Legislature(2017 - 2018)BUTROVICH 205

03/29/2017 01:30 PM HEALTH & SOCIAL SERVICES

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01:30:54 PM Start
01:31:21 PM Presentation: the Economic Costs of Alcohol and Drug Abuse in Alaska
02:49:56 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Presentation: The Economic Costs of Alcohol and
+ Other Drug Abuse in Alaska TELECONFERENCED
By The McDowell Group
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
      SENATE HEALTH AND SOCIAL SERVICES STANDING COMMITTEE                                                                    
                         March 29, 2017                                                                                         
                           1:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator David Wilson, Chair                                                                                                     
Senator Cathy Giessel                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Tom Begich                                                                                                              
MEMBERS ABSENT                                                                                                                
Senator Natasha von Imhof, Vice Chair                                                                                           
COMMITTEE CALENDAR                                                                                                            
PRESENTATION: THE ECONOMIC COSTS OF ALCOHOL AND DRUG ABUSE IN                                                                   
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
JEFF JESSEE, Legislative Liaison                                                                                                
Alaska Mental Health Trust Authority                                                                                            
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Commented on the Economics Costs of Alcohol                                                               
and Drug Abuse in Alaska report that was commissioned by the                                                                    
Alaska Mental Health Trust Authority.                                                                                           
DONNA LOGAN, Vice President-Anchorage Operations                                                                                
McDowell Group, Anchorage, Alaska                                                                                               
POSITION STATEMENT: Presented the Economic Costs of Alcohol                                                                   
Abuse in Alaska report.                                                                                                         
ACTION NARRATIVE                                                                                                              
1:30:54 PM                                                                                                                    
CHAIR DAVID WILSON  called the Senate Health  and Social Services                                                             
Standing Committee meeting  to order at 1:30 p.m.  Present at the                                                               
call to order were Senators  Begich, Giessel, Micciche, and Chair                                                               
^PRESENTATION: The  Economic Costs of  Alcohol and Drug  Abuse in                                                               
 PRESENTATION: The Economic Costs of Alcohol and Drug Abuse in                                                              
1:31:21 PM                                                                                                                    
CHAIR   WILSON  announced   that  the   committee  will   hear  a                                                               
presentation  on the  economic  cost of  alcohol  and other  drug                                                               
abuse in Alaska.                                                                                                                
1:32:11 PM                                                                                                                    
JEFF  JESSEE, Legislative  Liaison,  Alaska  Mental Health  Trust                                                               
Authority, Anchorage,  Alaska, provided an  introductory overview                                                               
of the McDowell Group's report as follows:                                                                                      
     The Alaska  Mental Health Trust has  been interested in                                                                    
     the economic costs of alcohol  and drug abuse in Alaska                                                                    
     for  a  number  of  years. The  McDowell  Group  is  an                                                                    
     independent   organization   dedicated   to   objective                                                                    
     research in  a number of  areas. I want to  stress that                                                                    
     we  did   not  direct   them  to   come  up   with  any                                                                    
     predetermined answer;  in fact, you will  see some data                                                                    
     in here that  was a surprise even to the  trust, but we                                                                    
     feel  this  is  important  work because  it  starts  to                                                                    
     quantify  what  the cost  to  all  of Alaskans  are  to                                                                    
     alcohol abuse and drug abuse.                                                                                              
     The  numbers are  quite staggering.  The economic  cost                                                                    
     alcohol abuse alone  is $1.8 billion, the  cost of drug                                                                    
     abuse is  $1.2 billion;  together that's $3  billion in                                                                    
     costs.  Now that  includes  lost productivity,  traffic                                                                    
     accidents, health-care  costs, criminal  justice costs,                                                                    
     child-protection  costs,  the  impacts of  alcohol  and                                                                    
     drug abuse are  felt across the entire  economy both at                                                                    
     the private sector and in the public sector as well.                                                                       
     We  think that  as you  are making  difficult decisions                                                                    
     around the budget looking at  how to reduce the cost to                                                                    
     the  state,  different  parts of  government,  that  at                                                                    
     least arguably are trying to  do something positive for                                                                    
     the  state, we  need to  start really  looking at  this                                                                    
     area of  cost and  how do  we drive  down this  cost of                                                                    
     alcohol  and drug  abuse. To  put this  in perspective,                                                                    
     the  entire alcohol  tax produces  just  less than  $40                                                                    
     million  a year,  that's a  $40 million  tax to  try to                                                                    
     deal with a $1.8 billion  problem. The tax has not been                                                                    
     increased  since 2002,  it was  not inflation  proofed,                                                                    
     and those  funds buy considerably fewer  services today                                                                    
     than they did 15 years ago.                                                                                                
1:34:31 PM                                                                                                                    
DONNA  LOGAN,   Vice  President-Anchorage   Operations,  McDowell                                                               
Group,  Anchorage, Alaska,  commenced with  the McDowell  Group's                                                               
report and  addressed the  purpose of  the report.  She explained                                                               
that the  report is the  subject matter's fourth  generation with                                                               
improved information  that more accurately reflects  the economic                                                               
costs than what was done previously.                                                                                            
She set forth that there  are costs associated with alcohol abuse                                                               
and the cost  can be tangible and intangible.  She explained that                                                               
tangible costs examples  are medical costs and  loss of property.                                                               
She  added that  intangible cost  would include  quality of  life                                                               
issues  and pain  and suffering.  She pointed  out that  the $1.8                                                               
billion  that Mr.  Jesse noted  does not  include the  intangible                                                               
costs associated with alcohol abuse.                                                                                            
She referenced  the many adverse  health and  social consequences                                                               
from alcohol abuse as follows:                                                                                                  
