14

Property damage costs from Blincoe and Faigin (1992) and vocational rehabilitation,
premature burial and emergency services costs from Miller (1993) were adjusted to 1994
price levels using the Consumer Price Index - All Items.

Nonfatal medical care and coroner costs from Miller (1993), were reinflated from their 1983
base year with medical spending per-capita rather than the Consumer Price Index for
Medical Care. Miller notes that the switch in inflators better accounts for changes in
medical technology and procedures. It causes the inflated costs per day of hospital stay for
crash injury to keep pace with the American Hospital Association’s index of average cost
per hospital day (Bureau of the Census, 1994) and is consistent with recent research on
medical care cost inflators (Newhouse, 1992). (The new basis raised the previously
published medical care costs for 1988 by 15%.)

Medical payments per fatality came from national workplace injury data (National Council
on Compensation Insurance, 1989) rather than the less representative data used by Miller
(1993).

The lifetime earnings and household production loss models in Miller et al. (1991) also were
updated with 1990-1991 demographic data, earnings profiles, and life tables (replacing 1985
data).

Employer productivity losses were recomputed with the assumptions in Miller (1993b).
Miller assumed supervisor and co-worker staff time lost to a permanently disabling injury
equaled the losses for a fatality.

New insurance administrative and legal expense models were derived. The new models
placed a $100,000 average policy limit on liability claims and a $500,000 limit on average
court awards for catastrophic injuries. Legal costs were reestimated with unit costs from
Kakalik and Pace (1986) and probabilities of lawsuit from Hensler et al. (1991), as well as
the updated medical care and productivity loss estimates.

Data from Miller et al. (1995) were further modified for this report as follows:

oO

°

All unit costs were updated to 1994 economics using inflators consistent with Miller et al.
(1995).

Lost productivity cost in Miller et al. were based on a 2.5% discount rate. These costs were
reestimated using a 4% discount rate. This rate is consistent with that used in Blincoe and
Faigin (1992), Discussion of the basis for a 4% rate was included in Appendix A of that
report, and is reprinted here in Appendix C.

Miller et al. (1995) provided estimates grouped under 4 categories: Medical, Future
Earnings, Public Program and Property Damage. In this report, these groups were
disaggregated into 11 different categories consistent with previous NHTSA reports (Blincoe
and Faigin, 1992).

The distribution of injured survivors in towed passenger vehicles (CDS crashes) by body
region and MAIS was derived from 1988-1991 Crashworthiness Data System (CDS) data.
Information for non-CDS cases was derived from 1982-1986 NASS data by restraint use.
These data sets were then weighted together based on the incidence in the 1992 GES to
determine the overall distribution of crash victims by injury severity and body region. This


35

In the previous NHTSA estimate, the three injury categories (A, B, & C) were combined using
incidence rates from Bowie & Walz to produce an average nonfatal injury rate of 12.96 percent.
Speed involvement for fatalities was derived from 1994 FARS data. The rate of speed
involvement for nonfatal injuries was based on the relative rates found in Bowie & Walz
(12.96/34.2). The rate for PDO’s was based on the relative rates of uninjured persons and
fatalities (10.2/34.2). The rates were applied to injury & PDO estimates to determine total speed
involvement by state and highway system. This resulted in the previous $23 billion estimate.

The $23 billion estimate was based on data stratified by KABCO but not by MAIS levels. An
average speed involvement rate was therefore calculated for all injury levels. Since speed is a
more prevalent factor in more serious crashes, basing all injuries on the same average rate
produces a conservative estimate of crash costs. The current estimate reflects the higher speed
involvement rates of more serious crashes. In addition, the state-specific costs that were
previously calculated were based on national rates of injuries and PDOs-to-fatalities, and on
average nationwide cost levels. The current state estimates reflect adjustments for different rates
of injury to fatal experience, and for state-specific price levels, Note, however, that these
estimates are subject to the same caveats discussed previously for State Costs, i.e., that
differences in injury severity or the completeness of nonfatal injury reporting practices can distort
state-to-state comparisons.

Note that there is undoubtedly a considerable overlap between alcohol involvement and speed.
Many speed-related crashes involved alcohol and visa-versa. These two estimates should not be
added together in an effort to account for the portion of costs that are represented by the
combined factors of speed and alcohol.


31

Table 8
Total Incidence by Injury Level
and BAC Level
ALL Positive

<.10 BAC >.10 BAC Alcohol ALL Cases
Incidence} % Total | Incidence] % Total [Incidence] % Total | Incidence | % Total
IPDO 353,027] 1.5%} 3,560,797] _15.2%] 3,913,824] 16.7%] 23,395,971} 100.0%
IMAIS 0 408,218] 11.0%] 579,822] 15.6%| 988.040) 26.6%} 3,715,370] 100.0%
IMAIS 1 179,892) 3.9%} 669,917] 14.5%] 849,809] 18.4%] 4,626,495] 100.0%
IMAIS 2 54,145] 13.6% 92,926] 23.3%] 147,071 36.9%} 398,553} 100.0%
IMAIS 3 16,008) 9.6%} 42,139] 25.3% 58,147] 34.9%] 166,845} 100.0%
IMAIS 4 1,569 9.2% 5,108] 29.8% 6,677] 39.0% 17,123] 100.0%)
IMAIS 5 304} 4.4% 2,39 34.6% 2,699] 39.0% 6.9141 100.0%
IMAIS 1-5} 251,919} 4.8%] 812.485] _ 15.6%} 1,064,404] 20.4%} _ 5,215,931} 100.0%
[Fatal 3,495 8.6%| 13,094] 32.2% 16,589) 40.8% 40,676] 100.0%

Table 9
Total Cost by Injury Level
and BAC Level (Millions of 1994$)
ALL Positive
<.10 BAC >.10 BAC Alcohol ALL Cases

Cost _|% Total] Cost_|% Total] Cost |% Total] Cost | % Total

PDO $587] 1.5%] $5,923] 15.2%] $6,511] 16.7% $38,919] 100.0%!

IMAIS 0 $461] 11.0%] $655] 15.6%] $1,115] 26.6% $4,194] 100.0%)

MAIS 1 $1,344] 4.0%] $4,998] 14.9%} $6,343] 18.9% $33,510] 100.0%

IMAIS 2 $1,973] 14.3%] $3,376] 24.4%] $5,349] 38.7%) $13,839] 100.0%

IMAIS 3 $1,743] 10.0%] $4,574] 26.4%] $6,317] 36.4% $17,349] 100.0%!

IMAIS 4 $374] 9.5%] _ $1,215] 30.8%] $1,589] 40.3% $3,939} 100.0%

IMAIS 5 $222] 4.5%] _ $1,745] 35.8%] $1,967] 40.3% $4,879] 100.0%

Fatal $3,141] 9.3%] $12,626] 37.3% $15,768] 46.6% $33,839] 100.0%

Total $9,846] 6.5%] $35,113] 23.3%] $44,959] 29.9%| $150,469} 100.0%

IMAIS 1-5] $5,656] 7.7%] $15,909] 21.6% $21,566] 29.3%] $73,517] 100.0%



40

Table 13
Summary of State Source of Payment Data
from Harris and CODES Studies

| Total Public | Insurance Self. Other Total

[Hawaii** 8.0% 92.0% 0.0% 0.0% 100.0%
|Utah** 10.7% 79.8%) 7.2%! 2.3%! 100.0%
INew York* 11.8%) 66.0% 8.8%) 13.4% 100.0%
\Vermont* 13.1% 63.9% 12.8%) 10.2% 100.0%
[Pennsylvania** 16.7%) 74.9%) 6.3% 2.0% 100.0%
|Wisconsin** 18.3% 75.4% 4.8% 1.5% 100.0%
IMissouri* 22.9% 55.0% 15.4% 6.7%) 100.0%
[Washington* 25.4% 56.9% 17.5%) 0.2% 100.0%
IMaine** 27.6%) 55.3%) 13.1% 4.1%) 100.0%|
[Rhode Island* 34.9% 34.9% 13.2% 17.0% 100.0%

alifornia* 36.8%) 44.6%) 17.5% 1.0% 100.0%
|Arizona* 40.1% 46.1% 0.0% 13.8% 100.0%
Simple Average = 22.2% 62.1%) 9.7%) 6.0%) 100.0%

Additional Data Not Used in Average

\Missouri** 23.2% 59.8% 13.0% 4.1% 100.0%)
INew York** 8.7%) 64.2%) 20.6%) 6.5% 100.0%
INew York, Drivers** 8.2% 63.6% 21.4% 6.7% 100.0%

* From Harris study
** From CODES study



8

Table 2
Summary of Unit Costs, 1994
(1994 Dollars
PDO_|MAIS 0/MAIS 1/MAIS 2] MAIS 3] MAIS 4] MAIS 5] Fatal

injury Components:

Medical $0} $1 $956] $8,144] $28,064]$100.820]$354.819] $12,089)
Prem. Funeral $0) $0} $0 $0) $0) $0} $0} __ $3,389)
EMS $28 $19] $152] $337) $506] $1,150] $1,171] $1,055)
[Voc. Rehab. $0} $0} $15) $99) $217 $410) $620 $0
Market Prod. $0) $1,315]$11,645] $35,776] $58,073]$184,260]$576,266}
|HH Productivity $42) $28] $413] $3,598] $10,903] $18,746] $54,119]$132,630)
Ins. Admin. $103 $69] $573] $3,481] $11,219] $21,165] $49,576] $28,646)
|Workplace Cost $44 $29] $217] $1,681] $3,671] $4,043] $7,049] $7,489)
[Legal Costs $0) $O]__$136]_ $2,179] $7,655] $17,087] $45,919] $60,766
Subtotal $218] $146] $3,777]$31,164] $98.011]$221,494]$697,533]$822.328}
iNon-Injury Components:

Travel Delay $125] $106} $203] _ $203 $203 $202 $203 $453
Prop. Dam. $1,320] _ $877] _ $3,263] $3,356] $5,771] $8,346] $8,018] $9,138
Subtotal $1,446] $983] $3,466] $3,559] $5,974] $8,548] $8,221] $9,591
[Total $1,663] $1,129] $7,243] $34,723]$103,985]$230,042]$705,754] $831,919

INOTE: Unit costs are on a per-person basis for all injury levels. PDO costs are on a per-
|damaged vehicle basis.



68

Kakalik, JS and Pace, NM. Costs and Compensation Paid in Tort Litigation, Report R-3391-ICJ,
Santa Monica CA: RAND, 1986.

Klein, T.M. A Method for Estimating Posterior BAC Distributions for Persons Involved in Fatal
Traffic Accidents, DOT HS 807094, Washington, DC: NHTSA; 1986.

Maull, Kimball I., Linda S. Kunning, and Julian K. Hickman. “Culpability and Accountability of

Hospitalized Injured Alcohol-Impaired Drivers.” Joumal of the American Medical Association
(JAMA), 252:14, October 12, 1984.

Miller, Ted R. “Costs and Functional Consequences of U.S. Roadway Crashes, AAP, v 25, No. 5,
Torytown, NY, 593-607, October 1993.

Miller, TR and Blincoe, LJ. “Incidence and Cost of Alcohol-Involved Crashes in the United
States,” AAP, V26, No. 5, Irvine CA, 583-591, 1994.

Miller, Ted R., D. Lestina, M. Galbraith, T. Schlox, P. Mabey, R. Deering D. Morsie and K
Cambell. “Understanding the Harm from U.S. Motor Vehicle Crashes” 39th Annual Proceedings,
AAAM, Des Plaines, ILL., 327-342, 1995.

Miller, TR. Costs of Injuries to Employers: A NETS compendium, (2 volumes), Washington DC:
NHTSA, 1993b.

Miller, Ted R., Viner, JG, Rosman, SB, Pindus, NM, Gellert, GW, Douglass, JB, Dillingham, AE,
and Plomquist, GC. The Costs of Highway Crashes, Washington DC: The Urban Institute, 1991.

Miller, Ted R., “Societal Cost of Transportation Crashes” Presentation at Bureau of
Transportation Statistics Conference on Measuring the Full Social Costs and Benefits of
Transportation, Irvine California. July 6-8, 1995.

Miller, Ted R. and M. Galbraith,
Employer Costs. DOT HS 808234, Washington, DC June 1995.

National Center for Health Statistics (NCHS). “Current Estimates from the National Health

Interview Survey.” Vital and Health Statistics Series 10. Washington, DC: U.S. Department of
Health and Human Services (USDHHS), annual.

National Council on Compensation Insurance. 1985 Insurance Expense Exhibit, Boca Raton FL:
NCCI, 1989.

Newhouse, JP. Medical Care Costs: How Much Welfare Loss?, Journal of Economic
Perspectives, 6(3):3-21, 1992.


50

Trends and Causes

In order to estimate the real trend in motor vehicle crash costs since 1990, several adjustments
were made to bring 1990 costs up to a common basis with 1994. The first change was made to
the 1990 incidence to reflect a change in the method used to calculate MAIS 0 injuries in
injury crashes. The 1990 report reflected an estimate of these cases that is significantly lower
than that found in the current report (0.28 per injured occupant vs. 0.74 per injured occupant).
When the method currently used was applied to 1990 data, it was found that the rate should
have been 0.67. The original 1990 estimate is therefore considered to be understated.

A second adjustment to 1990 incidence was made to fatalities. In the 1990 report, preliminary
data were used which indicated a total of 44,531 fatalities. Since then, NHTSA has revised
this number up to 44,599. Adjustments were made to the 1990 MAIS 0 and fatality incidence
estimates consistent with the corrected data.

A third adjustment to 1990 incidence was made to MAIS 5 injuries. In the 1990 report, the
estimate of MAIS 5 injuries was based on NASS data from the 1982-86 period. The resulting
estimate (11,386) was significantly higher than the number of MAIS 5 injuries predicted using
data from the CDS and GES in the current report (6,885). Since a decrease this dramatic
seemed unlikely, CDS data from 1990-94 was examined. The CDS estimate of MAIS 5
injuries has remained fairly consistent during this period, with the 1994 estimate being 2.6
percent higher than 1990. Since the earlier 1990 estimate was based on 1982-89 data, and
since there have been dramatic increases in safety belt use since that period, it is possible that
there is some validity to this large decline in these rare but serious injuries. However, the
CDS data seem to indicate that this trend did not occur since 1990, and it appears that applying
1982-86 experience to 1990 was not accurate. To correct for this, the 1990 MAIS 5 estimate
was revised by applying the rate of change in CDS MAIS 5 injuries to the total MAIS 5 injury
estimate for 1994,

A fourth adjustment was made to 1990 incidence to reflect corrected estimates of unreported
injuries. These corrections were required because of the recent announcement by HHS that all
their published NHIS data on motor vehicle injuries from 1982-1994 was incorrect. As
discussed in the “Unreported Injuries” secton of this report NHIS data was used as a basis for
unreported injuries in the 1990 report. A different study by Wastat Inc. (Greenblatt et al.) was
used to calculate unreported injuries in the current report, and this same study was used to
modify 1990 incidence to a corrected basis.

Unit costs were then adjusted back from their 1994 level to 1990 using the cost-specific
inflators that were used to estimate 1994 unit costs. Combining these with the corrected 1990
incidence yielded an estimate of $139.2 billion for 1990. This represents a corrected 1990
estimate which reflects the methodological improvements used in the current Teport.
Comparing this to the equivalent 1994 estimate of $150.5 billion indicates that costs from
motor vehicle crashes have increased by $11.3 billion or 8.1% since 1990.


48

Although data on source of payment is becoming more accessible through ongoing studies such
as CODES, there are still major gaps in our knowledge of this issue. These include the
following:

oO

As previously noted, there is no data on source of payment for physician visits. Data
from Utah imply that over 40 percent of all injured crash victims are not treated in any
hospital environment. It is likely that most of these see a private physician.

