Addressing the Costs of Indiana’s Pre-Existing Health Crisis: Opioid Abuse
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As Indiana lawmakers negotiate an end to the two-year COVID public health emergency, we have ground to regain in the two-decade fight against opioid abuse – a pre-existing condition that’s been resurgent in the shadow of the pandemic. After falling in 2018 and 2019, Indiana overdose deaths soared 58% through 2021, adding to the staggering human and financial costs associated with opioids.
More than 15,000 Hoosiers have died from opioid-related overdoses since 2003; hospitalization and treatment costs routinely exceeded a half-billion dollars a year in the mid-to-late 2010s. An Indiana University study estimated the state’s annual economic damages at $4 billion in 2017 – lost wages, productivity and output, along with excess healthcare and incarceration expenses.
While the General Assembly spars over vaccine mandates and winding down other pandemic policies, two bills with bipartisan support target the fiscal impact of Indiana’s other health crisis.
There have been legal efforts to hold opioid manufacturers and distributors accountable for the harm they’ve caused, including a $26 billion national settlement with Cardinal Health, McKesson, AmerisourceBergen and Johnson & Johnson. HB1193 revises the formula dictating how Indiana’s share of that settlement is divided among state agencies and local governments.
Indiana’s full participation in the settlement is worth about $507 million, a fraction of the total impact on the state. As part of last year’s budget bill, the legislature directed 15% of that total to county and municipal governments (on a per capita basis), 15% to the general fund and 70% to regional treatment programs overseen by the Family & Social Services Administration.
As a condition of accepting their funds, local units would also waive other legal claims and accept limits on their pursuit of future opioid litigation without state participation. This set up a tough choice for localities pursuing their own opioid-related lawsuits and hoping for more relief from budget pressures created by emergency care, public safety and other effects of substance abuse.
Over seventy localities have opted out of the state’s terms, seeing greater potential in continuing individual litigation against the opioid industry. But because the national settlement is allocated among states based in part on the populations of participating jurisdictions, these decisions threaten to reduce the statewide share by $230 million or more.
It’s a significant hit for potential treatment programs, even stretched over several years. But the motivations of local officials are understandable: 15% of the maximum settlement (about $76 million) doesn’t recoup even one year of drug-related local justice and corrections costs.
Dividing local share on a per capita basis also shortchanged many hard-hit rural counties. For context, suburban Boone County would receive nearly four times the funding as Scott County, one of the epicenters of opioid misuse in Indiana.
HB1193 proposes a compromise to lure local governments back into the state settlement. It distributes half the total settlement to localities: 15% for general purposes, 35% for community-based treatment programs that would allow local government to work together to provide programs and services. 35% would be allocated to statewide opioid abatement efforts and the remaining 15% to the state general fund. It also changes the allocation formula to reflect the impact of opioid disorders and extends deadlines for local officials to rejoin the revised agreement.
No matter how Indiana’s share of the national settlement is divided, it’s barely a fraction of the cumulative impact on the state. HB1193 still relies on all parties embracing the importance of forward-looking prevention and treatment over the hope of historic cost recovery.
Another bill does address one of the concrete costs of the opioid crisis to local governments – the skyrocketing population of county jails driven by Level 6 drug offenses. Indiana passed new rules classifying certain drug infractions as Level 6 felonies and reassigning offenders from state prisons to local detention in 2015.
These changes took effect just as opioid disorders hit a pre-COVID peak, and statewide county jail populations spiked more than 30% from 2016 through 2018. Today, two-thirds of these jails face chronic overcrowding and local taxpayers spend 50% more per capita on them than the 50-state average, according to a recent analysis by the Vera Institute of Justice.
HB1004 aims to reverse the 2015 rules and relieve this fiscal pressure on localities. It provides more discretion to remand Level 6 offenders to state prisons, where there are also more treatment programs and re-entry services available for those in need. With a budget surplus growing towards $5 billion, the state is certainly better-positioned to house and help these individuals than county governments laboring under Indiana’s property tax caps (with public safety already consuming more than half the average county budget).
Both HB1004 and HB1193 have passed the Senate and await renegotiation with the House and a final nod from Governor Holcomb. The prospects for both bills seem solid.
We’re twenty-four months into the COVID pandemic. The opioid epidemic has destroyed lives and affected communities across Indiana for twenty years, imposing a massive burden on state and local government alongside the tragic impacts on individuals and families. HB1196 and HB1004 are common-sense moves to make better use of our available resources against opioid abuse and its consequences, and the General Assembly deserves credit for pushing them forward.