   · Increased health care costs - injuries and chronic health                                                                  
   · Property damage - fire and motor vehicle collisions.                                                                       
   · Increased crime and criminal justice system costs.                                                                         
   · Lost or reduced worker productivity - absenteeism,                                                                         
     diminished output while at work, and reduced earnings                                                                      
   · Increased public assistance and social services - social                                                                   
     welfare support.                                                                                                           
   · Increased public sector costs - alcohol-attributable                                                                       
1:36:55 PM                                                                                                                    
She addressed page 3 in  her presentation, "Why Understanding the                                                               
Economic Costs Matters" and referenced the following:                                                                           
   · Assessment of the extent of the problem.                                                                                   
   · Valuable insights into factors that may influence alcohol                                                                  
     abuse and its adverse effects.                                                                                             
   · Inform   planning    and   implementation    of   prevention                                                               
   · Assessment of the cost of prevention strategies relative to                                                                
     the cost of alcohol-attributable harms.                                                                                    
   · Builds awareness of the public/private sector costs.                                                                       
MS. LOGAN  remarked that  everyone is aware  of the  public costs                                                               
associated with alcohol abuse, but  emphasized that alcohol abuse                                                               
is quite a cost to the state's employers as well.                                                                               
1:38:04 PM                                                                                                                    
SENATOR GIESSEL addressed fetal  alcohol syndrome (FAS) and noted                                                               
that legislation was recently put  into effect that put pregnancy                                                               
testing into  restrooms of alcohol  establishments. She  asked if                                                               
the  impact from  the restroom  testing program  was part  of the                                                               
McDowell Group's analysis.                                                                                                      
MS.  LOGAN replied  no. She  noted  that the  McDowell Group  did                                                               
capture some  of the  impacts related  to fetal  alcohol spectrum                                                               
disorder (FASD) that will be addressed in her presentation.                                                                     
MR. JESSE  added that  research evaluation  done for  the program                                                               
Senator  Giessel  referenced  was   done  by  the  Institute  for                                                               
Circumpolar  Health Research.  He pointed  out that  results from                                                               
the  research  are available  and  opined  that the  program  was                                                               
incredibly successful.                                                                                                          
SENATOR GIESSEL  commented that the  report Mr.  Jesse referenced                                                               
would  be  beneficial for  committee  members  to hear  what  the                                                               
results are  because the pregnancy testing  program was initiated                                                               
by the Senate.                                                                                                                  
MS.  LOGAN referenced  the report's  methodology  with regard  to                                                               
alcohol consumption  and noted that  the National Survey  of Drug                                                               
Use and  Health (NSDUH)  was used for  the report.  She specified                                                               
that  the  survey  captures  ages  12-plus  without  mixing  data                                                               
sources which  makes modeling easier.  She added that NSDUH  is a                                                               
rigorous  survey  with  close to  1,000  households  surveyed  in                                                               
Alaska  on an  annual basis.  She  noted that  surveyors go  into                                                               
household,  selection is  random,  and a  good  cross section  is                                                               
surveyed  throughout  the state.  She  added  that surveyors  are                                                               
trained  to  do  some  clinical   diagnosis  work  which  enables                                                               
reporting on alcohol dependence and alcohol abuse.                                                                              
1:41:58 PM                                                                                                                    
She  referenced the  methodology used  for modeling  productivity                                                               
losses as follows:                                                                                                              
   · Mortality Causes and Potential Years of Life Lost (PYLL):                                                                  
     Health Analytics and Vital Reports and Alcohol-Attributable                                                                
     Fractions (AAF).                                                                                                           
   · Incarceration: Department of Corrections (DOC) data and                                                                    
     Alcohol attributable rates from the Lewin Group's 2010                                                                     
     report, "Economic Cost of Excessive Alcohol Consumption in                                                                 
     the United States, 2006."                                                                                                  
   · Diminished Productive Causes: Lewin report adjusted for                                                                    
     Alaska's demographics (Alaska Department of Labor and                                                                      
     Workforce Development, American Community Survey (ACS), and                                                                
     the National Survey on Drug Use and Health (NSDUH)).                                                                       
   · Hospitalization and Treatment Causes: Alaska Hospital                                                                      
     Facilities Data Reporting Program (HFRP), Alaska Department                                                                
     of Labor and Workforce Development, and AAF.                                                                               
1:43:21 PM                                                                                                                    
SENATOR MICCICHE  stated that Alaska  is different  and commended                                                               
Ms. Logan for the use of  data from Alaska. He asked how national                                                               
data  is adjusted  for a  state with  a "challenged  demographic"                                                               
that has  higher health-care costs  per capita and  more domestic                                                               
violence, sexual assault, alcoholism, and suicide rates.                                                                        
MS.  LOGAN  admitted  that  the McDowell  Group  was  reliant  on                                                               
national  models with  the knowledge  that the  Alaska experience                                                               
was not captured,  but Alaska inputs did go into  the models that                                                               
helped make allowances  for some of the differences  such as wage                                                               
rates and population.  She agreed that an Alaskan  model would be                                                               
better than the national models.                                                                                                
MR. JESSE remarked  that the feeling was the  reported costs were                                                               
"under  estimated" and  that part  of  the thinking  was for  the                                                               
report to  be a conservative  estimate with "just the  facts" for                                                               
an accurate picture without exaggeration.                                                                                       
SENATOR MICCICHE  noted that his  next question was  addressed by                                                               
Mr.  Jesse  regarding "what  side  of  the horizon"  the  state's                                                               
numbers fell in the report, conservative or liberal.                                                                            