All data collected in the Harris and CODES reports represent estimates of the anticipated
primary payor. In reality, the process of subrogation commonly results in many different
payors picking up a share of the cost. Until more detailed studies are conducted which
follow cases through to their final settlement, it is assumed that aggregate estimates of
primary payors are a reasonable proxy for the actual cost distribution.

Data on medical rehabilitation centers are scarce. In this analysis, a single center
supplied both payment distribution and average cost data, and a single state provided
incidence data. Because both the cost, and the distribution of costs for rehabilitation are
much different from those for inpatient and ER treatment, even a shift of a few
percentage points in incidence could have a significant impact on the estimated
distribution of payments.

Future efforts to address these problems could provide significant improvements in our
understanding of the “who pays” issues.



54

Table 19a
Weights and Factors for Trend Analysis
Weights
PDO] MAISO] _ MAIS] MAIS2|_— MAIS3]_ MAIS4]__ MAIS5]_ FATAL
CPI 87.50%] 85.65%} _ 58.56% 28.42%} 25.60%] 22.48%] 16.18%} _ 12.60%
Med. 0.00% 0.08% 11.59% 20.98%] 24.27%) 40.33%! 46.73% 1.27%
Wage 12.50%] 14.27% 29.85% 50.59% 50.13%] 37.18%} 37.09%] 86.14%)
Total 100.00%f _100.00%] _100.00%f _100.00%J _100.00%] 100.00% 100.00%| 100.00%|
Factors
1990 1.0000} 1.0000} 1.0001 1,0000} 1,000} 1.0000 1.0000} 1.0000)
1991 0.9991] 0.9991 1.0041 0.9596} 0.8011} 0.6407] _0.9276} 0.9718}
1992 1.0208 1.0210} 1.0324} 0.7527} 0.6551} _0.6995| 1.4585] _ 0.9510)
1993 1.0710] 1.0714 1.0898 0.6342} 0.8371 0.8434] 1.2058 1.0079
1994 1.1308 1.1313 1.1562} 0.6842 1.1367] 0.9092] _1.2617] 1.0523)
1995 1.1991 1.1996] 1.2289] 0.7234} 1.2031 0.9673 1.3446] 1.1038
Table 19b
Trend Analysis Results
PDO|__MAISo|_MAISi{__MAIS2|_MAIS3| MAIS4|_MAISS| FATAL] TOTAL]
1990} $35,183 $3,260] $28,440} $16,493] $15,684] $4,108] $3,867] $32,157] $139,192|
1991} $34,385) $3,704] $29,103]_$19.410| $12,226] $2,776] $3,587] $31,252] $136,444]
1992] $35,132} $3,785] $29,922] $15,226] $9,999] $3,031] $5,641] $30,582] $133,317]
1993] $36,861 $3,972] $31,585] $12,828] $12,776] $3,654} $4,663] $32,410} $138,749
1994} $38,919} $4,194 $33,510] $13,839] $17,349] $3,939] $4,879] $33,839} $150,469
Predicted $39,785) $3,689] $32,881, $11,284) $17,829] $3,735] $4,879] $33,839] $147,921
[Ratio 1.022) 0.879} 0.981 0.815} 1.028} _ 0.948] 1.000) 1.000]
% Error 2.23% __-12.06%}__-1.88%} _-18.46% 2.76% -5.17%} 0.00%] 0.00%
$38,919 $4,194] $33,510] $13,839] $17,349] $3,939] $4,879] $33,839
Predicted $41,271) $4,448} $35,619] $14,633] $18,362] $4,191] $5,200} $35,494] $159,217
% CH.
1995/1994 1.0604 1.0603 1.0629} 1.0574 1.0584] 1.0639} 1.0657] 1.0489} 1.0581)



38

Table 23

Summary of Total Cost Estimates Used in Trend Analysis
(Dollar Estimates in Billions of Current Dollars)*

1994 % Diff.
Difference From
From 1994 |% Diff. Fromj% Diff. From] Adjusted
Total Cost Cost 1994 Cost_| 1990 Cost Cost
Original 1990 estimate $137.5 NA| NA| NAJ NA|
[Revised 1990 estimate/ $139.2 ($11.3) -7.5% 0.0% 8.1%
1994 Costs $150.5) $0.0 0.0% 8.1% 0.0%
1994 Incidence adj. for $145.6 ($4.9) -3.2% 4.6% 3.3%|
inflation
1994 costs @ 1990 $161.8 $11.3 7.5% 16,2%| -7.0%|
corrected incidence
1994 costs @ incidence $180.2 $29.7 19.7% 29.4%) -16.5%|
ladj for 1990 VMT
1995 preliminary cost $159.2 $8.7 5.8%| 14.4% -5.5%|
estimate

Current dollars refers to the year specified in each row.
dollars and a 1994 estimate is in 1994 dollars.

Thus a 1990 estimate is in 1990



46

Estimated Source of ers i. by Cost Category
| Federal | State | Govt | Insurer | Other | sett | Totat
ledical 14.40%) 9.76% 24.16% 54.85% 6.36% 14.62% 100.0%
[Pre-funeral 0.00%) 100.00%| 10.00%
[Emergency Services 3.87%] 75.75%] 79.62%} 14.74%) 1.71%] 3.93% 100.00%|
Voc. Rehab. 14.40%] 9.76%] _24.16%| 54.85%! 6.36%] 14.62% 10.00%
Market Prod. 16.20%] 3.06%) 19.26% 41.09% 1.55% 38.10% 10.00%
[HH Prod. 0.00%] 41.09%! _ 1.55%] 57.36%] _ 100.00%
lin. Adm. 0.89% 0.51%) 1.40%) 98.60% 100.00%|
lWkplce Costs Le 100.00% 100,00%|
ILegal/Court | 0.00%J_100.00%I 100.00%|
Travel Delay 0.00% 100,00%4 100,00%
[Prop. Damage 0.00%] 65.00% 35.00%] _ 100,00%|

In Table 17, the distribution of sources of payment is summarized for each cost category.

Governmental sources are estimated to account for a significant share of medical care costs,

emergency services, vocational rehabilitation and lost productivity.

In Table 18, this distribution is applied to each cost category. Roughly $13.8 billion or 9
percent of all costs are borne by public sources, with federal revenues accounting for 6 percent
and states accounting for 3 percent. Private insurers paid $82.2 billion or 55 percent, while
individual crash victims absorbed $44.2 billion or 29 percent. The $13.8 billion cost in public
revenues is the equivalent of $144 in added taxes for each of the roughly 96 million
households’ in the United States.

‘Source: Statistical Abstract of the United States 1995. Table 69.



18

“possible injury.” These are frequently referred to as “KABCO” designations.’ In order to
estimate GES injuries based on the MAIS coding structure, a translator derived from 1982-1986
NASS data was applied to the GES police-reported injury profile. NASS data is used because it
was the last available database that provided both MAIS and KABCO designations for non-CDS
cases.

Non-CDS equivalent cases were isolated from the 1982-86 NASS files and split according to their
safety belt status. Belt status was examined separately because belts have a significant impact on
injury profiles, and belt use has increased significantly since the 1982-86 period. The examined
categories were: belted occupants, unbelted occupants, unknown belt status occupants, and
nonoccupants including motorcyclists. A separate translator was derived for each of these
categories. These translators were applied to their corresponding non-CDS equivalent cases from
the 1994 GES file to estimate total non-CDS equivalent injuries by MAIS level for 1994.

The sum of the CDS and non-CDS cases represents police-reported injuries as estimated in these
systems. However, previous analysis comparing state police reports to GES counts have found
that actual police-reported injuries exceed those accounted for in the GES by 10-15 percent
Glincoe and Faigin 1992). In 1990, this undercounting was 14.6 percent, but after adjusting for
motorist reports and injuries categorized as unknown (see Blincoe and Faigin 1992 for a detailed
discussion of these adjustments), the shortfall was estimated to be 12 percent. This issue was
reexamined by comparing 1993 state police-reported injury counts to the 1993 GES (1993 was
the latest year for which both counts were reliably available) and it was found that the ratio of
police reports to GES counts was almost unchanged at 1.148. Therefore, for the current analysis,
the 12 percent adjustment was also applied to the 1994 injury total.

The above methods resulted in an estimate of 4.1 million nonfatal police-reported injuries, 87
percent of which are minor (MAIS1). These estimates are summarized in Table 3 of the
Introduction.

Property Damage Crashes

Crashes that do not result in injury (PDO’s) are by far the most common type of crash.
Unfortunately, information on PDO’s is unreliable because of the wide variety of damage
reporting thresholds in the states. For this report, the ratio of PDO’s to injuries from Blincoe

and Faigin was applied to the 1994 injury total. Unreported crashes, which account for 48
percent of all PDO’s, were also estimated from that report. A total of 12.2 million vehicles were
estimated to be damaged in police-reported PDO crashes. Another 11.2 million were estimated to
be damaged in non-police-reported crashes for a total of 23.4 million PDO involved vehicles.

3K = killed; A = incapacitating injury; B = nonincapacitating injury; C = possible injury; O
= no injury.


36

Table 11
Calculation of 1994 Speed Related Crash Costs and Incidence
Based on 1985 and 1986 NASS and FARS Speed Data

1985-1986 1994
Speed Speed Speed Related] Percent
Related %| 1994 | Related| 1994 | Incidence***] Speed
Total |Factor*] Costs_| Costs** | Incidence Related
IPDO 11.49%] 0.3245} $38,91 $3,875} 23,395,971 2,329,605 9.96%}
IMAISO 16.64%} 0.4697} $4,194] $605] 3,715,370] 535,478} 14.41%
IMAIS1 14.95%] 0.4221] $33,510] $4,340] 4,626,495 599,166] 12.95%
IMAIS2 20.76%] 0.5863] $13 339] $2,489) 398,553} 71,690} 17.99%)
IMAIS3 22.84%] 0.6448} $17,349] $3,432} 166,845] 33,007, 19.78%
IMAIS4 29.63%] 0.8366] $3. 939] $1,011 17,123 4,395 25.67%
IMAIS5S 35.99%] 1.0162 $4,879] $1,521 6,914 2,156 31.18%
[Fatal 35.42%} 1.0000) $33,839] $10,382} 40,676) 12,480 30.68%)
(Total Injuries 5,256,606 722,895} 13.75%)
Total 13.62%
INonfatal
lEnjuries. 5,215,930} 710,415}
[Total Cost. $150,469] $27,656] 18.38%

incidence.

* — Factor is calculated by dividing each speed related % total by that for Fatals (35.42%).

** Speed related costs are calculated by multiplying each factor by the 1994 percent speed related
for fatals (30.68%) and then multiplying this product by the 1994 costs.

*** Speed related incidence is calculated the same way as speed related costs, but based on 1994

Tre


67

REFERENCES

Association for the Advancement of Automotive Medicine. The Abbreviated Injury Scale 1985,
Des Plaines IL: Association for the Advancement of Automotive Medicine, 1985.

Baker, Susan P. and Russell S. Fisher. “Alcohol and Motorcycle Fatalities.” American Journal of
Public Health, Washington, DC: American Public Health Association (APHA), 67:3, March 1977

Blincoe, LJ and Faigin, BM. i yr i 0. Washington,
DC: U.S. Department of Transportation, NHTSA, DOT HS 807 876; 1992.

Blincoe, LJ and Luchter, S. i i i Washington, DC:
U.S. Department of Transportation, NHTSA, DOT HS 806 342, January 1983.

Bowie, NN and Walz M. “Data Analysis of the Speed-Related Crash Issue,” Auto & Traffic
Safety Vol. 1, No. 2, Winter 1994, Washington, DC: U.S. Department of Transportation,
NHTSA, 1994.

Committee on Injury Scaling. “The Abbreviated Injury Scale -- 1985 Revision.” Des Plaines, IL:
Association for the Advancement of Automotive Medicine, 1985.

Dischinger, Patricia C. and R. Adams Cowley. “Alcohol Use Among Victims of Vehicular
Crashes Admitted to a Level I Trauma Center.” i jati
i icine, Des Plaines, IL: AAAM, October 1989.

Greenblatt, J., Merrin, M.B., Morganstein, D., Schwartz, S. i
i Washington, DC: US Department of Transportation, NHTSA,
DOT HS-902128, November 1981.

Harris, Joan S.,
States, 1990, Washington, DC: US Department of Transportation, NHTSA, DOT HS 807800,
January 1992.

Hensler, DR, Marquis, MS, Abrahamse, AF, Berry, SH, Ebener, PA, Lewis, EG, Ling, EA
MacCoun, RJ, Manning, WG, Rogowski, JA, and Vaiana, ME. Compensation for Accidental
Injuries in the United States, Report R-3999-HHS/ICJ, Santa Monica CA: RAND, 1991.

Johnson, Sandra W., and Walker, Johathan, i :

i . DOT HS 808338. Washington, DC; National Hightay Traffic
Safety Administration, January 1996.
Kakalik, JS and Pace, NM. Costs and Compensation Paid in Tort Litigation, Report R-3391-ICJ,
Santa Monica CA: RAND, 1986.


Figure 5
Incidence by BAC Involvement ............. 00.00 c ccc cece eee eeee

Table 11
Calculation of 1994 Speed Related Crash Costs and Incidence Based on 1985 and
1986 NASS and FARS Speed Data .... 0.2.00... 000.0 c cece eee e eee

Table 12
Estimated 1994 Economic Costs Due to Motor Vehicle Crashes Where Excessive
Speed was a Factor 2.6... ccc cece eee n eae

Table 13
Summary of State Source of Payment Data from Harris and CODES Studies... . .

Table 14
1993 Police-Reported Injuries by State and Insurance Status ...............

Table 15
Source of Medical Payments by Specific Governmental Payor ..............

Table 16
Calculation of Weights and Average Source of Payments for Medical Care... ...

Figure 6
Source of Payment for Medical Costs in Motor Vehicle Crashes by
Treatment Level 6... 0... eee eee eee teen eee nneeees

Table 17
Estimated Source of Payment by Cost Category ..............0 000 000ee

Table 18
Estimated Source of Payment, 1994 Motor Vehicle Crash Costs
(Millions of 1994$) .... .oecccccec cece etn ea neaes

Figure 7
Trend in Factors Affecting Motor Vehicle Crash Costs, 1990-1994...........

Table 19a&b
Weights and Factors for Trend Analysis/Trend Analysis Results.............

Table 20
Inputs for Figure 7 and Trend Algorithm ............00 000.00 cceeuuue


National Highway Tratfic 5
Administration
DOT HS 808 425

hitp://www.nhtsa.dot.gov
July 1996


69

NHTSA. “Fatal Accident Reporting System, 1994.” Washington, DC: NCSA, 1995a.
NHTSA. Fi i i Tr

ion, Washington, DC: Office of
Regulatory Analysis, July 1984.
NHTSA. “General Estimates System, 1994.” Washington, DC: NCSA, 1995b.

NHTSA,
Emergenoy Deganingste DOT HS 808329, Washington, DC, September, 1995c.

i ” DOT HS 808347. Washington DC,

February 1996.

Rice, DP and MacKenizie, E.J.
San Francisco, CA: Institute for Health and Aging, University of California and Injury Prevention
Centers, The John Hopkins University, 1989.

Soderstrom, Carl A., J.M. Birshbach and P.C. Dischinger. “Injured Drivers and Alcohol Use:

Culpability, Convictions, and Pre- and Post-Crash Driving History.” The Journal of Trauma,
30:10, 1990.

Soderstrom, Carl A., P.C. Dishinger, and M.T. Soderstrom. “Alcohol Use, Driving Records, and
Crash Culpability ‘Among Injured Motorcycle Drivers.”
, Des Plaines: IL: AAAM, October 1991.

Terhune, K.W.
Drivers. Janaury 1982.

U.S. Bureau of the Census, Statistical Abstract of the United States: 1994 Washington DC: US

Government Printing Office, 1994.

U.S. Bureau of the Census, Statistical Abstract of the United States: 1995 (115 the edition)

Washington, DC, 1995.


