 2016, the rate of opioid-related overdoses in each Fourth District state exceeded the national rate of 13.2 deaths per 100,000 people: In West Virginia, Ohio, Kentucky, and Pennsylvania, the 2016 opioid overdose death rate was 44.9, 32.5, 23.2 and 18.4 deaths per 100,000 people, respectively.
  • The national supply of prescription opioids increased from 72 prescriptions per 100 people in 2006 to 81 prescriptions per 100 people in 2010, and the rate remained relatively stable from 2010 to 2012 before it declined roughly 18 percent to 67 prescriptions per 100 people in 2016– suggesting that the supply of prescription opioids markedly increased before it plateaued and sharply decreased over the past few years.
  • The labor force participation rate decreases 4.6 percentage points for prime-age men and 1.4 percentage points for prime-age women in high prescription rate counties. The researchers also find that the effects are more pronounced for those with a high school diploma or less, and opioid abuse is not influenced by short-term labor market shocks but that poor labor market outcomes are highly correlated with prescription opioid availability.

The Cleveland Federal Reserve Board’s report draw attention to this critical issue but also plays an important role in providing another data set needed to understand who to solve this problem- no policy issue can be addressed unless policymakers first understand the scale, scope and cause of the challenge.