MS.  LOGAN  stated   that  she  would  point  out   some  of  the                                                               
limitations  in the  report and  why the  numbers are  considered                                                               
1:45:53 PM                                                                                                                    
MS. LOGAN continued to address the report's methodology and                                                                     
detailed as follows:                                                                                                            
   · Criminal Justice and Protective Services:                                                                                  
        ƒOffenses  and  Arrests:  Department  of  Public  Safety                                                               
          (DPS),  FBI,  and  Lewin Group's  alcohol  attributable                                                               
        ƒCriminal  Justice  System:  HIH report,  "The  Cost  of                                                               
          Crime  to  Society:  New Crime-Specific  Estimates  for                                                               
          Policy  and  Program  Evaluation,"  and  Lewin  Group's                                                               
        ƒCriminal Victimization:  Bureau of  Justice Statistics,                                                               
          Alaska  Department of  Labor and  Workforce Development                                                               
          (DOLWD) and  the American  Community Survey  (ACS), and                                                               
          Lewin Group's alcohol attributable rates.                                                                             
        ƒProtective  Systems: "National  Survey of  Children and                                                               
          Adolescent Well-Being," National  Data Archive on Child                                                               
          Abuse  and Neglect,  Office of  Special Counsel  (OSC),                                                               
          National Institute on Drug Abuse (NIDA).                                                                              
   · Health Care:                                                                                                               
        ƒInpatient,  Emergency Department  (ED), and  Outpatient                                                               
          Costs: HFDR, NIDA, and Lewin Group's AAF.                                                                             
        ƒTreatment  for Alcohol  Abuse:  Division of  Behavioral                                                               
          Health (DBH) and Medicaid.                                                                                            
        ƒSkilled  Nursing and  Long Term  Care: NIDA  and Alaska                                                               
          Department of Senior and Disabilities Services (DSDS).                                                                
        ƒFAS/FASD-BVS and  Health Analytics, Vital  Reports, and                                                               
          Canadian  Study, "The  Burden of  Prenatal Exposure  to                                                               
          Alcohol: Revised Measurement of Costs.                                                                                
1:47:39 PM                                                                                                                    
MS. LOGAN continued to address the report's methodology and                                                                     
detailed as follows:                                                                                                            
   · Public Assistance and Social Services:                                                                                     
        ƒFederal Government  Costs: NIDA  and Old  Age, Survivor                                                               
          and   Disability    Insurance   (OASDI),   Supplemental                                                               
          Security Income  (SSI), Temporary Assistance  for Needy                                                               
          Families (TANF), and  Supplemental Nutrition Assistance                                                               
          Program (SNAP).                                                                                                       
        ƒState  Government Costs:  NIDA and  Division of  Public                                                               
          Assistance (DPA).                                                                                                     
   · Underage Drinking:                                                                                                         
        ƒPacific Institute of Research and Evaluation (PIRE)                                                                   
          2010 study on Underage Drinking in Alaska adjusted to                                                                 
          2016 dollars.                                                                                                         
   · Jobs/Income in Alaska's Alcoholic Beverage Manufacturing                                                                   
     and Sales:                                                                                                                 
        ƒDepartment of Labor and Workforce Development.                                                                        
   · Alcoholic Beverage Tax:                                                                                                    
        ƒDepartment of Revenue.                                                                                                
  · Implications for Alcohol Abuse Impacts on State GF Budget:                                                                  
        ƒPrevention Grants (DHB), Justice System (Court                                                                        
1:49:23 PM                                                                                                                    
MS.  LOGAN referenced  a graph  on "Alcohol  Consumption Patterns                                                               
(2013-2014). She  noted that the  national survey was  used where                                                               
1,000  Alaska  households  were   surveyed.  She  referenced  the                                                               
consumption data patterns as follows:                                                                                           
   · Current Alcohol Use (Ages 12+ within the last 30 days):                                                                    
        ƒAlaska: 54 percent;                                                                                                   
        ƒU.S.: 52.4 percent.                                                                                                   
   · Binge Alcohol Use (Male: 5 or more drinks in one sitting                                                                   
     within the last 30 days):                                                                                                  
        ƒAlaska: 22.9 percent;                                                                                                 
        ƒU.S.: 22.9 percent.                                                                                                   
   · Alcohol Dependence or Abuse in Past Year (Having a drink                                                                   
     within  the  last  year and  meet  at  least  three-clinical                                                               
     criteria  that  suggests  dependency,  meeting  one-clinical                                                               
     criteria suggests  abuse. Criteria may  include: withdrawal,                                                               
     persistent  desire,  loss  of  activities,  and  reoccurring                                                               
     psychological problems):                                                                                                   
        ƒAlaska: 6.7 percent;                                                                                                  
        ƒU.S.: 6.5 percent.                                                                                                    
   · Alcohol Dependence in Past Year:                                                                                           
        ƒAlaska: 3.2 percent;                                                                                                  
        ƒU.S.: 3.0 percent.                                                                                                    
She pointed out that Alaska is not statistically different than                                                                 
what is found elsewhere in the country, something that may be                                                                   
surprising to people.                                                                                                           
1:52:28 PM                                                                                                                    
She addressed "Alaskan Alcohol Consumption (2013)" and detailed                                                                 
as follows:                                                                                                                     
   · 313,000 drank alcohol within past 30 days.                                                                                 
   · 39,000 experienced alcohol dependence or abuse in past                                                                     
   · 19,000 experienced alcohol dependency in past year.                                                                        
   · Nationally, Alaska ranked:                                                                                                 
        ƒ31st for binge drinking,                                                                                              
        ƒ26th for current alcohol use,                                                                                         