29

In a 1990 study, Soderstrom et al. found that police correctly indicated alcohol use in only 71
percent of intoxicated injured drivers. In 1984, Maull et al. found that police only identified 57.1
percent of intoxicated drivers. Dischinger and Cowley (1989) found that police correctly
identified only 51.7 percent of intoxicated drivers and 28.6 percent of involved but not intoxicated
drivers.

In a 1991 study of injured motorcycle drivers, Soderstrom et al. found that police correctly
identified only half of those with positive alcohol readings. In 1977, Baker and Fisher found that
police only identified 29 percent of motorcycle drivers who had been drinking.

These studies are summarized in Table 7. From these studies, there appears to be a rough
consensus that police are only identifying just over half of all legally intoxicated drivers, and only
about a quarter of all drivers who were alcohol involved but not legally intoxicated.
Coincidentally, the number of cases of involved vs. intoxicated drivers in these studies
corresponds closely with the national experience, and the average experience for all cases were
roughly 50 percent correct identifications. With the exception of Soderstrom’s 1990 study and
Baker and Fisher’s 1977 study of motorcycle fatalities, all of these studies found fairly consistent
results, indicating that police identified just over half of all legally intoxicated drivers. No such
consensus is apparent for the involved but not intoxicated cases, with results ranging from 19-46
percent among injury studies. This variation may be a function of the low number of cases
examined. These estimates were used to adjust police-reported estimates of legal intoxication and
alcohol involvement levels.

In this study, adjustments were made for underreported alcohol using methods described in
Blincoe and Faigin. An exception was made to those methods for MAIS 4 and MAIS 5 injuries,
which were constrained to a level consistent with the estimated rate of alcohol use in fatal crashes.

This was done for several reasons:

° An examination of crash time-of-day characteristics indicates that MAIS 4 and 5 injuries
share similar event-time profiles with fatals. Alcohol involvement rates are largely a
function of time of day and day of week. It is thus unlikely that they would differ
significantly in their alcohol-involvement rates.

° The relatively small number of MAIS 4 and 5 cases in the 1994 files produced levels of
alcohol-involvement which, if adjusted directly, would result in unrealistically high alcohol
involvement rates, nearly double those predicted for fatalities using the NCSA algorithm.

The method used to adjust MAIS 4 and MAIS 5 injuries was as follows:

The alcohol involvement rate for fatals was computed using raw data and compared to the revised
estimate based on the algorithm derived by NCSA (Klein, 1986). The percent increase resulting
from the application of this algorithm was then applied to the police-reported percent alcohol
involvement rates previously computed from CDS and GES data to determine a rate that was
consistent with that for fatals. This rate was used to calculate the total increase in alcohol-


18

distribution was used to weight the 1994 costs for each MAIS level. A similar method is
used in Miller (1995).

Because of these methodology changes, the results of this report are theoretically not directly
comparable to NHTSA’s previous estimates. However, the impact of these changes, although
significant for some individual categories such as medical care, legal costs and insurance
administration, is relatively minor overall. The total cost of crashes in 1994 is estimated in this
report to be $150.5 billion. A simple updating of the unit costs in the 1990 report applied to 1994
incidence results in an estimate of $145.6 billion. The structural adjustments noted above thus
increased total costs by $4.9 billion or 3.2 percent, and overall costs of motor vehicle crashes
have increased by 8.1 percent after accounting for the decrease in fatalities, injuries and property
damage, and the increase in costs due to inflation. A full discussion of this issue is presented in
the Trends section of this paper.

The costs that result from the methods described above are summarized in Tables 1 and 2, and in
Figures 1, 2, and 3 in the Introduction Chapter of this report. The $150.5 billion total cost is the
equivalent of roughly $580 for each of the 260 million people’ living in the United States. It also
represents the equivalent of 2.2 percent of the Nations $6.7 trillion Gross Domestic Product.2

‘Source: Statistical Abstract of the United States, 1995. Table 27.

Source: Statistical Abstract of the United States 1995. Table 705.


21

Uninjured Occupants in Injury Crashes

Uninjured occupants in injury crashes (MAIS 0 injuries) incur costs for lost productivity,
insurance administration, travel delay, property damage, emergency services and workplace costs.
The incidence of these occupants was estimated from the 1994 GES by taking the ratio of
uninjured occupants to injured occupants in crashes where at least one person was injured. This
ratio was then applied to the total number of injured occupants to estimate a total of 3.8 million
uninjured occupants. National Center for Statistics and Analysis (NCSA) staff are of the opinion
that police records do not capture all of the uninjured who are involved in injury crashes. If this is
the case, then this method will produce a conservative estimate of uninjured occupants in injury
crashes.

The results of this analysis of incidence are summarized in Table 3 contained in the Introduction
Chapter of this report.


17
Table 4

Persons Killed or Injured and Fatality and Injury Rates by Population,
Licensed Drivers, Registered Vehicles, and Vehicle Miles Traveled, 1966-1994

Killed
Fatality Rate | Registered | Fatality Rate | Vehicle Fatality
Resident | Fatality Rate | Licensed | per 100,000 | Motor | per 100,000 | Miles Rate per
per 100,000 | Drivers Licensed | Vehicles | Registered | Traveled | 100 Million
Year_| Fatalities | (Thousands) (Thousands)| Drivers | (Thousands)| Vehicles _| (Biitions)
1966_| 50,804 195,576 26.02 100,998 50.39 95,703, 53.18 926 55
[1887 | 80,734 | 187.287 —] Z TO3,172 5.18 38 355 Bit 6a 33
a A T9030" ae 105,470. B07 T0287 | 8120] Te 32
[138553545 201,385 78 108,308 | 40.44] id 7585 7,082 30
[71070 —| 83.827 205,584 580 | 111 543} 4718 Ti 2ar a7 7170 a7
1971 _| 32,545 206,527 3540 114,238 W5E 118330 5 [“Ti7 a5
SABES — Tae —_[__ 5.08 _} ar 48.10 122,587 Eis) 1,280 43
2537 121 545 a AT 730,025 HST 13513 a7
[1074 [45,18] 213.347 3118 135 427 36.05 134 33.50 T28T 35
O75 _| 44525 215,465 20,66 120,751 341 T BT 7,528 34
[1976 [45 535 217583 2052 134 056, Ete 130,731 ELEY] 7402 32
1077 _|_ 47 878 219,760__| 21.79 T3827 ELA 134,887 35.45 727 33
1578 me ae | ae 140 ea rai 140,978 35.70 ae EK]
254 SBT er, 145,284 3 TH BOS 3528 7 EK
O80] 31,051 | 227 285 22.48 145 205 35.16 14 B45 3475 1527 35
[1o8T | a0, 301 | — 25,857 Ba a7 075 — | MKS 3507 T 353 32
43,545 231,506. TE5T 150,254 75.28 | 181,148 25.07 1,555. 25
TO8S_| 43,585 734,580 18.18 54380 | 2785 153,530 ri 753 28
1o84_| 44.87 235,477 “TE. | 188 aoa x [iss s00 {27s 7,720 28
[1988 | —45,538 —| 338,758 —| 1838 | 188 B88 | — 37 0a [26307 7774 25
TOES —|— 48 087- 247,107 a 25.50 185,137 27aT 1B 25
1587 —|— 46,300 | 343.227 | 18.08 TOT Te 2587 | 172388 | oT 1527 24
1988] 47,087 | 245, 788 W.18 “Em [176,757 —] i mend 23
5Bz hed 5.38 15 585 2753___| 160,78 25.27 z 22
TOI | 44,555] é eras — 3 [Tea] t PACS 27
[ToT [41,508 | 282.137 —] x [168.005 Pu TEE OBE Ki BIE ik
[1092 | "39 2507 on 15.30 175,125 2587 [84 B84 Ha) 2a TT
TOOS_[ 4,180, 1537 T7319 4 2T3t z TT
[ieee Lao e781 20 sa see Tae ree ozs rer} — 3s —t-3 85 tt
Injured
Injury Rate | Registered | injury Rate | Vehicle injury
Police | Resident | Injury Rate | Licensed | per 100,000 | Motor | per 100,000 | Miles Rate per
Reported | Population | per 100,000 | Drivers Licensed | Vehicles | Registered | Traveled | 100 Million
Year| injuries _|(Thousands)| Population |(Thousands)| _Drivers__|(Thousands)| Vehicles _| (Billions) vet.
4988_13.416,000 2.026 4
"1080 _[3,264,000 et 2,096 5
[1860 _]5,237 000 [345,350 1,205 187,015 7550 783,934 1.758 2,144 ST
ee a ee Ty
me 7 att ta
TO03_|3, 125,000 __| 287. 127 LCR T8058] 108,485] 1.858 2,207 it
TOOT ]3.215 000 | 280,341 | 1.258 —] 175.108 —}- —1 858 10233771 —_] 2.388 TH

Deaths,

fSource: Vehicle Miles of Travel and Licensed Drivers—Federal Highway Administration;
(Administration; Registered Vehicles, 1975-1994—R.L. Polk & Co. and Federal Highway Admi H
Peaths, 1968-1974—National Center for Health Statistics, D.H.H.S., State Acckient Summaries (adjusted to 30-day traffic deathe by NHTSA); Traffic

1975-1984—Fatal Accident Reporting System (FARS), NHTSA, 30-day traffic deaths; Traffic Injuries, 1988-1984—General Estimates System
1 N

Registered Vehicles, 1966-1974—Federal Highway
inistration;

|.S. Bureau of the Census; Traffic



30

calculated using the rates and methods described in Blincoe and Faigin. These results were used
to determine the relative frequency of unreported cases for each BAC category. These were used
as weights to distribute the total increase in alcohol cases for each BAC category. Increases in
alcohol involvement were then deducted from the uninvolved totals.

Data from the 1994 GES indicate that alcohol was involved in 4.5 percent of PDO crashes. This
number was adjusted to reflect underreported alcohol using methods established in Blincoe and
Faigin.

Alcohol involvement for uninjured occupants was estimated by distributing the totals according to
the relative portions of each of the BAC Categories that reflected uninjured occupants in the 1992-
94 GES. These portions are shown in Table 8.

The incidence and cost distribution by level of alcohol involvement is summarized in Tables 8 and
9 and in Figure 5. Alcohol-involved crashes account for 17 percent of PDO’s, 20 percent of
injuries and 41 percent of fatalities, By contrast, they account for 30 percent of nonfatal costs and
47 percent of fatal costs. This disproportionate impact on costs is due to two factors. The first is
the greater relative severity of alcohol-involved crashes. In Table 10, injury severity incidence is
expressed in relation to the total number of injured survivors. For all cases, fatalities are about
0.8 percent of injured survivors. This rate doubles for crashes involving alcohol. Similarly, the
rate for critical injuries (MAIS 5) triples for alcohol cases and for severe injuries (MAIS 4) it
nearly doubles. A higher portion of alcohol-involved cases therefore involve the more severe and
expensive injuries.

A second factor is demographics. The cost for each alcohol-involved case of the same injury level
is higher than for other cases because males are disproportionately involved in alcohol-involved
crashes. Since males have higher work force participation and average earnings than females, the
demographics of alcohol-involved crashes cause higher lost productivity than for non-alcohol-
involved crashes, where gender distribution is more evenly spread. In addition, victims of
alcohol-involved crashes tend to be of an age group where this lost productivity is maximized by
the discounting process.



12

Figure 3
Components of Total Costs, Non-Fatal Injuries

HH Prod. $5,859

Prop. Damage $17,595

Legal $3,385
Market Prod. $18,962

Whple. Cost $2,404

Other $2,165

Insurance $6,615 Medical $16,531

(Millions of 1994 dollars)
Other inclndes: emergency, voc. rehab.,
and travel delay


56

The net impact of all these factors was an overall decline in both fatalities and crash costs in 1991
and 1992. Fatalities then edged back up in 1993 and again in 1994, to a level roughly 9

percent lower than the 1990 level. Spurred by inflation in medical care and other cost categories,
the cost of motor vehicle crashes rose in 1993 to a level roughly equal to the 1990 cost. In 1994,
costs rose again to a level 8.1 percent above 1990.

The estimated costs for 1990-94 in Table 20 were expressed in the economic terms of each
specific year. They thus reflect inflationary factors as well as real increases in costs due to
changes in incidence or the nature of costs incurred. The “real” trend in costs can be examined by
removing the impact of increases in the overall cost of living from earlier years estimates. This
was done using the Implicit GDP Price Deflator to adjust these estimates. Table 21 lists the
adjustment factors and results of this calculation. Although absolute costs have risen since 1990,
real costs have declined.* The real decline primarily reflects the lower incidence of fatalities,
injuries, and damaged vehicles that occurred compared to 1990, whereas the increase in absolute
costs was primarily driven by inflation.

Mitigation of Inflationary Impacts

By substituting 1 for f, in the formula discussed previously, an estimate can be made of the
percent change that would have occurred if the incidence of crashes and injuries had remained the
same as in 1990. This is essentially the same as substituting the corrected 1990 incidence for the
1994 incidence and recalculating 1994 costs. This yields a predicted 1994 cost of $161.8 billion,
an increase of $22.6 billion or 16.2 percent over 1990 costs. This represents the potential impact
of inflation on crash costs over this time period if there were no change in the incidence of motor
vehicle crashes. As noted previously, the actual rise in costs was only $11.3 billion or 8.1 percent.
Improved driving habits, roadways and motor vehicles safety features have thus cut the expected
impact of inflation on 1994 motor vehicle crash costs by 50 percent, and saved $11.3 billion in
economic costs.

Savings from Reduced Injury Rates

The rate of fatal and nonfatal injury as a function of driving exposure (VMT) has declined steadily
for over two decades. A variety of improvements in motor vehicles, roadways and driving
behavior are responsible for this trend. In 1990, the fatality rate per 100 million VMT was 2.1
and the police reported injury rate was 151. By 1994, these rates had declined to 1.7 and 137
respectively. A more comprehensive way to view the impact of safety improvements is to

°Note that the GDP deflator factors out inflation in overall price levels. The specific
market basket of costs associated with motor vehicle crashes has increased by more than
the general level of inflation (16.2% based on 1990 incidence). An even larger decline in
real costs would be indicated if adjustments were based on each years actual crash cost
profile.



INTRODUCTION

In 1994, 40,676 people were killed, 5.2 million were injured, and 27 million vehicles were
damaged in motor vehicle crashes. The death, injury and property damage caused by these
crashes is a major cause of personal suffering and financial loss to the victims, their families and
friends, and to society at large. NHTSA estimates that in 1994, the economic cost of motor
vehicle crashes was $150.5 billion. Included in these losses are lost productivity, medical costs,
legal and court costs, emergency service costs, insurance administration costs, travel delay,
property damage and workplace losses.

Motor vehicle crashes affect both the individual crash victims and society as a whole in numerous
ways. The cost of medical care, for example, is borne by the individual through payments for
uninsured expenses, and by society through higher insurance premiums and through the diversion
of medical resources away from other needs, such as disease control or medical research.
Significant costs also are associated with the productivity that is lost when an individual's life is
claimed at an early age or as a result of an injured person's disability. Those dependent on the
victim suffer the immediate economic hardship from foregone income, but society also suffers
through efforts to support the victim or victim's dependents and, eventually, through foregone
contributions to the nation's productivity.

This report examines these and other costs resulting from motor vehicle crashes. The purpose of
presenting these costs is to place into perspective the tragic losses resulting from these crashes,
and to provide information to government and private sector officials for use in structuring
programs to combat these needless losses.

Total economic costs are summarized in Table 1. The total economic cost in 1994 resulting from
motor vehicle crashes is estimated to have been $150.5 billion. Of this total, medical costs were
responsible for $17 billion, property losses for $52.1 billion, lost productivity (both market and
household) $54.7 billion, and other costs $26.6 billion.

