This study examines the relationship between substance abuse treatment expenditures for medical expenditures for General Assistance welfare clients in Washington State.  Substance abuse treatment was associated with a $2,500 annual reduction in medical expenses.  The estimated savings equaled the cost of treatment and represented roughly 35 percent of Medicaid expenses incurred by welfare clients with substance abuse conditions.   

Wickizer, T. M., A. Krupski, et al. (2006). The effect of substance abuse treatment on Medicaid expenditures among general assistance welfare clients in Washington state. Milbank Quarterly, 84(3): 555-76. http://www.ncbi.nlm.nih.gov/pubmed/16953810 

Authors: Thomas M. Wickizer, Antoinette Krupski, Kenneth D. Stark, David Mancuso, Kevin Campbell