        ƒ21st for alcohol dependence use,                                                                                      
        ƒ20th for alcohol dependence or abuse.                                                                                 
MS. LOGAN reviewed estimated data for "Current Alcohol Use (age                                                                 
12+), by Age Group" as follows:                                                                                                 
   · Ages 12-17:                                                                                                                
        ƒAlaska: 9.2 percent;                                                                                                  
        ƒU.S.: 11.6 percent.                                                                                                   
   · Ages 12-20:                                                                                                                
        ƒAlaska: 21.5 percent;                                                                                                 
        ƒU.S.: 22.8 percent.                                                                                                   
   · Ages 18-25:                                                                                                                
        ƒAlaska: 59.7 percent;                                                                                                 
        ƒU.S.: 59.6 percent.                                                                                                   
   · Ages 12 or Older:                                                                                                          
        ƒAlaska: 54.0 percent;                                                                                                 
        ƒU.S.: 52.4 percent.                                                                                                   
   · Ages 18 or Older:                                                                                                          
        ƒAlaska: 59.1 percent;                                                                                                 
        ƒU.S.: 56.7 percent.                                                                                                   
   · Ages 26 or Older:                                                                                                          
        ƒAlaska: 59.1 percent;                                                                                                 
        ƒU.S.: 56.2 percent.                                                                                                   
1:54:48 PM                                                                                                                    
She reviewed "Per Capita (age 14+) Consumption (2013)" as                                                                       
   · 1.6 million gallons of ethanol consumed in Alaska,                                                                         
     including consumption by residents and non-resident                                                                        
   · Alaska per capita consumption (2.73 gallons):                                                                              
        ƒBeer: 1.06 gallons of ethanol;                                                                                        
        ƒWine: 0.52 gallons;                                                                                                   
        ƒLiquor: 1.16 gallons.                                                                                                 
   · Average U.S. ethanol consumption: 2.34 gallons per capita                                                                  
   · Alaska consumption increased slightly in 2014, to 2.79                                                                     
     gallons per capita.                                                                                                        
1:56:07 PM                                                                                                                    
SENATOR MICCICHE asked for clarification  on the "Current Alcohol                                                               
Use (age 12+),  by Age Group" and pointed out  that Alaska showed                                                               
both   below   and   above  average   percentages   versus   U.S.                                                               
MS. LOGAN explained that statistically  the percentages are not a                                                               
statistical  difference. She  noted that  over time,  the state's                                                               
underage drinking is trending down.                                                                                             
1:58:02 PM                                                                                                                    
She revealed  that looking at  consumption trends over  time, the                                                               
height of  consumption was  in 1981. She  added that  the state's                                                               
consumption has been flat over the past 20 years.                                                                               
CHAIR  WILSON  asked if  quarterly  data  is available  from  the                                                               
Department  of  Revenue  to  breakdown  visitor  versus  resident                                                               
alcohol consumption.                                                                                                            
MS. LOGAN  replied that quarterly information  might be available                                                               
in order to look at seasonal-alcohol consumption.                                                                               
2:00:03 PM                                                                                                                    
She  addressed "Total  Economic Costs  of Alcohol  Abuse -  $1.84                                                               
Billion" and referenced data as follows:                                                                                        
   · Productivity Loss: $775 million, 42 percent;                                                                               
   · Traffic Collisions: $594.3 million, 32 percent:                                                                            
        ƒMedical: $38.5 million;                                                                                               
        ƒEmergency services: $0.02 million;                                                                                    
        ƒMarket productivity: $81.4 million;                                                                                   
        ƒHousehold productivity: $22.6 million;                                                                                
        ƒInsurance administration: $9.3 million;                                                                               
        ƒWorkplace costs: $1.6 million;                                                                                        
        ƒLegal costs: $12.8 million;                                                                                           
        ƒCongestion costs: $1.3 million;                                                                                       
        ƒProperty damage: $4.9 million;                                                                                        
        ƒDirect costs: $172.5 million.                                                                                         
        ƒ5.5 percent of all traffic collisions are caused by                                                                   
          alcohol or drug impairment. 704 collisions occurred in                                                                
          the modeled year, equating to 1,690 occupants that                                                                    
          were affected in the vehicles. Occupants also include                                                                 
   · Criminal Justice and Protective Services (2014): $270                                                                      
     million, 15 percent:                                                                                                       
        ƒ9,400 alcohol-related arrests and offenses.                                                                           
        ƒAlcohol-related  arrests  and offenses  represented  25                                                               
          percent of the total offenses.                                                                                        
        ƒ7,300 victims of  alcohol-related arrests and offenses,                                                               
          representing 17 percent of the total crime victims.                                                                   
        ƒCriminal  Justice  System:  $136.2  million,  many  are                                                               
          borne by the public sector and includes: police,                                                                      
          firefighters, and court system.                                                                                       
        ƒCrime victim tangible costs: $58.2 million.                                                                           
        ƒTheft  was the  number-one  crime  related to  alcohol:                                                               
          2,400 offenses.                                                                                                       
        ƒDriving under  the influence (DUI) was  the second-most                                                               
          crime related to alcohol.                                                                                             
        ƒAssault was the third-most crime related to alcohol.                                                                  
        ƒDUI  is the  number-one cost  associated with  alcohol,                                                               
          approximately $42 million.                                                                                            
        ƒHomicide is the number-one  victim cost associated with                                                               