The largest single cost component is property damage, which accounted for over a third of total
economic costs. The high cost of property damage is primarily a function of the high incidence of
minor crashes in which injury is either insignificant or nonexistent (see Table 3).

Although property damage costs are the largest single component of total costs, the value of
market and household productivity together account for 36 percent of total costs. Medical,
emergency services (EMS, which includes police, fire department and ambulance services) and
vocational rehabilitation costs are responsible for about 13 percent of the total. Legal and court
costs account for about 4 percent, and insurance administration costs account for about 7 percent
of total costs. These costs are summarized in Tables 1 and 2, and Figures 1 thru 3.


27

Injury cases in vehicles that meet these criteria are examined in considerable detail. Insofar as
alcohol involvement is concerned, data are collected on specific BAC levels of all involved
drivers as well as other indications of alcohol involvement.

The General Estimates System (GES) by contrast, collects data on a sample of all police-
reported crashes, without a specific set of vehicle and severity criteria. Although GES collects
data on a broader universe of crashes, it collects less information on each crash. Thus, for
alcohol involvement, cases in the GES system are limited to a yes, no, or unknown indication on
the police crash report. No BAC test results are available for these crashes.

To estimate alcohol involvement in nonfatal injuries, a combination of these two systems has
been used. The 1992-1994 CDS system, which provides more detailed investigations of the
injuries it covers, was the source of estimates of alcohol involvement in injuries to occupants of
passenger vehicles in tow-away crashes. The use of current files is a relevant consideration in
this case because alcohol involvement has generally been declining in fatal crashes and
considerable effort has been made in recent years to reduce the incidence of drunk driving.
However, data on alcohol involvement is scarce enough that there is considerable variation from
year to year. This variation causes occasional “spikes” in results which can produce absurd or
misleading estimates. CDS alcohol distributions were therefore taken from 1992-94 averages
for all injury levels which demonstrated these spikes (MAIS 1-4).

Alcohol involvement in all other categories of injuries (e.g., non-CDS injuries) was estimated
from GES data. The BAC distribution of these non-CDS alcohol-related injuries was more
complex. An examination of 1984-1986 NASS injuries indicated that non-CDS injury crashes
have a different BAC profile than CDS equivalent crashes do. An adjustment was applied to the
respective CDS profiles to produce the non-CDS equivalent profile for each MAIS level.

Details of this method are described in Blincoe and Faigin.

Underreported Alcohol

Police underreporting of alcohol involvement has been well documented in numerous studies.
Typically, these studies compare the results of BAC tests administered in a medical care facility
to police reports of alcohol presence. In a 1982 study of injured drivers, Terhune found that
police correctly identified only 42 percent of drivers who had been drinking. Identification rates
improved at the higher BAC levels with correct identification of only 18.5 percent of these who
had BAC’s of .01 - 09, 44.1 percent of those with BAC's of .10 - .19 and 58,1 percent of those
with BAC's of .20 and over.


63

Treasury bills were negative. In the mid - 1980's, after a decade of higher inflation rates,
inflation began to return to more modest levels. In this type of scenario investors would be
expected to overestimate inflation. As a result of this, and the sustained radical growth in
stocks during the mid to late 1980's, actual real rates of return may have overstated the real
rate of time preference during that period.

The best way to address these concerns is to examine rates over a long period of time. This
allows temporary fluctuations to offset each other and gives less weight to isolated fluctuations
that are not balanced out by cyclical response. The long-term cumulative average rates for
stocks are in the 2-5 percent range, and the average rate of return for Treasury Bills appears to
be zero or slightly negative. These rates are consistent with Lind's 1982 estimate of 0-6
percent and Kolb and Scheraga's 1988 estimate of 1-5 percent.

This analysis will be based on a discount rate of 4 percent. Four percent was chosen because
most long-term cumulative rates of return on stocks cluster around that number. As previously
noted, investors seem to prefer the higher, although riskier, returns from stocks over the more
conservative Treasury Bills by a significant margin. Four percent is a mid to slightly
conservative selection within the range of estimates that have been derived from the analysis
described in this Appendix and from other analyses.


65

Table C-2
Real After-Tax Return on 3-Month Treasury Bills
Real After-tax 5-Year Moving 10-Year Moving
Year 3-monthT-bills Return Average Average _ Cumul._to 1990
1945 0.375 0.020 -0.009
1946 0.375 0.076
1947 0.594 0.122
1948 1.04 0.064
1949 1.102 0.019 0.053
1950 1.218 0.000 0.049 ~0.004
1951 1.552 0.063 0.046
1952 1.766 0.009 0.024
1953 1.931 0.006 0.009 -0.033
1954 0.953 0.002 0.013 ~0.033
1955 1.753 0.017 0.009 0.029 0.003
1956 2.658 0.004 0,004 0.021
1957 3.267 0.011 0.004 0.010
1958 1.839 0.013 0.000 -0.005
1959 3.405 0.016 0.003 0.005
1960 2.928 0.005 0.000 -0.005 0.004
1961 2.378 0.007 0.001 0.002
1962 2.778 0.009 0.005 0.004
1963 3.157 0.010 0.009 0.005
1964 3.549 0.013 0.009 0.006
1965 3.954 0.012 0.010 0.005 0.006
1966 4.881 0.007 0.010 0.005
1967 4.321 0.002 0.009 0.007
1968 5,339 0.002 0.006 0.008
1969 6.677 0.004 0.003 0.006
1970 6.458 0.009 -0.001 0.004 0.009
1971 4.348 0.009 0.005 0.003
1972 4.071 -0.002 -0.005 0.002
1973 7.041 0.008 0,006 0.000
1974 7.886 -0.046 0.015 0.006
1975 5.838 -0,047 -0.022 0.012 -0.007
1976 4.989 0.022 0.025 0.015
1977 5.265 -0.026 0.030 0.017
1978 7.221 0.024 0.033 -0.020
1979 10.041 0.041 ~0.032 0.023
1980 11,506 -0.053 0.033 0.028 0.005
1981 14.029 0.012 0.031 0.028
1982 10.686 0.008 -0.024 0.027
1983 8.63 0.025 0.015 -0.024
1984 9.58 0.021 ~0.002 0.017
1985 7.48 0.017 0.012 -0.011 0.010
1986 5.98 0.022 0.019 -0.006
1987 5.82 0.006 0.018 0.003
1988 6.69 0.008 0.015 0.000
1989 8.12 0.011 0.012 0.005
1990 7.51 0.001 0.009 0.011



66

APPENDIX D
Nonfatal Injury Unit Cost By Body Region, 1994 $
Voc. | Household {Market] Workplace [Travel] Insurance Prop.
Medical] Rehab. | Productivity} Prod. Cost Delay} Admin. | Costs (EMS) Damage Total
Scl
IMAIS 1 Q Q Q Ol d Ca) | of 0
IMAIS 2 0 0] | of oj dod od 0) od
IMAIS 3} 36425} 207, 17642] 57940} 3876] 203 17358] 11951] 506) S771] 151879)
IMAIS 4] 698434] 3406} 116743] 288841) S814] 203) 79586] 59675] 1151 8353] 1262207|
IMAIS S}_ 822272] 5511 113402] 442065) 6931} 203} 88798] 59675] 1171 8018] 1548046]
Brain
[MAIS 1 1381 13 70S]__ 2268} 305} __ 203} 817} 1927152} 3263 9298}
IMAIS 2 6651 98} 2700] 8767, 203} 2672] 1658] 337] 3356] 28009)
MAIS 324994 192] 10925] 35870} 3445] 203; 10946] 7317] 506] S771 _ 100168}
IMAIS 4} 121996] 229) 18841} 62553 4102} 203} 26781] 22562] 1151 8353] 266771
IMAIS S}_ 443224] 199 66381} 219908} 8358] 203; 60521] 59675] 1171 8018] 867658}
Lower Extremity
IMAIS 1 1256] 10} 346] 1054} 253] 203} 542] 138] 152) 3263| 7217]
IMAIS 2} 13915 98 4366} 14055] 1784] 203} 4591 3141 337] 3356] 45846}
S3] 40218 225| 12186] 39971 4185} 203} 13332] 9336] 506) S771] 125935}
S47 57764 197] 17724} 60052] 5433} 203} 20015] 1505871151 8353} 185949)
iS 5 Y) iy 0 0 oO} i) iY) of 0}
Upper Extremity
[MAIS 1 1066 23 623] __ 1992 296] 203} 728] 1794 __—*152} 3263 8526}
MAIS 2 8272 56 5292] 17190] 2005] 203} 4754] 2580{ 337} 3356] 44044!
IMAIS 3} 18020} 113 11763] 38621) 3826] 203 10977] 7151} 506] S77} 96951
MAIS 4 0 ) 0) 0} 0 i) 0} OF ) ie) 0
MAIS 5 0} 0 ) 0} 0 0 oO Of 0 i)
Trunk, Abdomen
IMAIS 1 1228] E) 384] 1196} 2674 203} 566} 155] 152 3263} 7422)
iS 2 5781 210) 2857} 9118) 1369] 203} 2692) 1852] 337 3356] 27776)
IMAIS 3 17706) 274 7114} 23336 2740] 203 7320] 5084 506] 577\}__ 70055)
IMAIS 4} 34463 316] 10129] 34208} 3750{ __ 203 11717] 9193} 1151 83534113482]
IMAIS 5S} 57964 360 13784] 46681. 4230} 203} 16876} 13446] 1171 8018] _162732|
Face, Other Head/Neck
MAIS 1 1983 51 584] 1881) 275} 203 783} 183 152] 3263 9359}
IMAIS 2 5570 58 3612) 11747 1732] 203 32722073} __ 337 3356] 31960!
IMAIS 3} 22005] 203| 15928] 52285} 4464] 203; 14551]_9078] 506 S771] 124993}
MAIS 4} 51304} 44) 14276] 47759} 4687} 203} 16544§ 12820} 1151 8353] 157142}
SSP 39473) 244! 3980S] 132890} 8928] 203 35398] 21528} 1171 8018] _287657|
Minor External
IMaisi[ 497] af 317] __ 1008] 172{__203f 468 tos 152] 3263] 6190]



24

Ts
Hptiate 194 Fase Conte

State (ions $) Se Total
IALABAMA $1,988 13% S471
ALASKA. $316 0.2% $522
ARIZONA $2,539 1.7% $623
IARKANSAS $1,394 0.9% $568
CALIFORNIA. $15,625 10.4% $497
ICOLORADO $1,850 12% $506

:ONNECTICUT $2,117 14% $646
DELAWARE $382 0.3% $540
IDIST. OF COL. $503 0.3% $883
FLORIDA $8,879 5.9% $636
IGEORGIA $4,346 29% $616
HAWAII $636 0.4% $539
IDAHO $525 0.3% $463
ILLINOIS: $6,447 43% $549
INDIANA $2,955 2.0% $514
IOWA $1,399 0.9% $494
IKANSAS: $1,252 0.8% $490
IKENTUCKY $2,091 14% $546
LOUISIANA $2,736 18% $634
IMAINE $669 0.4% $540
IMARYLAND $3,360 2.2% $671
IMASSACHUSETTS $4,011 2.7% $664
MICHIGAN: $5,549 3.7% $584
MINNESOTA. $1,981 13% $434
MISSISSIPPI $1,336 0.9% $500
MISSOURI $3,051 2.0% $578
IMONTANA_ $412 0.3% $481
INEBRASKA $892 0.6% $549
INEVADA. $1,000 0.7% $686
INEW HAMPSHIRE $441 0.3% $388

IEW JERSEY $6,606 44% $836
INEW MEXICO $1,084 0.7% $655

IEW YORK $13,156 8.7% $724
[NORTH CAROLINA, $4,741 3.2% $671

(ORTH DAKOTA $214 0.1% $336
(OHIO $7,125 4.7% $642
OKLAHOMA $1,709 11% $525
(OREGON $1418 0.9% $459
PENNSYLVANIA. $5,436 3.6% $451
IRHODE ISLAND $445 0.3% $446
ISOUTH CAROLINA. $1,999 13% $546
ISOUTH DAKOTA. $352 0.2% $439
[TENNESSEE $3,001 2.0% $580
[TEXAS S1L159 74% $607
UTAH $897 0.6% $470
IVERMONT $209 0.1% $361
VIRGINIA $3,321 2.2% $507
WASHINGTON $3,205 2.1% $600
WEST VIRGINIA $984 0.7% $540
WISCONSIN $2,451 16% $482
WYOMING $279 0.2% $586
(Total $150,469 100.0% $578



SUMMARY

The cost of motor vehicle crashes that occurred in 1994 was $150.5 billion. This total represents
the present value of lifetime economic costs for 40,676 fatalities, 5.2 million non-fatal injuries, 3.7
million uninjured occupants and 27 million damaged vehicles. These incidents include both
police-reported and unreported crashes. Property damage costs of $52.1 billion accounted for the
most significant portion of the total cost, followed by lifetime losses in marketplace production of
$42.4 billion.

Economic cost components include productivity losses, property damage, medical costs,
rehabilitation costs, travel delay, legal and court costs, emergency service costs, insurance
administration costs, premature funeral costs and costs to employers. Injury costs are presented
by severity level using the Abbreviated Injury Scale. All costs are expressed in 1994 economics.

Significant findings on cost include:
° The cost of motor vehicle crashes that occurred in 1994 was $150.5 billion, the equivalent

of $580 for every person living in the United States, or 2.2 percent of this county’s Gross
Domestic Product.

° Each fatality resulted in lifetime economic costs to society of over $830,000. Over 85
percent of this cost is due to lost workplace and household productivity.
° The average cost for each critically injured survivor was $706,000 -- nearly as high as for

a fatality. Medical costs and lost productivity accounted for 84 percent of the cost for
these Maximum Abbreviated Injury Scale (MAIS) level 5 injuries.

° Present and future medical costs due to injuries occurring in 1994 were $17 billion,
representing 11 percent of total costs. However, medical costs accounted for 22 percent
of non-fatal injury crash costs.

° Lost market productivity totalled $42.4 billion, accounting for 28 percent of total costs,
and lost household productivity totalled $12.3 billion, representing 8 percent of total
costs.

° Because of their high incidence, crashes of vehicles that sustained only property damage

were the most costly type of occurrence, totalling $38.9 billion and accounting for
26 percent of total motor vehicle crash costs.

° Property damage in all crashes (fatal and injury) as well as property-damage-only crashes
totalled $52.1 billion and accounted for 35 percent of all costs, more than any other cost
category.

° About 24 percent of medical care costs resulting from motor vehicle crashes are paid from
public revenues, with Federal revenues accounting for 14 percent and states and localities
10 percent.

° Roughly 9 percent of all motor vehicle crash costs are paid from public revenues. Federal
revenues account for 6 percent and states and localities paid for about 3 percent. Private


Table 21

Estimated Trend in Crash Costs, 1994$ 2.2... 0... ccc eee eee eee 57
Table 22

Predicted CDS Survivors Based on 1990 VMT .......... 0.000 c veces 57
Table 23

Summary of Total Cost Estimates Used in Trend Analysis (Dollar Estimates

in Billions of Current Dollars)... 2.2.0... cece cee eee eae 58
Table A-1

Comprehensive Fatality and Injury Costs .. 0.0.0... 0.0000 cee eee eeuee 59
Table C-1

Real After-Tax Return on Stocks, 1940-1990... 2.0... 000.0000 cee eee 64
Table C-2

Real After-Tax Return on 3-Month Treasury Bills............... 0.00005 65
Table D

Nonfatal Injury Unit Cost By Body Region, 1994$............. 0.00000. 66


13

HUMAN CAPITAL COSTS

The costs documented in this report are the economic or “human capital” cost components for
motor vehicle injuries and crashes. The conceptual framework of human capital costs
encompasses direct and indirect costs to individuals and to society as a whole from decreases in
the general health status of those injured in motor vehicle crashes. Individuals are seen as
producers and consumers of a stream of output throughout their lifetime. Injured individuals are
considered part of total societal impact, hence, the value of their decreased production and their
decreased consumption is included in total cost. The resources consumed in response to any
injury or crash that might otherwise be used for increasing the general state of well-being in
society also are counted in total cost.

