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September 2007

Private Insurance Payments Continue to Lag

...Still Won’t Pay

The latest data indicate that the precipitous slide in the rate at which the commercial payors shoulder the burden of treating the nation’s addicts has been even greater than previously estimated. The commercial payor contribution to addiction industry revenues was just 10 percent in 2003, little changed from 2001, which was previously estimated at 13 percent. In 1986, the commercial payor contribution was three times higher than it is now, at that time accounting for nearly 30 percent of all addiction treatment industry revenues. Of course, private pay, as everyone knows, has stepped up to help fill the gap Private Pay Revenueson the private side of the industry, in 2003 accounting for $1.7 billion in industry revenues, up by a little more than 30 percent over the prior five years. As a percentage of revenues in the overall addiction industry, private pay has declined due to the fast rise in public funding contributions. In the period 1998 thru 2003, private pay grew at three times the rate of commercial insurance payments, which have finally begun to rise in absolute dollar terms after plummeting between 1989 and 1998, with only a very slight rise in absolute dollar terms 1998 thru 2001.

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