          alcohol, $25 million.                                                                                                 
        ƒAssault is  the number-two victim cost  associated with                                                               
          alcohol, $14 million.                                                                                                 
        ƒChild  protective  services  has impacts  on  families,                                                               
          approximately 40 to 80 percent of the cases of                                                                        
          children going into foster care that are affected                                                                     
          because of alcohol or drugs.                                                                                          
        ƒCrime victim intangible  costs: $604.9 million, related                                                               
          to quality of life issues, and pain and suffering.                                                                    
   · Health Care: $182 million, 10 percent:                                                                                     
        ƒMedical inpatient: $85.4 million, 48 percent;                                                                         
        ƒMedical  inpatient admissions:  2,200 in  2015, equates                                                               
          to 10,000-bed days in the hospital;                                                                                   
        ƒMedical  emergency department  (ED): $32.7  million, 18                                                               
        ƒMedical ED visits: 15,800;                                                                                            
        ƒMedical  outpatient   in  a  hospital   setting:  $22.6                                                               
          million, 12 percent;                                                                                                  
        ƒAlcohol/Drug treatment: $25.9 million, 14 percent;                                                                    
        ƒAlcohol/Drug  treatment admissions:  5,000, equates  to                                                               
          14,500-bed days;                                                                                                      
        ƒAlcohol/Drug   treatment   Medicaid   payments:   $12.6                                                               
          million out of the $25.9 million was funded by                                                                        
        ƒPrescription drugs to treat alcohol abuse or other                                                                    
          medical conditions related to alcohol abuse: $10.7                                                                    
          million, 6 percent;                                                                                                   
        ƒNursing Home/Long-term care (LTC): $1.5 million, 1                                                                    
        ƒFetal Alcohol Spectrum Disorders (FASD): $3 million, 2                                                                
          percent; the modeling does not capture children                                                                       
          diagnosed for FASD after birth.                                                                                       
   · Public Assistance: $14.5 million, 1 percent.                                                                               
        ƒFederal social welfare: $9.4 million, 65 percent;                                                                     
       ƒState social welfare: $5.1 million, 35 percent.                                                                        
2:04:11 PM                                                                                                                    
SENATOR MICCICHE  asked to address  methodology and  inquired how                                                               
the dollar  amount was determined for  the homicide-related costs                                                               
from alcohol.                                                                                                                   
MS. LOGAN replied that national  models were used, primarily with                                                               
the  Lewin  Group's  attribution percentages  based  on  specific                                                               
crimes. She  detailed that the  Lewin Group's  modeling indicates                                                               
that 47 percent of criminal homicide is related to alcohol.                                                                     
2:08:35 PM                                                                                                                    
CHAIR WILSON asked to address  the alcohol and drug treatment. He                                                               
inquired if the treatment was inpatient.                                                                                        
MS. LOGAN surmised that the treatment was inpatient.                                                                            
MR. JESSE detailed that alcohol  and drug treatment would include                                                               
the grants  that are made  specifically for treatments.  He noted                                                               
that  the  Medicaid outpatient  is  not  included because  mental                                                               
health  and  substance abuse  was  integrated,  and the  Medicaid                                                               
codes cannot  be "peeled" apart into  whether the unit-of-service                                                               
was for a mental-health issue or a substance-abuse issue.                                                                       
MS. LOGAN added  that the McDowell Group was able  to look at the                                                               
enrollments  for  treatment   from  24-hour  detox,  residential,                                                               
outpatient, and outpatient opioid.  She summarized outpatient and                                                               
residential were included.                                                                                                      
2:12:04 PM                                                                                                                    
SENATOR  BEGICH  asked  to  address  FASD.  He  inquired  whether                                                               
children  that  are  identified  for  FASD  post-birth  would  be                                                               
captured in other categorical areas.                                                                                            
MS.  LOGAN concurred  that some  may be  captured due  to medical                                                               
issues, but  not to the  full extent of  what the impacts  are on                                                               
schools with special education, etc.                                                                                            
SENATOR  BEGICH asked  to confirm  that the  post-identified FASD                                                               
children  are  not captured  in  the  categories defined  by  the                                                               
McDowell Group.                                                                                                                 
MS. LOGAN answered correct.                                                                                                     
2:14:03 PM                                                                                                                    
She addressed "Underage Drinking -  $350 Million" and detailed as                                                               
   · In 2013-2014:                                                                                                              
        ƒUnderage Drinkers: 9 percent of Alaskans age 12-17 and                                                                
          22 percent of Alaskans age 12-20.                                                                                     
   · In 2010, PIRE estimated annual costs from underage Alaskan                                                                 
     drinkers at $350 million (2016$).                                                                                          
        ƒYouth violence represents $168 million, 48 percent of                                                                 
          underage drinking costs, followed by youth traffic                                                                    
          accidents that represents $99 million, 28 percent of                                                                  
          underage drinking costs.                                                                                              
2:16:45 PM                                                                                                                    
CHAIR  WILSON  asked  to  address the  medical  cost  related  to                                                               
traffic collision. He  inquired if the medical  cost was separate                                                               
from the medical in the health care category.                                                                                   
MS. LOGAN answered yes.                                                                                                         
2:18:07 PM                                                                                                                    
She addressed  "Productivity Losses  - $775.1 Million"  and noted                                                               
that productivity  is the number-one  economic cost  from alcohol                                                               
abuse. She detailed productivity losses as follows:                                                                             
   · Premature death (primary diagnosis): $581 million, 75                                                                      