Direct costs include emergency treatment, initial medical costs, rehabilitation costs, long-term
care and treatment, insurance administrative expenses, legal costs, and employer/workplace costs.
Indirect costs are productivity costs in the workplace due to temporary and permanent disability
and decreases in production in the home resulting from these disabilities. In addition, crash costs
other than those directly attributable to an injury -- property damage and travel delay -- are
estimated for injury and non-injury crashes. A description of each of these cost categories is
included in Appendix B.

The injury and crash costs calculated using the human capital method do not include decreases in
emotional well-being unless they result in medical treatment, nor do they include values for pain
and suffering or permanent losses in functional capacity unless they result in permanent earnings
losses. They also do not purport to measure decreases in the enjoyment of life. Due to those
omissions, injury and crash cost totals calculated using the human capital methodology are not
comprehensive. Therefore, these costs should not be used in direct comparisons with the costs of
reducing injuries and crashes to produce benefit-cost ratios.

However, these costs can legitimately be used in the following purposes:

© for calculating the economic cost savings from reducing a given number of injuries or
crashes;

o for demonstrating the economic magnitude of the crash problem in the U.S. or in a State;

o for evaluating the impact of injury on a specific sub-sector of the economy such as
consumption of medical resources or employer costs.

Unit costs in this report were derived from Miller et al. (1995) and Miller (1995). Miller et al.
modified unit cost data from three previous reports, Miller et al. (1991), Blincoe and Faigin
(1992) and Miller (1993). Modifications were as follows:

o The short-term wage loss and travel delay costs from Miller (1993) were inflated with the
Employer Cost Index rather than Average Hourly Earnings. The Employer Cost Index is
preferable because it includes supervisory personnel and fringe benefits.


3

A variety of factors including increased safety belt use, decreased driving under the
influence of alcohol, safer vehicles, and improved roadways reduced the incidence of
crashes, death and injury. This offset about half of the potential cost increase due to
inflation, leaving costs 8.1 percent higher than in 1990.

If fatality and injury rates had remained at 1990 levels, 1994 crash costs would have been
$29.7 billion (or 20 percent) higher than the $150.5 billion measured in this study.


19

Unreported Injuries
Although most crashes are reported to police, a significant number go unreported. This is most
likely to occur in crashes where the injured party is at fault, and does not want to involve police
for fear of insurance or legal sanction, or in which minor bicycle or pedestrian injuries occur. In
addition, a variety of administrative, clerical, or procedural errors may result in the injury going
unrecorded. For example, in some cases, helicopters or ambulance transport may occur prior to
police arrival, or information on the injured parties may not be provided to police. Estimates of
unreported injuries vary by injury severity with nearly one quarter of all minor injuries and almost
half of all PDO crashes going unreported. By contrast, all critical or fatal injuries are believed to
be reported.

In the previous NHTSA analysis (Blincoe and Faigin, 1990), unreported injuries were estimated
from data derived by Rice (1989) and Miller (1991) from the National Health Interview Survey
(NHIS). In June 1996, the Department of Health and Human Services (HHS) announced that all
motor vehicle injury estimates from the NHIS since 1982 through 1994 were in error.

Apparently, a programing error resulted in multiple injuries being coded as multiple injury victims,
which resulted in an overstatement of total injured persons. HHS subsequently supplied revised
estimates for those years. An examination of these data indicated a large degree of variation in
annual estimates, with annual injury estimates changing by as much as 40-50 percent. In some
years, the NHIS total was even significantly smaller than police reported totals. This is apparently
due to the small sample size; only 50-100 cases of motor vehicle injury are found in the NHIS
survey annually. For these reasons, the NHIS survey was not used in the current Teport. Instead,
a report compiled by Westat Inc. (Greenblatt et al., 1981) was used. Greenblatt et al. conducted a
survey of 630 households where a driver had been injured in a motor vehicle crash to determine
the portion of motor vehicle crashes that were reported to the police. They found that for every
police-reported crash, there were 27.4 unreported crashes.

Blincoe and Faigin distributed the NHIS-based unreported injury total according to the relative
incidence of non-hospitalized injuries. This was done because Greenblatt et al. had found no
cases of unreported injury that involved hospitalization. For this report, the portions of each
MAIS category that were unreported in Blincoe and Faigin were modified to reflect the total
unreported injury ratio from Greenblatt et al. This was done by multiplying by the ratio of
unreported to reported injuries in Greenblatt et al. (.2738) to that in Blincoe and Faigin (.2854).
The resulting estimates maintain the injury distribution techniques from Blincoe and Faigin but
reflect the total rate of unreported injury from Greenblatt et al. These results are reflected in
Table 3 in the Introduction section of this report, and in Figure 4. These data indicate that 22
percent of all nonfatal injuries, primarily minor (MAIS1) injuries, are not reported to the police.




42

T 14
1993 Police-Rey and Status
Tort and All ‘Compulsory First-Party No-
Other States Fault States

lAlabama 44183

Alaska 3686

lArizona 63037

Arkansas 39148

{California 315184

IColorado 43021
{Connecticut 43963

[Delaware 8344
[Dist of Col, 10190

Florida 212497
[Georgia 309463.

Hawaii 13884
Idaho. 11593

IIlinois 155590

Indiana 75614

lows, 35510

Kanasa 30142
[Kentucky 55205
Louisiana. 77896

Maine 17216

|Maryland. 62976
IMassachusetts. 90732
Michigan. 134548
[Minnesota 44987
Mississippi 33999

Missouri 71517

Montana, 9288

[Nebraska 26117

[Nevada 21264

[New Hampshire 10384

[New Jersey 129953
[New Mexico 28032

[New York 273709
[North Carolina 129535

[North Dakota 5507
[Ohio 206213

[Oklahoma ATN47

[Oregon 32718
Pennsylvania 131503
[Rhode Island 10445

South Carolina 50349

South Dakota 8410

[Tennessee 76490

[Texas 298891

{Utah 25763
Vermont 4573

Virginia 77852

\Washington 76332

West Virginia 28149

Wisconsin 60902

Wyoming. 5845

[Total 1295489
1% Total 63.89% 36.11%
SOURCE: Individual state transportation agencies.



6

or lacerations can lead to similar results with the additional emotional trauma associated with
permanent disfigurement. From an individual standpoint, these aspects can be the most
devastating result of a motor vehicle crash. Moreover, they can continue to negatively affect a
person's life, regardless of any economic compensation that may occur through the insurance,
welfare or court systems.

While the individual crash victim bears the most severe consequence from the injuries, serious
repercussions also are felt by those close to him/her. Caring for a disabled person represents a
considerable burden to the family, both economically and emotionally, and result in limitations on
individual and family activities. The emotional consequences of the victim's physical problems can
often result in personality problems that affect family relationships and may even affect the
cohesiveness of the family unit. The effects on family members can be particularly devastating
when the crash leads to death. The effect of sudden, unexpected and permanent separation from
parent, child, or sibling can raise feelings of grief, anguish, guilt, fear, insecurity and a sense of
loss that can affect a person's emotional state for years after the accident occurred. Often
individuals will attempt to deal with this loss by withdrawing either emotionally or physically from
the family. In severe cases, this can lead to the breakup of previously stable family units.

Action taken by society to alleviate the individual suffering of its members or to reduce the
incidence of this suffering would be justified in and of itself; i.e., to increase the overall quality of
life for its individual citizens, In this context, economic benefits from such actions are useful to
determine the net cost to society of programs that are primarily based on humane considerations.
If the focus of policy decisions were purely on the economic consequences of motor vehicle
crashes, the most tragic and, in both individual and societal terms, possibly the most costly aspect
of the toll of such crashes would be overlooked.

Users should be aware that the focus of the costs presented in this report is on the economic
impact of motor vehicle crashes. They do not represent the more intangible consequences of
these events to individuals and families and should therefore not be used by themselves to produce
benefit-cost ratios. Measurement of the dollar value of intangible consequences such as pain and
suffering has been undertaken through numerous studies. These studies have estimated values
based on wages for risky occupations and purchases of products for improvements in safety
among other measurement techniques. These "willingness-to-pay" costs can be an order of
magnitude higher than the economic costs of injuries. Currently, most authors seem to agree that
the value of fatal risk reduction lies in the range of $2-5 million per life saved. Appendix A of this
report discusses these estimates.


5

Alcohol use is one of the major causes of motor vehicle crashes. Historically, about half of all
fatalities have occurred in crashes where a driver or pedestrian had been drinking. This report
focuses specifically on the cost of alcohol crashes and includes estimates of the incidence of
alcohol-related crashes that were reported and not reported by police. The results indicate that
alcohol is involved in crashes that account for 30 percent of all economic costs, with over 78
percent of these costs involving crashes where a driver or pedestrian was legally intoxicated,
defined as Blood Alcohol Content (BAC) > .10.

The Abbreviated Injury Scale (AIS) used in this report provides a convenient, but imperfect, basis
for stratifying societal costs. Significant sources of economic loss, such as medical costs and
foregone productivity, are highly dependent on injury outcome. AIS codes are primarily oriented
toward the immediate threat to life resulting from the injury, and are estimated soon after the
crash occurs. In general, more serious injuries have more serious outcomes; however, in many
instances, outcome is not accurately predicted by initial AIS code assignments. For example,
some injuries with low AIS codes, such as lower extremity fractures, can result in serious long-
term outcomes. There is currently no incidence database organized by injury outcome. The
development and use of such a database could improve the accuracy of estimates of economic
cost, and might result in a significant shift in the relative number of injuries regarded as serious.

Generally, this analysis focuses on "average" costs for injuries of different severity. This approach
is valid for computing aggregate costs at a nationwide level; however, it should be noted that the
cost of individual cases at each injury level can vary dramatically. While the average costs
indicated in this report are significant, in individual cases they can be exceeded by factors of three
or more. There is considerable evidence to indicate that the most serious injuries are not
adequately covered by insurance. Depending on the financial ability and insurance coverage of
the individual victims, the medical and rehabilitative costs, as well as the loss in wages resulting
from serious injury, can be as catastrophic to the victim's economic well being as to their physical
and emotional condition.

In using this report for analyzing the impact of crash and injury countermeasures, care should be
taken to include only those cost elements that are applicable to the specific programs addressed.
For example, programs that encourage safety belt usage may reduce costs associated with death
or injury, but would not have a noticeable effect on property damage. Therefore, consideration
should be given to the nature of the benefits that may result from any proposal before
incorporating the results of this report into analyses or recommendations.

Economic costs represent only one aspect of the consequences of motor vehicle crashes. Persons
injured in these crashes often suffer physical pain and emotional anguish that is beyond any
economic recompense. Permanent disability such as paraplegia, quadriplegia, loss of eyesight, or
brain damage can deprive an individual of the ability to achieve even minor goals and aspirations,
and can result in dependence on others for economic support and routine physical care. Less
serious but more common injuries such as whiplash can result in chronic physical pain and
effectively limit the victim's physical activities for years after the crash. Serious burns, contusions,


55

Table 20
Inputs for Figure 7 and Trend Algorithm
Inputs
CPI Crash
Year | Medical All Total | Fatals % Belt VMT GES Costs
Per Capita] Items | Comp.|% Alcohol] Use Billions) | Fatals | Injuries |(Millions)
19 2,105.2 130.7] $107.0} 0.5) 0.49} 2,144] 44,599] 3,231,000} $139,192
1991 2,283.7, 136.2] $111.7| 0.48} 0.59} 2,172] 41,508] 3,097,000] $136,444)
1992! 2,459.8} 140.3] $115.6 0.46 0.62, 2,240] 39,250] 3,070,000} $133,317
1993} 2,635.4 144.5] $119.8) 0.44 0.66} 2,297] 40,150] 3,125,000} $138,749
1994] 2,785.9] 148.2] $123.5 0.41 0.67 2,347] 40,676} 3,215,000} $150,469)
Index
1990=1
1990) 1.000} 1.000] _ 1.000) 1.000} 1.000) 1.000] 1.000) 1.000} 1,000}
1991 1.085} 1.042] 1.044} 0.960} 1.204} 1.013] 0.931 0.959) 0.980)
1992 1.168} 1.073] 1.080} 0.920) 1.265} 1.045} 0.880 0.950} 0.958}
1993 1,252} 1.106] 1.120) 0.880) 1.347| 1.071} 0.900) 0.967| 0.997
1994] 1,323 1.134f 1.154) 0.820) 1.367] 1.095} 0.912) 0.995 1.081
Inputs, Continued
MAIS2 MAIS3 MAIS4 MAISS
1990) 305,169) 87,812) 14,028) 3,446
1991) 278,378) 66,779} 8,479) 3,008
1992) 209.421) 52,30] 8,806) 4,486)
1993} 169.273) 64,022! 10,114) 3,524)
1994) 176,355 83,878 10,473} 3,535
Index
1990=1
1990) 1.000 1.000) 1.000} 1.000}
1991 0.912) 0.760) 0.604] 0.873;
1992! 0.686} 0.596} 0.628) 1.302
1993} 0.555 0.729) 0.721 1.023
1994] 0.578) 0.955] 0.747] 1.026



38

SOURCE OF PAYMENT

The economic toll of motor vehicle crashes is borne by society through a variety of payment
mechanisms. The most common of these are private insurance plans such as Blue Cross-Blue
Shield, HMO’s, commercial insurance policies or workers compensation plans. Medicare is the
primary payor for most people over the age of 65. When these sources are not available,
government programs such as Medicaid may provide coverage for those who meet eligibility
requirements. Expenses not covered by private or governmental sources must be paid out-of-
pocket by individuals, or absorbed as losses by health care providers.

For this report, estimates of the payment mechanism for motor vehicle crashes have been derived
from a variety of sources. Estimates for property damage, travel delay, legal costs and insurance
administration are taken directly from the 1991 Urban Institute Study “The Costs of Highway
Crashes” (UI). Lost market and household productivity was derived by isolating the market
productivity portion of the total productivity estimates provided in the UI report and recomputing
the distribution separately under the assumption that lost household productivity would be split
between self, private insurance and other, while lost market productivity would be split among
these groups plus state and federal funds. Vocational rehabilitation costs were assumed to be
distributed in the same fashion as medical care. Premature funeral costs were assumed to be
borne entirely by the individual.

The distribution of medical care payments has been measured in a number of NHTSA sponsored
studies (Harris, CODES). These studies indicate significantly different distributions for medical
costs, however. The 1992 study by Harris used E-codes to isolate motor vehicle crash injuries in
5 states. Harris examined charges for discharged hospital inpatients only. No ambulatory or long
term rehabilitation cases were included. Harris found government sources accounting for 29
percent of all cases, private insurance accounting for 52 percent, individual injury victims (self)
accounting for 11 percent and other sources for 8 percent.

By contrast, a recent study conducted by NHTSA (CODES) found that only 16 percent of all
costs were covered by government sources, with 69 percent covered by private insurance and the
remaining 15 percent covered by self and others. The CODES study linked all passenger vehicle
drivers involved in police-reported motor vehicle crashes to EMS, hospital, and other injury
records. CODES analyzed passenger vehicle drivers for whom safety belt utilization was known
from the crash report, and for whom hospital admission are known from the linkage.

The sharp difference between the findings of the Harris and CODES studies was of particular
concern. However, an analysis of these studies indicated that results for Missouri, the one state
common to both, were quite similar (see Table 13). This seemed to imply that the reason for the
difference in the two studies’ results may be related to real differences in the particular states
involved. A second possibility was that the use of all occupants in the Harris study, and only


26

Nonfatal Injuries

In 1988, NHTSA began using a redesigned crash information system that replaced the former
NASS system. In its place NHTSA now collects crash data through a two-tiered system. The
NASS Crashworthiness Data System (CDS) is a probability sample of a subset of police-
reported crashes in the U.S. To qualify as a CDS case, the crash must be police-reported, it
must involve a harmfill event (property damage and/or personal injury) resulting from the crash,
and it must involve a towed passenger car or light truck or van in transport on a public road or

highway.

