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reform, since they promise more immediate savings. While substance abuse will never be 

 eliminated entirely, some consequences are so immediate that even gradual reductions in use will 

 pnxiuce savings in the short term. 



Medicaid and Substance Abuse 



Medicaid was chosen as the initial area for analysis for a variety of reasons. First, the 

 skyrocketing costs of the Medicaid program top the concerns of nearly every governor in our 

 nation. The program does not provide adequate health care to poor people, yet its costs are 

 breaking state budgets. The current crisis prompted the Henry J. Kaiser Family Foundation to 

 create a commission to examine Medicaid and investigate ways to improve the program while 

 containing costs. 



Second, the Medicaid program covers a large number of pregnant women and children. 

 Substance abuse has a significant impact not only on pregnancy and birth outcomes but also on 

 life-long health care costs for infants bom to substance-abusing mothers. Lastly, the growing 

 problem and mounting costs of AIDS is disproportionately borne by the Medicaid program since 

 it is often the payer of last resort for a population disenfranchised from the private insurance 

 system. 



In any assessment of where best to target limited resources, the impact of substance abuse on 

 Medicaid expenditures must be considered. This study demonstrates that substance abuse takes 

 a heavy toll on already limited Federal and state tax doUars, yet there is no explicit 