   · Premature death reasons:                                                                                                   
       ƒLiver disease: 285 deaths in 2015, 191 were men;                                                                       
        ƒOther poisonings;                                                                                                     
        ƒAlcohol poisoning;                                                                                                    
   · Incarceration: $41.5 million, 5 percent:                                                                                   
        ƒApproximately 1,000 inmates are in prison due to                                                                      
          alcohol-related offenses;                                                                                             
        ƒOne third of inmates are in prions due to alcohol-                                                                    
          related offenses;                                                                                                     
   · Diminished productivity: $145.6 million, 19 percent;                                                                       
   · Substance abuse treatment: $1.5 million, 0.2 percent;                                                                      
   · Medical conditions: $5.0 million, 1 percent.                                                                               
2:22:06 PM                                                                                                                    
SENATOR  BEGICH asked  to address  substance-abuse treatment.  He                                                               
pointed  out  that productivity  is  lost  when  a person  is  in                                                               
treatment.  He  asked if  the  lowering  of the  premature  death                                                               
number and  a decrease in  the incarceration are captured  in the                                                               
modeling. He specified that a trade-off occurs.                                                                                 
MS.  LOGAN replied  that Senator  Begich  may be  right, but  the                                                               
McDowell  Group  did not  do  the  analysis that  Senator  Begich                                                               
MR. JESSE remarked  that Senator Begich was  absolutely right. He                                                               
said  the noted  productivity trade-off  would be  preferred over                                                               
the other costs.                                                                                                                
MS.  LOGAN  referenced  the  "State  Alcoholic  Beverages  Tax  -                                                               
Volume" from 1997  to 2015. She referenced a graph  that showed a                                                               
relatively  stable  volume taxed  at  16  million to  18  million                                                               
gallons from 1997 to 2015.                                                                                                      
SENATOR  BEGICH  pointed  out   the  tax-revenue  explosion  that                                                               
occurred from small breweries that started in 2003.                                                                             
2:24:55 PM                                                                                                                    
SENATOR GIESSEL recounted  that Ms. Logan referenced  1981 as the                                                               
highest alcohol  consumption year  and noted  that 1981  was when                                                               
the first permanent dividend check was issued.                                                                                  
MS.  LOGAN referenced  the "State  Alcohol  Beverage Tax  Revenue                                                               
(FY1997 - FY2015)" and noted the  tax revenue in FY2015 was $37.5                                                               
million. She detailed that the  per capita tax revenue is $24.82.                                                               
She  noted  that the  tax  law  changed  in  2003 where  a  split                                                               
occurred  between  revenue  retained  in  the  general  fund  and                                                               
revenue allocated  to the  Alcohol and  Drug Abuse  Treatment and                                                               
Prevention Fund.                                                                                                                
MR. JESSE  added that sometimes  there is a  misapprehension that                                                               
because only half  of the alcohol tax goes into  Alcohol and Drug                                                               
Abuse Treatment and  Prevention Fund that that is  the only money                                                               
that  is   spent  on  alcohol   and  drug  abuse   treatment  and                                                               
prevention; however, that is not  the case. He detailed that more                                                               
than  $40 million  was spent  on alcohol  and drug  abuse from  a                                                               
combination  of   the  Alcohol  and  Drug   Abuse  Treatment  and                                                               
Prevention Fund and the general fund.                                                                                           
2:27:58 PM                                                                                                                    
MS. LOGAN  addressed "Local Government  Alcohol Tax  Sales, 2015"                                                               
and  noted that  close to  $5 million  was captured  locally. She                                                               
noted  that  the Municipality  of  Anchorage  and the  Matanuska-                                                               
Susitna Borough where not included in the data.                                                                                 
MR.  JESSE  added  that  there  are  some  significant  statutory                                                               
limitations placed  in state  law that  restricts the  ability of                                                               
local governments to tax alcohol  separately or to tax alcohol at                                                               
a rate  higher than they  tax other  commodities which is  also a                                                               
policy issue that may want to be addressed.                                                                                     
MS.  LOGAN noted  that there  is a  benefit that  comes from  the                                                               
alcohol sector  and that  is on jobs  and payroll.  She disclosed                                                               
that the benefits are not costs  to the economy, but the McDowell                                                               
Group wanted to  include the benefit in the  report. She detailed                                                               
that  in  2014 there  were  2,900  jobs  related to  the  alcohol                                                               
beverage sector and  that includes individuals who  work in bars,                                                               
drinking  establishments, alcohol-retail,  alcohol-wholesale, and                                                               
beverage manufacturing  as well.  She noted  that the  2,900 jobs                                                               
equates to over $66 million in payroll.                                                                                         
SENATOR  GIESSEL  asked if  tips  were  included in  the  alcohol                                                               
drinking places.                                                                                                                
MS. LOGAN answered no.                                                                                                          
2:30:52 PM                                                                                                                    
SENATOR MICCICHE commented  that the wages are very  low, and the                                                               
low wages is  part of the committee's discussion.  He opined that                                                               
alcohol is an important part  of Alaska's economy, but the intent                                                               
of committee is  to make alcohol a positive economy  instead of a                                                               
negative economy.  He said part  of the economic cost  of alcohol                                                               
abuse also  provides good jobs for  those that are trying  to set                                                               
the  lives straight  of  those that  are trapped  in  the web  of                                                               
alcoholism and  abuse. He  asked how the  McDowell Group  went on                                                               
both sides of the fence.                                                                                                        
MS. LOGAN  replied that  the McDowell  Group did  not do  a full-                                                               
economic analysis  of the labor  force that  included involvement                                                               
in treatment, medical, and insurance.                                                                                           
MR.  JESSE  disclosed  that  another   McDowell  report  will  be                                                               
released that was commissioned by  the Alaska Mental Health Trust                                                               
Authority that looks at the  economic impact of alcohol taxes. He                                                               
