At two o’clock in the morning, the emergency department doors open to a familiar story. A middle-aged man arrives with massive gastrointestinal bleeding, severe jaundice, and advanced cirrhosis from decades of alcohol use. He has no insurance, no primary care provider, no stable home, and no ongoing addiction treatment. The next 10 days bring mechanical ventilation, endoscopic procedures, dialysis, and intensive care. The total bill will exceed $100,000, nearly all of it unreimbursed. He survives long enough to leave against medical advice, only to return two months later. It is a cycle that repeats in hospitals across America, a cycle fueled by compassion and sustained by economic contradiction.
The social and economic tide of addiction
Often people comment that doctors should not be focusing on treating illness but on keeping people healthy. That is a noble concept, but the focus of the physician is to heal the sick. Why? Simply because physicians do not have the authority, ability, or resources to change advertising, to alter public perceptions or desires, or to prevent self-inflicted disease from injuring people. Physicians can’t stop people from drinking, from using drugs, or from driving under the influence. Physicians cannot solve societal ills. Physicians are on the front line with others (nurses, techs, assistants in the hospital and in the outpatient setting) trying to cope with the impact of these societal problems and mental health complications.
Substance use disorders (SUDs) encompassing alcohol use disorder (AUD) and drug use disorder (DUD), exact a profound toll on society. According to the National Institute on Drug Abuse (NIDA, 2025), substance use costs the United States over $740 billion each year in health care expenditures, lost productivity, and criminal justice involvement. Each case of advanced alcoholic liver disease or overdose hospitalization reflects the cumulative failure of prevention, mental health integration, and addiction care. The cost of inaction is measured not only in lives lost but in billions of dollars diverted from primary care, education, and prevention to crisis medicine.
The dollars we can measure
In 2021, Peterson et al. published a study in JAMA Network Open analyzing more than 158 million hospital encounters. They found that United States hospitals incurred approximately $13.2 billion in direct medical costs attributable to substance use disorders in 2017. Of that total, $7.6 billion was directly related to alcohol-related conditions. These costs are concentrated in emergency and inpatient settings (the most expensive arenas of care) and exclude post-discharge and outpatient treatment costs.
The Agency for Healthcare Research and Quality (AHRQ) reported that among inpatient stays with a primary alcohol-related diagnosis, 48.1 percent were billed to public payers (Medicare or Medicaid), 26.9 percent to private insurance, and 25.1 percent were uninsured. In practical terms, that means nearly one in four hospitalizations for alcohol-related illness produces no payment at all.
Table 1: Distribution of hospital costs for substance use disorder care (2017)
| Category | Amount ($USD) |
|---|---|
| Total national hospital cost (ED + inpatient) | $13,200,000,000 |
| Public payers (Medicare/Medicaid) | $6,600,000,000 |
| Private insurance | $3,300,000,000 |
| Uninsured / uncompensated care | $3,300,000,000 |
Alcohol-related liver disease: A financial sinkhole
In 2019, Desai et al. published an analysis showing that hospitalizations for cirrhosis cost $7.37 billion in 2014. Decompensated cases accounted for most of the expense. Patients with alcoholic hepatitis (AH) represent the most extreme subset. Thompson et al. (2018) found that the average first-year cost per AH patient was $53,269, increasing to over $145,000 in subsequent years. For patients requiring liver transplantation, lifetime costs frequently exceed $1 million.
The payer mix problem
Public programs such as Medicare and Medicaid finance roughly half of SUD-related hospitalizations. Private insurance covers about one quarter. The remaining quarter (the uninsured) is absorbed directly by hospitals as uncompensated care. The Congressional Budget Office (2024) reported that hospitals provided $41.4 billion in unpaid care to uninsured patients in 2023. While that figure spans all conditions, a significant portion relates to SUD and liver disease. This continuous financial burden diverts funds away from prevention, primary care, and workforce retention, particularly in safety-net hospitals.