Table 6
Alcohol-Involved and Intoxicated
Traffic Fatalities, 1982-1994
Legally
Alcohol-Involved Intoxicated
Total (01 BAC) Percent (10 BAC) Percent
Year | Fatalities aI Fatalities of Total Fatalities of Total
1982 43,945 25,165 57% 20,356 46%
1983 42,589 23,646 56% 19,174 45%
1984 44,257 23,758 54% 18,992 43%
1985 43,825 22,716 52% 18,112 41%
1986 46,087 24,045 52% 18,936 41%
1987 46,390 23,641 51% 18,529 40%
1988 47,087 23,626 50% 18,731 40%
1989 45,582 22,436 49% 17,862 39%
1990 44,599 22,084 50% 17,650 40%
1991 41,508 19,887 48% 15,930 38%
1992 39,250 17,859 46% 14,234 36%
1993 40,150 17,473 44% 13,977 35%
1994 40,676 16,589 41% 13,094 32%



43

Table 15
Source of Medical Payments by
Specific Governmental Payor
Emergency Room Inpatient Rehabilitation
IMedicaid: 0.071 0.137 0.435
Federal 0.041 0.078 0.250
State 0.030 0.058 0.185
Medicare: 0.054 0.075 0.061
Federal 0.043 0.060 0.048
Self 0.011 0.015 0.012
Other Government: 0.033 0.037
Federal
State 0.033 0.037
Private Insurance: 0.453 0.580 0.502
Self. 0.257 0.117 0.002
Other: 0.132 0.054
Total 1,000 1,000 1.000

The relative cost of the three hospital categories was a function of Cost-per-case and frequency.
Average costs were obtained from different sources. Emergency room costs were taken from
data provided by the state of Utah for the CODES report, rehabilitation costs were based on data
from RIC and inpatient costs were based on a weighted average of the charge data from Harris
and CODES. Frequency data for ER and inpatient admissions were obtained from 1982-86
NASS files. Frequence data for rehabilitation centers were obtained from the state of Utah.
Utah data indicated that, of those who experience some form of hospital treatment, 0.6% are
admitted to long term rehabilitation centers. Similar data were not available from other states.

Payments from all sources were then combined into five basic source of payment categories:
Federal, State, Private Insurance, Self, and Other (“Other” includes costs absorbed by health
care providers or charities). Within each category, the three hospital status categories were
weighted together based on their relative cost. These weights were applied to the data from


25

ALCOHOL

Alcohol use is a major cause of motor vehicle crashes and injury. Historically, about half of all
motor vehicle fatalities occur in crashes where a driver or pedestrian had consumed some
measurable level of alcohol prior to the crash, and of these cases, roughly 80 percent involved a
level of consumption which met the typical legal definition for impairment (0.10 percent Blood
Alcohol Content (BAC) or greater).* In recent years, there has been a heightened awareness of
the problems caused by drunk driving. Various groups, from NHTSA to Mothers Against
Drunk Driving (MADD) and state and local agencies, have promoted the enactment of laws and
launched public awareness campaigns to help combat this problem. Legal measures such as
administrative license Tevocation/suspension have been enacted in numerous states. The effect
of all this has been a marked decrease in the portion of fatalities that result from alcohol-
involved crashes. Table 6 lists the portion of fatalities associated with alcohol involvement
(20.01 BAC) and legal intoxication (20.10 BAC) since 1982. Alcohol-involvement in fatal
crashes has declined from 57 percent of all fatalities in 1982 to 41 percent in 1994 while legal
intoxication has declined from 46 percent to 32 percent over the same period. Despite these
declines, alcohol remains a significant causative factor in motor vehicle crashes.

As of April 1996, thirty-seven states define legal intoxication, the level at which DWI
Convictions can be made, as having a blood alcohol content of 0.10 percent or higher and 13
states have lowered this level to 0.08 percent. In this report, the definition of legal intoxication
is 0.10 BAC or higher. This is consistent with Most states definition and with the categories of
BAC used in NHTSA publications. FARS data indicate that fatalities involving legally
intoxicated drivers account for 79 percent of the fatalities arising from all levels of alcohol
involvement.

Fatalities

The Fatal Accident Reporting System (FARS), provides detailed information about all traffic
fatalities that occur within 30 days of a crash on a public road. Each case is investigated and
documentation regarding alcohol involvement is included. Alcohol involvement can be
indicated either by the judgment of the investigating police officers or by the results of
administered BAC tests. Cases where either of these factors are positive are taken as alcohol-
involved and any fatalities that result from these crashes are considered to be alcohol-involved
fatalities. In addition, there are a large number of cases where alcohol involvement is unknown.
NHTSA's National Center for Statistics and Analysis (NCSA) has developed an algorithm
which estimates alcohol involvement for these cases based on crash characteristics (Klein,
1986). The total number of alcohol-involved fatalities by BAC level is shown in Table 6 for
1994,

‘As of April 1996, a total of 13 states have changed their definition of legal intoxication to
0.08 BAC and above.


62

percent real rate of time preference for health, which they characterize as being consistent with
financial market rates for the period covered by their study. Moore and Viscusi's estimate was
derived by estimating the implicit discount rate for deferred health benefits exhibited by
workers in their choice of job risk.

With the exception of Moore and Viscusi, the basis for most estimates of the social rate of
time preference has been historical rates of return on investment opportunities. Readily
accessible instruments such as 3-month Treasury bills and common stocks are usually
considered the most appropriate measure. Past performance by these instruments is taken as a
proxy for the rate of time preference in future years, and this in itself causes uncertainty about
the accuracy of any rate selected on this basis. This uncertainty would be mitigated to some
extent if past rates showed some reasonable measure of consistency, but this does not appear to
be the case.

Tables C-1 and C-2 show estimates of the real after tax rate of return on stocks and three
month Treasury bills. An examination of the last three columns in either table indicates that
there is considerable variation from year to year, and that the time period on which any
estimate is based can have a significant influence on the results. For example, an estimate
made in 1985 based on the performance of the stock market that year would use a 10.7 percent
Tate. Based on the previous 5 years, a 4.7 percent rate would be chosen, and based on the
previous 10 years, a 1.9 percent rate would be used. As it turned out, the average real rate of
retum over the following 5 years was 8.1 percent.

Long-term cumulative averages show a similar variation. For the 51 years from 1940-1990,

real rates of return averaged 4 percent. As the period examined decreases, returns rise slightly
but then dip to a low of 1.5 percent for the 21 years from 1970-1990. During the last decade,
retums have averaged 5.6 percent and during the last 6 years, they have averaged 8.1 percent.

Treasury bills show considerably more stability than stocks. Although individual years can
show significant variation, historically they nave given average negative returns of less than
one percent for most cumulative periods since 1945. Since 1980 cumulative returns have been
positive but modest. Treasury bills are a relatively conservative investment and it appears that
investors in Treasury bills are willing to accept real returns that essentially maintain their
current wealth rather than increase it. The higher rates of return that are available from stocks
are reflected in consumer investment patterns, Individuals invest roughly five times as much
money in stocks and mutual funds as they do in Treasury bills.

Another problem with using historical rates of return as a proxy for the marginal rate of time
preference is that actual inflation rates May not match expected rates. Lind (1982) noted that
if the individual systematically understates the rate of inflation, as he might do in a period of
rapidly rising inflation rates, the actual real rates of return will understate his marginal rate of
time preference. From the mid - seventies through the early eighties, inflation was generally
much higher than in previous times. For this time period, real rates of return on stocks and



2

insurers pick-up 55 percent while individual crash victims absorb about 29 percent.
Overall, sources other than the individual crash victims pay about 70 percent of all motor
vehicle crash costs, primarily through insurance premiums and taxes

Motor vehicle crash costs funded through public revenues cost taxpayers $13.8 billion in
1994, the equivalent of $144 in added taxes for each household in the United States.

Significant findings on incidence include:

°

5.2 million persons were injured in motor vehicle crashes in 1994; 1.1 million of these, or
roughly 22 percent, were injured in crashes that were not reported to police.

27 million vehicles were damaged in motor vehicle crashes in 1994; 86 percent of these
were damaged in property-damage-only impacts, with injuries occurring in, or pedestrian
injuries caused by, the remaining 14 percent.

Roughly half of all property-damage-only crashes and over a fifth of all nonfatal injuries
are not reported to police.

The report also includes findings on alcohol-involved crashes. Estimates were made of incidence
and costs involving cases where drivers or pedestrians were legally intoxicated (.10 BAC or
greater), as well as where there was alcohol involved below the level of legal impairment.
Adjustments were made to reflect police underreporting of alcohol. Findings related to alcohol
crash involvement include:

Alcohol-involved crashes resulted in $45 billion in economic costs in 1994, accounting for
30 percent of all crash costs.

Seventy-eight percent of all alcohol-involved crash costs occur in crashes where a driver
or pedestrian had a blood alcohol content of 0.10 percent or greater, the definition of legal
intoxication in most states.

The impact of alcohol involvement increases with injury severity. Alcohol-involved
crashes accounted for 17 percent of property-damage only (PDO) crash costs, 29 percent
of nonfatal injury crash costs, and 47 percent of fatal injury crash costs.

An estimate was also made of the impact of excess speed on motor vehicle crashes:

°

oO

Crashes in which police indicate that at least one driver was exceeding the legal speed limit
or driving too fast for conditions cost $27.7 billion in 1994.

Speed - related crashes restilted in 12,480 deaths, 710,000 nonfatal injuries, and damage
to over 2.3 million vehicles in property damage only crashes in 1994. This represents 31
percent of all fatalities, 14 percent of all nonfatal injuries, and 10 percent of all PDO
involved vehicles.

An analysis was conducted of trends in motor vehicle crash costs since 1990:

ce

Inflation increased the cost of motor vehicle crashes by over 16 percent since 1990.


16

INCIDENCE

Fatalities

Fatality estimates for 1994 were obtained from the Fatal Accident Reporting System (FARS).
FARS contains information on a complete census of all fatal traffic crashes on public roads in the
United States that result in death within 30 days of the crash. It is the single best source for data
on these crashes. For 1994 FARS indicates a total of 40,676 fatalities in traffic crashes. This is
3,923 fewer than in 1990, the last year for which NHTSA examined economic costs. This
represents an 8.8 percent decline over four years, despite an increase in population, licensed
drivers, motor vehicle registrations and vehicle miles travelled during this time period. As can be
seen from Table 4, fatality rates based on each of these demographic measures have been steadily
declining over time. Reasons for this decline in recent years include increased usage rates for
safety belts, a decline in the incidence of drinking and driving, and the introduction of air bags and
other safety features into the vehicle fleet.

Nonfatal Injuries

The FARS census provides an accurate count of fatalities. However, there is no equivalent data
base for injuries. Estimates of nonfatal injuries were derived from a variety of data sources
including the Crashworthiness Data System (CDS), the General Estimates System (GES) the
National Accident Sampling System (NASS), the National Health Interview Survey (NHIS), and
injury estimates provided to the Federal Highway Administration (FHWA) by individual states. A
detailed discussion of these data bases is available in NHTSA’s 1990 report (Blincoe and Faigin,
1992); however, the methods used for combining these data in this report are somewhat different.

The CDS contains detailed information on police-reported injuries incurred by passengers of
towed passenger vehicles. These represent about 54 percent of all police-reported injuries and
typically involve the most serious injuries to vehicle occupants. Estimates of these cases for each
survivor injury severity category (MAIS) were derived directly from the 1994 CDS. These
estimates were then increased by the ratio of CDS equivalent injury cases from the GES, to the
CDS total. This was done because the GES sample is significantly larger than the CDS, and it has
a smaller standard error. It is therefore likely to be a better predictor of total injuries. However,
the level of detail examination available in the CDS makes that system a more reliable predictor of
injury severity.

Because they are not included in CDS, injuries incurred in non-towaway crashes, to occupants of
large trucks, buses, motorcycles, bicyclists or to pedestrians, must be derived from other sources.
The GES provides estimates based on all crash and vehicle types. However, detailed information
regarding injury severity (MAIS) is not provided. Instead, GES provides information based on
vague police-reported injury designations such as “incapacitated,” “non-incapacitated,” and


53

Figure 7

Trend in Factors Affecting Motor Vehicle Crash Costs, 1990-1994

1.4

1.3

1.2

Trend Since 1990
=
a

=

0.9 a =
oO i
0.8
0.7 T T T
1990 1991 1992 1993 1994
Year
—O@— Medical sem OPI
—-b— Fatals ~-®%- Alcohol
~"%-- BeltUse Poe MT
~——H— CrashCosts —A— Wages


60

APPENDIX B

DEFINITIONS OF ECONOMIC COSTS

Medical Costs : The cost of all medical treatment associated with motor vehicle injuries other
than that given during ambulance transport. Includes emergency room and inpatient costs,
follow-up visits, physical therapy, rehabilitation, prescriptions, prosthetic devices, and home
modifications.

Emergency Services: The cost of ambulance or helicopter EMS transport and care, as well as
police and fire department response costs.

Vocational Rehabilitation: The cost of job or career retraining needed due to disability caused
by motor vehicle injuries.

Market Productivity: The present discounted value (at 4 percent discount rate) of lost wages
and fringe benefits over the victims remaining life span.

Household Productivity: The present value of lost productive household activity, valued at the
market price to hire someone else to accomplish these tasks.

Insurance Administration: The administrative costs associated with processing insurance
claims resulting from motor vehicle accidents.

Workplace Cost: The cost of workplace disruption due to the loss or absence of an
employee. Includes the cost of retraining new employees, overtime needed to accomplish
work of injured employee, and administrative costs of processing personal changes.

Legal/Court Costs: The legal fees and court costs associated with civil litigation resulting
from traffic crashes.

Premature Funeral Cost: The present discounted value of paying for a funeral in the present
instead of at the end of the victim’s normal expected lifespan.

Travel Delay: The value of travel time delay for persons who are not involved in traffic
crashes, but who are delayed in traffic congestion caused by these crashes.

Property Damage: The value of vehicles, cargo, and roadways damaged in traffic crashes.



33

Figure 5
Incidence by BAC Involvement

100% 7

80% +

60% +

40% +

20% 7

0%

0

T T T T T T T T
PDO MAISO MAIS1 MAIS2 MAIS3 MAIS4 MAISS5 Fatal

No Alcohol <.10 Bac WE >10Bac



34
SPEED

Excess speed can contribute to both the frequency and severity of motor vehicle crashes. At
higher speeds, more time is required to stop a vehicle and more distance is travelled before
corrective maneuvers can be accomplished. Less time is available for drivers to react to the loss
of control of their own vehicle, or to avoid vehicles or objects that are in their path. The fact that
a vehicle was exceeding the speed limit does not necessarily mean that this was the cause of the
crash, but there probably would have been a better chance of. avoiding the crash had the driver or
drivers been travelling at slower speeds,

To put the speed issue in context with overall costs, an estimate of speed-related crash costs was
made for 1994. A speed-related crash is defined as any crash in which the police indicate that one
or more of the drivers involved was exceeding the speed limit or driving too fast for conditions.
FARS data indicate that in 1994, a total of 12,480 fatalities, representing 31 percent of all motor
vehicle fatalities, occurred in speed-related crashes (which comprise 30 percent of all motor
vehicle crashes).