detailed  that the  report looks  at  the impact  of raising  the                                                               
alcohol  tax. He  explained that  raising the  alcohol tax  would                                                               
have a  negative impact on  the industry in addition  to lowering                                                               
consumption due  to higher prices;  however, reinvesting  the tax                                                               
dollars  would  result  in  people   being  employed  to  provide                                                               
treatment to people  that were struggling with  alcohol. He noted                                                               
that  the  jobs   provided  by  an  increase   in  alcohol  taxes                                                               
significantly exceeds the number of jobs that would be lost.                                                                    
2:33:14 PM                                                                                                                    
SENATOR MICCICHE  asserted that he  will never call  something an                                                               
economic benefit that is on the  backs of human misery a positive                                                               
thing;  however, he  emphasized  that no  committee members  were                                                               
talking about that. He said his  statement was his attempt to put                                                               
the report in context so  that he could understand. He reiterated                                                               
that the wage numbers related  to the alcohol industry looks very                                                               
low  when consideration  is given  to  tourism, restaurants,  and                                                               
package stores across the state.                                                                                                
MS.  LOGAN replied  that many  of the  jobs are  likely part-time                                                               
jobs as well.                                                                                                                   
SENATOR GIESSEL asked Mr. Jesse  how he knows that increasing the                                                               
tax  on  alcohol  decreases  consumption.  She  inquired  if  Mr.                                                               
Jesse's comment was based on a study.                                                                                           
MR. JESSE  replied that there  have been extensive  studies about                                                               
the price  elasticity around  alcohol and  in fact,  the greatest                                                               
price sensitivity  to consumption  is among  under-aged drinkers.                                                               
He  disclosed  that the  upcoming  report  will include  data  on                                                               
decreased consumption.                                                                                                          
SENATOR  GIESSEL agreed  with Mr.  Jesse's observation  on under-                                                               
aged  drinkers, but  asked about  the impact  of higher  taxes on                                                               
adult drinkers.                                                                                                                 
MR.  JESSE answered  that higher  taxes would  have an  impact on                                                               
older  drinkers as  well. He  set  forth that  the Alaska  Mental                                                               
Health Trust Authority  believes in presenting the  facts and the                                                               
fact  is there  will be  some reduction  in consumption  and that                                                               
will have  an economic effect  on the industry. He  asserted that                                                               
the Alaska Mental  Health Trust Authority intends to  be fair and                                                               
honest. He  revealed that in  Canada and some states  have looked                                                               
at and  or implemented  minimum pricing  where alcohol  cannot be                                                               
priced below a certain price point in order to prevent very low-                                                                
cost alcohol.                                                                                                                   
2:36:22 PM                                                                                                                    
MS. LOGAN "Jobs and Wages - Alcoholic Beverage Sector, 2014" and                                                                
detailed as follows:                                                                                                            
   · Total Jobs: 2,887:                                                                                                         
        ƒAlcohol Drinking Places: 55 percent;                                                                                  
        ƒAlcohol-Retail: 23 percent;                                                                                           
        ƒBeverage Manufacturing: 12 percent;                                                                                   
        ƒAlcohol-Wholesale: 9 percent.                                                                                         
   · Total Wages: $66.4 million:                                                                                                
        ƒAlcohol Drinking Places: 41 percent;                                                                                  
        ƒAlcohol-Retail: 22 percent;                                                                                           
        ƒBeverage Manufacturing: 20 percent;                                                                                   
        ƒAlcohol-Wholesale: 17 percent.                                                                                        
MS. LOGAN summarized on the cost of alcohol abuse in Alaska as                                                                  
   · $1.84 billion: total costs of alcohol abuse (2016),                                                                        
   · $66.4 million: total Alaska's alcoholic beverage sector                                                                    
     payroll (2014),                                                                                                            
   · $37.6 million: total Alaska alcohol beverage tax revenue                                                                   
   · $4.9 million: local government alcohol sales tax revenue                                                                   
2:38:29 PM                                                                                                                    
She addressed "The Economic Costs of Drug Abuse in Alaska,                                                                      
2016." She provided details on "Illicit Drug Use, 2013 - 2014"                                                                  
as follows:                                                                                                                     
   · Current Illicit Drug Use:                                                                                                  
        ƒAlaska: 13.2 percent,                                                                                                 
        ƒU.S.: 9.8 percent.                                                                                                    
   · Past Marijuana Use:                                                                                                        
        ƒAlaska: 19.6 percent,                                                                                                 
        ƒU.S.: 12.9 percent.                                                                                                   
   · Current Marijuana Use:                                                                                                     
        ƒAlaska: 11.9 percent,                                                                                                 
        ƒU.S.: 8.0 percent.                                                                                                    
   · Current Drug Use Other than Marijuana:                                                                                     
        ƒAlaska: 3.5 percent,                                                                                                  
        ƒU.S.: 3.3 percent.                                                                                                    
   · Past Cocaine Use:                                                                                                          
        ƒAlaska: 1.5 percent,                                                                                                  
        ƒU.S.: 1.7 percent.                                                                                                    
   · Past Nonmedical Pain Reliever Use:                                                                                         
        ƒAlaska: 4.4 percent,                                                                                                  
        ƒU.S.: 4.1 percent.                                                                                                    
   · Illicit Drug Dependence or Abuse Past Year:                                                                                
        ƒAlaska: 3.2 percent,                                                                                                  
        ƒU.S.: 2.6 percent.                                                                                                    
   · Illicit Drug Dependence Past Year:                                                                                         
        ƒAlaska: 2.2 percent,                                                                                                  