When families demand “do everything”
When a patient with end-stage liver failure is admitted to the ICU, families often respond with an understandable plea: “Don’t give up. Do everything possible.” But “everything” may mean weeks of futile invasive care (ventilation, vasopressors, renal replacement therapy) costing hundreds of thousands of dollars. When the chance of meaningful recovery approaches zero, continued aggressive care may violate principles of beneficence and justice, and cause moral distress among caregivers.
Recommendations for a sustainable path forward
| Recommendation | Rationale |
|---|---|
| Early multidisciplinary review | Rapid involvement of hepatology, addiction medicine, palliative care, and ethics identifies when care ceases to offer benefit. |
| Goal-of-care conversations | Structured family discussions clarify prognosis, expectations, and quality-of-life goals. |
| Institutional transparency | Tracking SUD-related admissions and costs supports ethical and fiscal accountability. |
| Redirect downstream spending upstream | Reinvesting 10 percent of hospital SUD costs into addiction and housing programs can reduce readmissions. |
| Federal policy incentives | Increased funding for outpatient addiction and mental health reduces inpatient dependence. |
Would an earmarked national alcohol sales tax defray hospital and federal costs?
A recurring question is whether a modest, earmarked national sales tax on alcoholic beverages (dedicated to reimbursing federal and state programs like Medicare/Medicaid and directly paying hospitals for uncompensated alcohol-related care) could materially defray the burden described in this article. Certainly a tax would not change outcomes but it would certainly help to defray the financial cost to society and to the health care system.
Two pieces of public data help bound the calculation: First, hospitals incurred approximately $7.6 billion of alcohol-related hospital costs within the broader $13.2 billion substance use disorder total in 2017 (Peterson et al., JAMA Network Open, 2021). Second, AHRQ’s HCUP payer analysis shows alcohol-related inpatient stays were 48.1 percent public (Medicare/Medicaid), 26.9 percent private, and 25.1 percent uninsured (HCUP Statistical Brief #191, 2012).
On the revenue side, consumer spending on beverage alcohol across off-premise and on-premise channels was reported at approximately $408.8 billion in 2024 based on Bureau of Economic Analysis personal consumption expenditure data compiled by industry analysts (bw166, 2025). Separately, the U.S. Bureau of Economic Analysis reports federal excise tax receipts from alcoholic beverages were $8.798 billion in 2024 (FRED/BEA series B2001C1A027NBEA). Those receipts currently accrue to the general fund and are not dedicated to hospital or Medicare/Medicaid reimbursement.
Using these figures, three policy targets illustrate how an earmarked national sales tax could function. Each target includes a 20 percent administrative allowance to run the program and verify payments:
Table: Illustrative national alcohol sales tax scenarios
| Policy Target | Annual Cost Covered | Required Revenue (Cost + 20 percent) | Implied National Sales Tax Rate on ~$408.8B Base |
|---|---|---|---|
| A) Hospitals’ uninsured alcohol-related care | $1.9 billion | $2.3 billion | 0.56 percent |
| B) Public payer (Medicare/Medicaid) + uninsured alcohol care | $5.6 billion | $6.7 billion | 1.63 percent |
| C) All alcohol-related hospital costs (all payers) | $7.6 billion | $9.1 billion | 2.23 percent |
Interpretation: Under Scenario A (which reimburses hospitals only for the uninsured share of alcohol-related hospitalizations) an earmarked federal sales tax of roughly 0.56 percent on alcoholic beverages would be sufficient. Scenario B (relieving Medicare/Medicaid and hospitals of their combined alcohol-related burden) would require about 1.63 percent. Scenario C (covering the entire alcohol-attributable hospital cost regardless of payer) would require about 2.23 percent. These estimates assume a $408.8 billion consumer spending base and include a 20 percent administrative margin. Actual rates would vary with changes in consumption, enforcement leakage, and program design.
Conclusion: Redefining compassion
True compassion is not infinite intervention; it is aligning care with realistic outcomes and human dignity. When treatment no longer offers meaningful recovery, continued escalation serves neither the patient nor the public good. Redirecting resources toward comfort and prevention is not abandonment; it is responsible stewardship of both compassion and cost.
Brian Hudes is a gastroenterologist.