To estimate the portion of economic costs that occurred in speed-related crashes, 1985 and 1986
NASS files were examined. These files were used because they are the latest accident files that
contain adequate speed information stratified by MAIS level for all crash types. Rates of speed
involvement for each severity level were compared to the rate for 1985 and 1986 fatalities (from
FARS) to determine a relative speed involvement factor for that severity level. This factor was
applied to the speed involvement rate for 1994 fatalities (30.68%) to determine the rate of
involvement for each nonfatal severity category. This rate was applied to total costs for that
category to determine the portion of costs that were speed related. The results of this analysis are
shown in Table 11. A total of $27.7 billion in costs, representing 18 percent of total costs,
occurred in crashes that involved excess speed. Note that, unlike the alcohol cost estimates, the
speed estimate does not include any adjustment for police undercounting of speed involvement.
The degree to which police correctly identify speeding drivers is not known.

A state-specific estimate of speed-related crash costs was developed using the same adjustments
for cost levels and injury incidence described in the section of this paper that discusses alcohol
crash costs. These estimates are summarized in Table 12.

Previously NHTSA has estimated that speed-related crashes cost about $23 billion. The previous
estimate was derived by using rates of speed involvement from Bowie and Walz (1994). Bowie
and Walz examined data from the Crash Avoidance Research Data file (CARD file), the Indiana
Tri-Level study, and FARS to determine the role of speeding in crash causation. Their study
found that speed was a factor in 34.2 percent of fatals, 17.1 percent of incapacitating (A) injuries,
14.6 percent of non-incapacitating (B) injuries, 10.9 percent of possible (C) injuries, and 10.2,
percent of uninjured cases.



49

COST TRENDS 1990 vs. 1994

Prior to this report, the last year examined by NHTSA for motor vehicle crash costs was 1990.
Costs for 1990 were estimated to be $137.5 billion. Since then a number of trends have
emerged:

o Increased safety belt use (up 37 percent), decreased driving while under the influence of
alcohol (down 18%) and the increased production of safety devices such as air bags have
resulted in fewer deaths and injuries. Fatalities declined from 44,599 in 1990 to 40,676
in 1994. Reductions also occurred in nonfatal injuries (5.4 million in 1990, 5.2 million
in 1994) and in vehicles damaged (28 million vehicles vs. 27 million vehicles).

o Inflation has driven up the overall cost of living by 13.4 percent. Medical care costs
have increased even higher, by 32.3 percent.

o Demographic and economic factors have increased travel exposure as measured by
vehicle miles travelled (VMT) by 9.5 percent.

The costs estimated in this paper reflect the impact of these trends, but also reflect changes in
methodology which give improved estimates of costs. This clouds the relationship between the
current and previous cost estimates. This analysis will address several questions. These
include:

o What impact did improved methodology have on the 1994 cost estimates?

o What has happened to crash costs during the 1990s, and what factors contributed to this
trend?

o To what extent has improved safety mitigated the impact of inflation on crash costs?

o _ What impact has improved safety had on crash costs compared to 1990 accident rates?

Impact of Revised Methods

The revised cost methodology described in this analysis had an impact on cost estimates. To
determine this impact, a simple inflation adjusted basis for 1990 unit costs was calculated.
Individual 1990 cost components were inflated using the CPI All Items and Medical Care
indices, as well as average hourly earnings indices where appropriate. These 1994 equivalent
costs were then multiplied by the 1994 incidence to determine the total cost without the
specific unit cost adjustments discussed earlier under “Human Capital Costs.” This resulted in
a total cost of $145.6 billion, implying that the methodology changes made to individual cost
components by Miller, and for this report, resulted in an upward adjustment of $4.9 billion.
This represents 3.2 percent of the 1994 cost estimate of $150.5 billion.


22
STATE COSTS

Over the past decade, states have become increasingly involved in establishing and enforcing laws
related to motor vehicle safety. Safety belt laws, motorcycle helmet laws and increased sanctions
for drunk driving have played a major role in reducing traffic injuries. The impact of traffic
crashes on states is often of interest to legislators considering new traffic safety laws, changes to
existing laws and funding for enforcement of these laws, Recent federal legislation allowing states
to set their own speed limits on interstate highways should increase interest in this issue.

A state - specific distribution of total economic costs was made as follows:

© 1994 fatalities were obtained for each state from FARS. The portion of total national
fatalities in each state was then applied directly to the total fatality cost ($33.84 billion).

© State injury data were obtained from individual states for 1992 and 1993 (the latest years for
which complete data were available). The portion of total national nonfatal injures in each
state was applied to the total cost of all nonfatal injures, PDO’s, and uninjured occupants
($116.63 billion).

© The total costs for each state were then adjusted to reflect locality cost differences based on
the ratio of costs in each state to the national total. Medical costs were adjusted based on
data obtained from the ACCRA Cost of Living Index (ACCRA) and cited by Miller &
Galbraith (1995). Lost productivity, travel delay and workplace costs were adjusted based
on 1994 per-capita income. Insurance administration and legal costs were adjusted using a
combination of these two inflators weighted according to the relative weight of medical and
lost productivity administrative costs. All other cost categories were adjusted using a
composite index developed by ACCRA (also supplied by Miller).

These four adjustment factors were applied separately to the fatal and nonfatal costs for each
state. Weights to combine each factor were derived separately from the relative importance of
each cost category to nationwide fatal and nonfatal total costs. The sum of fatal and nonfatal
costs for each state was then. adjusted to force the sum of all states costs to equal the national
total.

The results of this analysis are shown in Table 5. There is considerable variation in costs among
States, with California having costs that are 75 times as high as those for Vermont. This is
primarily due to the higher incidence of death and injury in California, but also to the higher cost
levels in that state. However, as noted by Miller & Galbraith, cost comparisons between states
that are based on state injury totals can be inaccurate because injury totals do not capture
differences in nonfatal injury severity between states. This would tend to lower costs in rural
states relative to urban states, which typically have lower average speeds and consequently less
severe injuries. Differences between states also may result from different reporting practices that
result in more or less complete recording of injuries from state to state. For example, California
has 2.4 times the VMT as New York and 2.6 times as many fatalities; but California police-
Teported nonfatal injuries are only 15 percent higher than New York. Differences in roadway


52

predictors of other severity levels. This can be seen from the “error” line in Table 19, where
there are significant differences indicated for MAIS 0 and 2 costs. The estimates for 1991-
1993 were therefore adjusted by the ratio of actual to predicted costs to correct for this
imprecision in the algorithm, and produce results consistent with 1994 costs. The inputs and
indices that resulted are summarized in Table 20.

GES police-reported injuries were used to estimate the trend in PDO’s, MAIS 0 and MAIS 1
injuries. Both logic and experimentation indicated that GES provides a better prediction of
trends in these lower severity categories. Roughly 90 percent of all GES injuries are minor
severity.

Table 20 and Figure 7 reveal a gradual 13.4 percent increase in overall consumer costs and a
steep 32.3 percent increase in medical care costs over this period. There were also steady
increases of 15.4 percent in total average compensation and 9.5 percent in driving exposure as
measured by vehicle miles travelled (VMT). All of these factors tended to increase the cost or
incidence of motor vehicle crashes.

At the same time that inflation and VMT were tending to increase crash costs, a significant
change was occurring in the driving habits of the American public. Observed safety belt use rates
climbed from 49 percent in 1990 to 67 percent in 1994. The importance of belt usage in
protecting vehicle occupants has been verified in numerous reports. Belt usage is estimated to
increase an occupants’ chance of surviving a potentially fatal crash by 45 percent, and to decrease
their chance of serious injury by 50 percent (NHTSA, 1984).

Concurrent with the increase in belt use, the incidence of driving under the influence of alcohol
declined. The portion of fatalities that occurred in alcohol-involved crashes dropped from 50
percent in 1990 to 41 percent in 1994. This reflects an overall decline in the incidence of impaired
driving that resulted in fewer motor vehicle crashes.

A third factor favoring the decline in deaths is the steady increase in the portion of the vehicle
fleet that has improved safety features. Air bags, for example, were in 2% of the on-road
passenger car fleet in 1990. By 1994 they were in 17%. Other significant safety features that
became more common during this period include antilock brakes, rear seat lap/shoulder belts and
center high mounted stop lamps.

Another trend that occurred during this period was an increase in the popularity of light tracks
and utility vehicles, which rose from 29 percent of registered passenger vehicles in 1990 to 33
percent in 1994. These vehicles have lower fatality rates for occupants than passenger cars.
However, they are also more aggressive when they impact a passenger car. It is not clear which
of these factors holds the edge in the overall safety picture.


61

APPENDIX C
DISCOUNT RATES

When a person is disabled or killed in a motor vehicle crash, the victim's future productive
contribution to society is reduced or eliminated. In addition, they may incur ongoing medical
or rehabilitation costs throughout much of the remainder of their life. Because these losses
occur in a future time period, they are not directly comparable to costs that occur in the year
of the crash, and they must be adjusted to reflect society's preference for current consumption
or investment opportunities. This adjustment is accomplished through the process known as
discounting.

Discounting reflects the fact that a dollar invested today can earn a real (net of inflation) rate
of return that would result in more than a dollar's purchasing power in a future year.
Although economists are in general agreement that discounting should take place, there is
considerable controversy regarding which rate to use.

There is general agreement within the economic community that the appropriate basis for
determining discount rates is the marginal opportunity cost of lost or displaced funds. When
these funds involve capital investment, the marginal, real rate of return on capital must be
considered. However, when these funds represent lost consumption, the appropriate measure
is the rate at which society is willing to trade off future for current consumption. This is
referred to as the "social rate of time preference," and it is generally assumed that the
consumption rate of interest, i.e.,-the real, after-tax rate of return on widely available savings
instruments or investment opportunities, is the appropriate measure of its value.

The production that is lost by individual crash victims, as well as the medical and other costs
that must be incurred in an attempt to restore them to their pre-crash physical and material
Status, are a measure of the consumption that is lost (or diverted to no-net-gain uses) to the
injured parties and their dependents. It could be argued that the portion of these lost earnings
that are invested rather than consumed represent foregone capital investment and should be
discounted at a rate that reflects the opportunity cost of capital. However, savings rates are
extremely low in the United States. Since the mid-1980's the savings rate has only totalled
about four percent of disposable personal income. As a practical matter, therefore, foregone
consumption is the dominant consideration in establishing a discount rate for crash costs, and
the social rate of time preference is the appropriate measure.

Estimates of the social rate of time preference have been made by a number of authors.
Robert Lind (1982) estimated that the social rate of time preference is between zero and 6
percent, reflecting the rates of return on Treasury bills and stock market portfolios. More
recently, Kolb and Sheraga (1991) put the rate at between one and five percent, based on
returns to stocks and three-month Treasury bills. Moore and Viscusi (1990) calculated a two


TABLES AND FIGURES

Table 1

Summary of Total Costs, 1994 (Millions of 1994 Dollars) ............0..

Table 2

Summary of Unit Costs, 1994 (1994 Dollars) ..........0..0.00.0000.

Table 3

Incidence Summary, 1994 Total Reported and Unreported Injuries and Vehicles . . .

Figure |

Components of Total Costs... 0.2... . eect eee en

Figure 2

Components of Total Costs, Fatalities ........... 0000.0 cee cece eee

Figure 3

Components of Total Costs, Non-Fatal Injuries ..............0 0.0005

Table 4
Persons Killed or Injured and Fatality and Injury Rates by Population, Licensed

Drivers, Registered Vehicles, and Vehicle Miles Traveled, 1966-1994........

Figure 4

Distribution of Reported/Unreported Injuries ................0.0 0000.

Table 5

Estimated 1994 Economic Costs Due to Motor Vehicle Crashes ............

Table 6

Alcohol-Involved and Intoxicated Traffic Fatalities, 1982-1994 ............

Table 7

Portion of Drivers Correctly Identified as Drinking by Police .............

Table 8

Total Incidence by Injury Level and BAC Level .................0004.

Table 9

Total Cost by Injury Level and BAC Level (Millions of 1994$) ............

Table 10
Incidence by BAC Level and Injury Severity Relative to Total Nonfatal Injuries


41

For each payment source (Medicare, Medicaid, private insurance, self, etc.).

x= (Ys, Wet (Ds, 1] w,

Where: x = average portion of hospitalized costs paid by specific payment source

8, = portion of payments made by specific source in no-fault state n

t, = relative weight of sampled state n among other sampled no-fault states as
defined by the relative number of police-reported injuries in each state

W; = relative weight of all no-fault states defined by the relative number of
police-reported injuries in such states to all states (36.11%)

8, = portion of payments made by specific source in tort state z

t, = relative weight of sampled state z among other tort states as defined by
the relative number of police-reported injuries in each state

w, = relative weight of all tort states defined by the relative number of police-
reported injuries in such states to all states (63.89%)

The results of this analysis are shown in the “Hospitalized” column of Table 15,

Both the Harris and the CODES studies examined hospital inpatients. A third NHTSA. study,
“Low Threat-to Life Motor Vehicle Injuries, a Profile of Motor Vehicle Injuries in Emergency
Departments”, (NHTSA 1995c) examined the source of payment for persons who are not
admitted to hospitals as inpatients. This study found that about 15.8 percent of the costs of these
“ambulatory” patients were covered by government sources, while 45.3 percent were covered by
private insurance, 25.7 percent by self, and 13.2 percent by other sources, The study was based
on a sample of 1649 cases treated in emergency departments as a result of motor vehicle crash
injuries.

An estimate of the long-term rehabilitation cost distribution was obtained from the Rehabilitation
Institute of Chicago (RIC). Data obtained from RIC for admission due to motor vehicle injuries
between August 1993 and December 1995 found that, for 322 cases examined, 49.6 percent of
Costs were covered by government programs, 50.2 percent by private insurance, and only 0.2
percent by self.

To estimate source of payment for medical care, data from the CODES, Harris, NHTSA 1995c,
and the RIC studies were used. Medicaid costs were broken out according to their federal and
state shares. In 1992, federal funds accounted for 57.4% of nationwide Medicaid expenditures
with the states accounting for 42.6%. Medicare expenditures are paid primarily by the Federal
government (80%) with private individuals picking up about 20% of the cost of this program.
The portion of costs associated with unspecified government Programs was allocated to state
costs.


39

drivers in the CODES study had caused the difference, possibly due to the added liability of
drivers as controlling parties. However, New York provided data on both drivers and occupants
for the CODES study, and the difference in payment distribution between the two groups was
insignificant.

Harris obtained data from New York and California after publication of her 1992 report.
Although these data have not been published, they are available for inclusion in this analysis,

For the reasons discussed above, it was concluded that the basic difference between the CODES
and Harris reports was due to real differences in the payment experience of two different samples
of states. Data from both studies were then combined to produce a more broadly representative
sample of source of payment experience across the U.S. Several different weighting schemes
were considered for this sample. Weighting the results according to injury population would
seem a logical choice. However, in the new combined sample of 12 states, California and New
York had injury populations that overwhelmed most other states, and would dominate in the
resulting estimates. Since these two states are at the extreme ends of the public payment
spectrum, it was not clear that this would provide an estimate that was representative of the U.S.
overall.

A simple average was also considered. However, this poses the opposite problem, in that it gives
all states equal weight, regardless of the population they represent.

One possible reason for the different experiences among states is that some states have no-fault
auto insurance while others do not. In states with compulsory first party no-fault laws,
automobile insurance is automatically considered the primary source of payment for motor vehicle
injuries. An analysis of state auto insurance laws indicates that there is a strong correlation
between no-fault laws and low public (or high private) payments for motor vehicle injuries. Four
of the five states with the lowest public involvement (Hawaii, Utah, New York and Pennsylvania)
have compulsory first party no-fault requirements. The remaining eight states do not.