        ƒU.S.: 1.9 percent.                                                                                                    
MS. LOGAN provided details on "Illicit Drug Use, 2013 - 2014" as                                                                
   · 77,000 Alaskans used illicit drugs within the past 30 days:                                                                
        ƒ69,000 consumed marijuana,                                                                                            
        ƒ20,000 used other illicit drugs.                                                                                      
   · 26,000 Alaskans used pain relievers for non-medical                                                                        
     purposes in the past year.                                                                                                 
   · 13,000 Alaskans are dependent on illicit drugs.                                                                            
   · Marijuana consumption is the only drug in Alaska                                                                           
     statistically different than U.S.:                                                                                         
        ƒ12-percent Alaskans used marijuana in past 30 days                                                                    
          versus 8 percent in the U.S.                                                                                          
        ƒ20-percent Alaskans used marijuana in past year versus                                                                
          13 percent in the U.S.                                                                                                
She addressed the "Total Economic Costs of Drug Abuse - $1.22                                                                   
Billion" as follows:                                                                                                            
   · Productivity Loss: $542 million, 45 percent;                                                                               
   · Traffic Collisions: $396 million, 33 percent;                                                                              
   · Criminal Justice and Protective Services: $136 million, 11                                                                 
   · Health Care: $134 million, 11 percent;                                                                                     
   · Public Assistance and Social Services: $7 million, 1                                                                       
2:41:12 PM                                                                                                                    
She addressed "In Conclusion" regarding the cost of alcohol and                                                                 
drug abuse in Alaska as follows:                                                                                                
   · $1.84 billion: total economic costs of alcohol abuse                                                                       
  · $1.22 billion: total economic costs of drug abuse (2016).                                                                   
   · $3.10 billion: total combined economic costs of alcohol and                                                                
     drug abuse in Alaska (2016).                                                                                               
MR.  JESSE specified  that  the  report was  not  designed to  in                                                               
anyway  indict  the  industry. He  noted  that  Senator  Micciche                                                               
pointed out  that the alcohol  industry is an  important economic                                                               
part of  Alaska's economic system.  He remarked that  if everyone                                                               
drank responsibly  then there would  not be virtually any  of the                                                               
negative  costs; however,  the fact  is  that alcohol  is a  very                                                               
highly abused product and as  a result there are very substantial                                                               
economic costs across Alaska.                                                                                                   
He set  forth that the  Alaska Mental Health Trust  believes that                                                               
it is important  to look at the data from  the report because the                                                               
$3.1 billion  is almost identical  to the entire fiscal  gap that                                                               
the Legislature is struggling with.                                                                                             
SENATOR  MICCICHE  agreed  with  Mr. Jesse  and  noted  that  the                                                               
industry is just  as concerned with the demographics.  He said to                                                               
Mr. Jesse,  "I certainly did  not take it  that way by  any means                                                               
whatsoever." He asserted  that the industry is  an important part                                                               
in the  state. He pointed  out that many Alaskans  are struggling                                                               
with substance abuse and that was  the focus of not only reducing                                                               
the economic cost,  but the social and cultural costs  as well, a                                                               
point  that he  takes from  the  numbers on  the negative  dollar                                                               
impacts. He clarified that he understood the value of the study.                                                                
2:43:45 PM                                                                                                                    
MR. JESSE stated  that from the Alaska  Mental Health Authority's                                                               
perspective, the  economic costs are  very important; but,  it is                                                               
the  impact  of  the  substances  on  the  Alaska  Mental  Health                                                               
Authority's beneficiaries in  terms of its impact  on their lives                                                               
and quality of life.                                                                                                            
SENATOR BEGICH  commented that  his hope is  that in  future work                                                               
the  relationship between  the treatment  dollars  spent and  the                                                               
impact in  producing the numbers  can be  shown. He noted  that a                                                               
substantive  baseline has  been set  that can  be used  in future                                                               
years to show the relationship  between investment and the impact                                                               
on the  costs to  society. He  commented that  there is  a direct                                                               
relationship  between   addressing  the  issues   and  ultimately                                                               
reducing the costs in the long  run. He set forth that the report                                                               
is a great work for a starting point.                                                                                           
2:46:01 PM                                                                                                                    
SENATOR MICCICHE commented that he  is worried that the attention                                                               
given  to the  opioid crisis  that  a "shiny  thing" effect  will                                                               
occur that  detracts from  alcohol abuse's  impact on  Alaska. He                                                               
opined  that applying  the  social cost  to  alcohol abuse  would                                                               
create  a   much  wider  spread  between   alcoholism  and  other                                                               
substances.  He opined  that alcohol  is  still easier,  socially                                                               
acceptable and  a problem  that many  Alaskans have  their entire                                                               
lives. He  summarized that alcohol  underlies as  the number-one-                                                               
social cost in the state.                                                                                                       
SENATOR  GIESSEL opined  that looking  further there  would be  a                                                               
finding of concurrent use and  potentiation from alcohol's effect                                                               
on  the individual.  She stated  that correlating  concurrent use                                                               
would be interesting.                                                                                                           
MR. JESSE replied that Senator  Micciche's point is well made. He                                                               
shared his  personal experience with  alcoholism. He  stated that                                                               
many people struggle with alcohol, but remain anonymous.                                                                        
CHAIR WILSON thanked the presenters.                                                                                            
2:49:56 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Wilson  adjourned the Health and  Social Services Committee                                                               
at 2:49 p.m.                                                                                                                    

Document Name Date/Time Subjects
McDowell Presentation SHSS 3.29.17.pdf SHSS 3/29/2017 1:30:00 PM
SHSS McDowell Presentation 3.29.17