Opioid Treatment for Pain and Work and Disability Outcomes: Evidence from Health Care Providers’ Prescribing Patterns

Medical conditions that cause pain are a leading reason why workers leave the labor force and seek disability benefits. The fall in the labor supply of individuals with pain has occurred despite the increased availability of medications to treat pain – notably opioids – over the past two decades. The use of opioids to treat pain has risen steadily over time, but the implications for functional status and employment are unclear, and a key empirical challenge in disentangling the effects of opioids on labor supply is that opioid use is correlated with pain and perhaps other unobserved measures of labor force attachment. We therefore use an instrumental variables strategy to examine the relationship between opioid treatment for pain and labor outcomes between 2012 and 2018, which relies on differences in providers’ propensity to prescribe opioids to new users adjusted for detailed patient medical characteristics. To calculate provider propensities, we leverage the largest U.S. commercial claims database, through which we observe the prescribing behavior of approximately 76% of active U.S. physicians as well as a large share of non-physician providers who are legally permitted to prescribe opioid analgesics. In addition, we use a novel natural language processing algorithm to analyze medications entered in the free text fields of SSDI applications, allowing us to identify applicants using opioid analgesics and estimate the impact of prescription opioid supply on the number of applicants using opioids specifically. We find that lagged prescription opioid supply has a statistically significant, negative impact on the employment-to-population ratio and the average weekly wage, and a statistically significant, positive impact on SSDI applications overall and applications mentioning opioid use, as well as SSDI initial allowances. Our findings indicate that opioid treatment for pain can have adverse effects on labor productivity and employment, even precipitating more permanent separation from the labor force through SSDI claiming.