Tax on opioids to fund treatment programs could hike workers comp costs

A proposed tax on opioid painkillers that would be used to fund substance abuse treatment programs could significantly increase workers compensation costs.

Introduced last month by seven U.S. senators, the Budgeting for Opioid Addiction Treatment Act, or LifeBOAT, recommends imposing an excise tax of 1 cent per milligram on active opioid ingredients in prescription painkillers.

Sen. Joe Manchin, D-W.Va., said during a May 24 news conference that the proposed legislation is expected to generate $1.5 billion to $2.0 billion a year, which would be used exclusively for substance abuse treatment efforts. According to the bill, such efforts include establishing addiction treatment facilities, sober living facilities, and increasing reimbursement for mental health providers in medically underserved communities.

Bill supporters, including Sen. Manchin, are comparing the proposed opioid tax to cigarette taxes, which they say have successfully decreased the number of cigarette sales and, ultimately, the number of smokers.

“This analogy is a poor one,” Michael Gavin, Duluth, Georgia-based president of medical cost management company Prium, said Monday in a blog post.

The tax could cause patients paying for their own treatment “to seek alternative, nonopioid medications from their doctors” but, in workers comp, it “will likely be paid by an entity (the insurer) that is not a party to the originating transaction,” such as the physician who writes the prescription or the injured worker, Mr. Gavin said.

Without a financial incentive for physicians to prescribe fewer opioids, the tax could have little effect on prescribing behavior.

Meanwhile, many people have expressed concerns via social media about the proposed “sin tax.”

“If you don't think this is an illness that needs treatment, you're going to disagree with us,” Sen. Manchin said during the May 24 news conference.

While payers of workers comp claims are not addressed in the proposed legislation, the bill states that cancer and hospice patients would be eligible for a rebate, and patients using narcotics exclusively for the treatment of opioid addiction would be exempt.

“If the bill passes,” Mr. Gavin said, “workers compensation payers will bear the brunt of this new tax burden.”