Economic downturns and substance abuse treatment: Evidence from admissions data

This study investigates how admission rates to specialty substance abuse treatment facilities vary across the business cycle using administrative data from the Treatment Episodes Data Set between 1992 and 2010. We find that admission rates decrease in economic downturns. Our preferred specification, which controls for a rich set of demand and supply side factors, suggests that a 1 percentage point increase in the lagged state unemployment rate leads to a 2.5% reduction in total admissions, and a 3.0% and 2.3% decrease in alcohol- and illicit drug-related admissions, respectively. We conduct supplementary analyses to explore potential mechanisms for the net effects we estimate in our reduced form models. Our findings offer new evidence on the relationship between economic downturns and behavioral healthcare utilization.