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Integrating Mental Health & Substance Abuse Strategies

The Cost Offset Issue

Unrealized Potential?


Mark Olfson, M.D., M.P.H., Associate Professor of Clinical Psychiatry, New York State Psychiatric Institute and Columbia University, New York, NY.

An issue often raised in discussions about making greater investments in mental health and substance abuse (MH/SA) treatment is the potential that these investments can have the effect of reducing spending on other health care services that would otherwise be incurred (the "cost offset" issue).

In this session, Dr. Mark Olfson of the New York State Psychiatric Institute and Columbia University, the author of a recent Health Affairs article on the subject, discussed the research examining the extent to which these offsets can be realized.

Dr. Olfson presented findings from a number of studies that did show reductions in other health care expenditures after the initiative of specific MH/SA interventions.

In the subsequent discussions, the focus was broadened to include the impact of MH/SA treatment on a broader array of costs, including productivity/work days lost (from an employer perspective), other public program costs, and societal costs associated with substance abuse-related criminal activity.


Olfson M, Schlesinger HJ. Mental Health/Medical Care Cost Offsets. Opportunities for Managed Care 1999 Mar/Apr;18(2):79-90.

Simon G, Katzelnick D. Depression, Use of Medical Services and Cost-Offset Effects. J Psychosom Res 1997;42(4):333-44.

Holder, H. Recent Developments in Alcoholism, Volume 14: The Consequences of Alcoholism, ed. Galanter. New York: Plenum Press; 1998. Chapter 14, The Cost Offsets of Alcoholism Treatment.

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