Based on this analysis, a weighting scheme based on the states’ insurance laws was devised, with
the sampled no-fault states carrying the weight for all no-fault states and the other eight states
Tepresenting all states without compulsory first party no-fault laws. The basis for these weights
was 1993 police-reported injuries listed in Table 14. Average U.S. source of payments were
calculated as follows:


64

Table C-1
Real After-Tax Return on Stocks, 1940-1990
Year | Dividend p——S<2 Percent [Mare,ar] ta'hetern | sioy | iB¥er |, Coma
ear vi
Wield) ster | pte, | CPE | Chutnge ‘Rite ern Average 1990
Change
1939 12.06] 41.6
1940} 5.59 1102] -0.086f 42.0) 0.010] __ 0.087] 0.037] 0.040]
1941 6.82] 9.82] 0.109) 44.1) 0.050] ott 0.081
1949 724 367] 07 4a.sf 0.107] 0.226 0.128]
1943 4.93 11.50f 0.326] st.sf 0.061 0.296] 0.191
1944 4.86 12.47] ood] 5271 0.017] __ 0.300) 0.074 0.004)
1945| 4.17] Isi6f_ 0.216] 53.9) 0.023) 0.3081 0.152] 0.042] 0.044)
1946 3.85 17.08} 0.127] 58.5] 0.085] _ 0.261 0.034) 0.065]
1947] 493 1517] 0.112] 66.9) 0.144) 0.261 0.166] 0.057]
1948] 5.54] 15.53} 0.024f 72.1 0.078} 0.207] 0.014 0.016]
1949 6.59] 15.23] -0.019f 71.4f_-0.010) _0.200 0.047] 0.01 0.007]
1950} 6.57] 18.40] 0.208f 72.11 o.010f__0.225] 0.200] 0.020) 0.031) 0.048]
1951 6.13 2234f o.214f 7781 0.079] 0.261 0.115] 0.037] 0.051)
1952 5.80] 24.50] 0.097] __79.5f 0.022] 0.289] 0.087] 0.087] 0.072]
1953] 5.80} 2473f 0.009] 30.11 0.008] __0.280] 0.041 0.098] 0.057]
1954] 4.95] 29.691 0.201} 80.5] 0.005] _0.255 0.180) 0.125 0.068]
1955 4.08] 40.49} 0.364] 30.2] 0.004) 0.261 0.304) 0.146] 0.083 0.037]
1956] 4.08] 46.62] 0.15] 8.4] 0.015] _ 0.269] 0.124) 0.147] 0.092]
1957] 435 4438] 0.048] 84.31 0.036 0.271 0.038 0.122] 0.105
1958] 3.97] 46.241 0.042] 86.6f 0.027] __ 0.270) 0.031) 0.120) 0.109]
1959 3.23 5738] 0.241] 87.3 0.008] __ 0.279] 0.187 0.122] 0.133}
1960 3.47] 55.85] 0.027] 88.71 o.o1s] —_ 0.279) 0.010) 0.059] 0.103] 0.024]
1961 2.98] £8.27] 0.222] 9.6] 0.010) __0.285 0.168] 0.068} 0.108}
1962] 3.37] 66.27) 0.029] 90.6f __0.011 0.289] 0.008 0.074] 0.098]
1963 3.17] 698 0.054f 91.7] 0.012) 0.293) 0.048] 0.077] 0.099]
1964 3.01) 8137] ois] 929] 0.013] _ 0.269] 0.127] 0.065] 0.093}
1965 3.00 38.17] ___o.08d} 94.5 0.017] _ 0.248 0.067 0.081] 0.070] 0.016]
1966 3.40} 85.264 0.033] 97.24 0.029] __0.257] 0.027) 0.043} 0.055]
1967 3.20 91.931 0.078] 100.0) 0.029] __ 0.295] 0.048] 0.053] 0.063}
1968] 3.07] 98.69] 0.074) 104.2] 0.042] _0.247] 0.035; 0.050} 0.064]
1969] 3.24 9724f_ 0.009] 109.8] 0.054) __ 0.2581 0.034] 0.018] 0.041
1970 3.83 83.22] 0.149} 116.3] 0.059] 0.237] 0.136 0.023 0.029] 0.015}
1971 3.14) 98.29] ots} 1213) 0.043] 0.2281 0.116 0.006] 0.024]
1972 2.84] 109.20} olf 125.3) 0.033) __0.230] 0.072] 0.011 0.032]
1973 3.06] 107.40] ___-0.016f 133.1) 0.062) 0.241 -0.049| 0.006} 0.022]
1974] 4.47] £2.85] 0.2294 147.7] oo] 0.250) 0.223 0.044) 0.013
1975 431] 86.16{ 0.040] 161.2 0.091 0305 0.031 0.023 0.023 0.034]
1976 3.77] 102.00f__0.184f_ 170.5] 0.058) 0313] 0.089] 0.028 0.011
197] 4.62 98.20] -0.037]_181.5| 0.065] _0.291 0.055 0.054 0.021
1978} 5.28 96.02] 0.022} 195.4] 0.077] __ 0.304] 0.051 0.054) 0.030}
1979 3.47] 103.00} 0.073] 217.41 0.113] 0.329] 0.024 0.014 0.029]
1980] 5.26 118.80] 0.153] 246.8) 0.135] 0.347] 0.001 0.00 0.016} 0.056}
1981 5.20 128.10}__ 0.078] 272.41 0.104] __0:358] 0.018] 0.030} 0.029
1982 5.81] 119.70] ___-0.066] 289.1] _ 0.061] 0347 0.062 0.031 0.042}
1983 4.40) 160.40] 0.340] 298.4f 0.032) __0.325] 0.220] 0.023} 0.016
1984] 4.64] 160.50] 0.001} 311.1 0.043] 0.324 0.010} 0.026] 0.006]
1985 4.25] 136.80] 0.164] 322.2 0.036] __0.290] 0.107] 0.047] 0.019] 0.081]
1986 3.49] 236.30] 0.265] 328.4) 0.019] 03081 0.185] 0.088] 0.029]
1987 3.08 286.80] o.214| 340.41 0.037] __0.273 0.136 0.127] 0.048]
1988 3.64] 265.80} -0.073] 354.3) 0.041 0.272] 0.065 0.071 0.047]
1989 3.45 322.80] o.214f 371.3) o.oas| _0.272] 0.127] 0.098] 0.063]
1999] 3.48] 333.60] 0.033] 391.4) 0.054] 0.272 -0.004| 0.076] 0.061)



Table 3
Incidence Summary
1994 Total Reported and Unreported Injuries
Percent
Police-Reported Unreported Total Unreported

Vehicles:

Injury Vehicles 3,049,595) 831,318} 3,880,914 21.42%
PDO Vehicles 12,165,905 11,230,066} 23,395,971 48.00%
[Total Vehicles 15,215,500} 12,061,384} 27,276,885 44.22%
|People:

MAISO (Uninjured) 2,919,512 795,858 3,715,370 21.42%)
IMAIS 1 (Minor) 3,574,582} 1,051,913} 4.626.495 22.74%
IMAIS2 (Moderate) 335,465} 63,088 398,553} 15.83%]
IMAIS3 (Serious) 155,961 10.884] 166,845 6.52%
IMAIS4 (Severe) 17,008} 115) 17,123 0.67%)
IMAISS (Critical) 6,914 0 6,914 0.00%
Fatal 40,676] ) 40,676} 0.00%
[Total Injured Persons: 4,130,606} 1,126,001 5,256,607, 21.42%
IMAIS 1-5 4089930} 1126001 5215931 21.59%
(Crashes;

IPDO 6,977,132} 6,440,429} 13,417,561 48.00%
Injury 2,687,685 732,662} 3,420,347| 21.42%)

[Fatal 36,223 0} 36,223 0.00%
[Total Crashes | 9,701,040] 71 73,091 16,874,130] 42.51%

|All PDO vehicles, including those involved in injury crashes, are included under PDO vehicles,



51

The conflicting trends that have resulted in the current level of crash costs can be seen from
Figure 7. To generate this figure, data for medical expenditures per capita, the CPI All Items
Index, the total number of fatalities, the portion of fatalities involving alcohol, total wage
compensation, VMT, and the rate of safety belt use were turned into indices with 1990 as the
base. The year-to-year change thus represents the percent change each year over the 1990
base. Crash costs were only available for 1994 and 1990 (the 1990 costs are the recomputed
costs discussed above). For 1991-93, crash costs were estimated by using a factor derived
from the relative incidence of fatalities or injury and the weighted average of the 3 inflators
used in this report. Weights for this average were derived by calculating the percent of total
costs that each cost category represents for each injury severity level. Medical care weight
was applied to medical expenditures per-capita. Weights for market and household
productivity, workplace costs and travel delay were applied to the total compensation index.
All other expenditures weights were applied to the CPI All Items. This resulted in the
following equation:

Tr, = (w,a, + w,b, + w,c,)*f,
Where:
weighted factor for year n relating year n costs to 1990 costs
CPI All Items index based in 1990
medical expenditures per-capita index based in 1990
total compensation index based in 1990
incidence index based in year 1990 (FARS for fatalities, CDS for MAIS
2-5, GES total injuries for PDO, MAIS 0 and MAIS 1)
portion of specific injury levels costs due to EMS, premature funeral,
vocational rehabilitation, insurance administration, legal costs, and
property damage
portion of specific injury levels costs due to medical care
w, portion of specific injury levels costs due to market and household
productivity, travel delay, and property damage

Po Ps
awd

=
It

#
wu

This formula was applied separately for each injury severity level. For MAIS 2, 3, 4 and 5
injuries, f, was the CDS MAIS specific index based in 1990. For PDO’s, MAIS 0 and MAIS
1 injuries, f, was the GES total injury index based in 1990. For fatalities, f, was the fatality
index based in 1990.

The FARS based index gives a perfect prediction of 1994 fatal costs when applied to the 1990
cost. This is to be expected since the same factors are used to predict both years’ numbers.
Similarly, the CDS MAIS 5 index, which was used to estimate revised 1990 MAIS 5 injuries,
gives a perfect prediction of critical injuries. However, CDS and GES are less perfect


57

compare costs to what they would have been had no safety improvements occurred while driving
continued to increase. To accomplish this, the fatality and police-reported injury rate per 100
million VMT (from Table 4) were applied to actual VMT from 1991-1994. The resulting
estimates for fatals and injuries are shown in Table 22. These numbers were substituted for actual
incidence in the method described under Trends and Causes. This produced an estimate of
$180.2 billion. Improved safety has thus reduced the potential economic impact of motor vehicle
crashes in 1994 by $29.7 billion, a 16.5 percent reduction from the cost level that would have
resulted from 1990 injury rates.

Outlook for 1995

Since preliminary 1995 data are now available for the variables used in this trend analysis, a
preliminary estimate of 1995 costs can be made. Applying the cost estimating algorithm to 1995
data yields an estimate of $159.2 billion, roughly 5.8 percent higher than 1994. This reflects
inflationary increases of 5.5 percent in medical costs, 2.2 percent in total wage compensation and
2.8 percent in consumer prices, as well as increases in injury incidence of 3.2 percent in police-
reported nonfatal injuries, and 2.5 percent in fatalities.

Estimated Trendy Crash Costs, 1994$
GDP Deflator Adj. Factor Current Dollars 1994$
1990 113.3 1.113 $139,192 $154,918
1991 117.6 1.072 $136,444 $146,306
1992 120.9 1.043 $133,317 $139,051
1993 123.5 1.021 $138,749 $141,670
1994 126.1 1,000 $150,469 $150,469
Table 22

Predicted CDS Survivors Based on 1990 VMT

MAIS2 MAIS3 MAIS4 MAIS5 Fatals Injuries

1990 305,169 87,812 14,028 3,446 44,599 | 3,231,000
1991 282,014 67,651 8,590 3,047 45,181 | 3,273,196
1992 218,798 54,643 9,200 4,687 46,596 | 3,375,672
1993 181,353 68,591 10,836 3,775 47,782 | 3,461,570

1994 193,053 91,820 11,465 3,870 48,822 | 3,536,920



1]

Figure 2
Components of Total Costs, Fatalities

HH Prod. $5,395

Prop. Damage $372

Legal $2,472

Other $504
Medical $492

Insurance $1,165

Market Prod. $23,440

(Millions of 1994 dollars)
Other includes: workplace, prem. funeral,
emergency, voc. rehab., travel delay


TABLE OF CONTENTS

SUMMARY . «20. ect e eect e nee ee ences 1
INTRODUCTION .. 00... 1. cece eee e ee ceeeeeee 4
HUMAN CAPITAL COSTS ... 0... cece eee eee 13
INCIDENCE .. 1.1... e eee nnnneeee 16
Fatalities ©. cece cece cnet eeees 16
Nonfatal Injuries... 2... cece ccc eect e ee eeeee 16
Property Damage Crashes... 2...) e ee eeeee 18
Unreported Injuries... 0... cece eneeee 19
Uninjured Occupants in Injury Crashes... 2.2... cece cece eee 21
STATE COSTS ©... 00... c eee ence cence ceence 22
ALCOHOL ... 1.11. e nee ennnnnnece 25
Fatalities cece cece eect ence neees 25
Nonfatal Injuries... cece een nnee 26
Unreported Alcohol... cece eee neue 27
SPEED .. 2. ccc eect cece e ee ennee 34
SOURCE OF PAYMENT... 0c ccc e cence 38
COST TRENDS 1990 vs. 1994 2c eee cece cece 49
Impact of Revised Methods... eee eee eee 49
Trends and Causes 2... ccc cette ee eeeeee 50
Mitigation of Inflationary Impacts... 2.2... eee eee cece eee 56
Savings from Reduced Injury Rates... 2.2... eee eee euee 56
Outlook for 1995 2. cece eeenee 57
APPENDIX A - Comprehensive Costs... 2.2... eee ecu eeeeee 59
APPENDIX B - Definitions of Economic Costs ................000 00000. 60
APPENDIX C - Discount Rates... ccc eee ce eeee 61
APPENDIX D - Table of Unit Costs by Body Region..................0000, 66



32

Table 10
Incidence by BAC Level and Injury Severity
Relative to Total Nonfatal Injuries

All Positive
<.10 BAC >.10 BAC Alcohol All Cases
IMAIS 0 162.0% 71.4% 92.8% 71.2%}
IMAIS 1 71.4%] 82.5%] 79.8% 88.7%
IMAIS 2 21.5% 11.4%| 13.8%] 7.6%
IMAIS 3 6.4% 5.2% 5.5% 3.2%
IMAIS 4 0.6% 0.6%) 0.6% 0.3%
IMAIS 5 0.1% 0.3% 0.3%) 0.1%]
IMAIS 1-5 100.0% 100.0% 100.0% 100.0%
Fatal 1.4%] 1.6% 1.6%| 0.8%



Figure 4

Distribution of Reported/Unreported Injuries

‘eported | Reported


Technical Report Decementation Fore

~ Report No. 2. Government Accession No. 3. Recipient's Catalog Na-

DOT HS 808 425

|. Title and Subtitle 5. Report Date

July, 1996

6. Performing Organization Code

The Economic Cost of Motor Vehicle Crashes, 1994

Author! s)

8. Performing Organization Report No

Lawrence J. Blincoe

- Performing Orgonization Name ond Address. 10. Work Unit No. (TRAIS) .
Plans and Policy |
National Highway Traffic Safety Administration 11. Contract or Grant Na.

Washington, DC

3. Type of Report and Periad Covered

. Sponsoring Agency Name and Address
U.S. Department of Transportation NHTSA Technical Report
National Highway Traffic Safety Administration Ta" Sponsoring Agency Code

Washington, DC 20590

Suppiemenrery Notes Special thanks to Ted R. Miller of the National Public Services Research Institute for providing access to his cost
data base, and for guidance in its use. Thanks also to the staff of the National Center for Statistics and Analysis for their timely response to
the many complex data requests that were required for this report; to Linda Bernett of the Office of Plans and Policy, NHTSA, for her
assistance in ‘ocument preparation; to Joan Harris, Sandy Johnson and Jon Walker for providing data on source of payment; and to Jing
Wang of Information Management Consultants Inc. for data on uninjured occupants.

Abstract

This report presents the results of an analysis of motor vehicle crash costs in 1994. The total economic
cost of motor vehicle crashes in 1994 was $150.5 billion. This represents the present value of lifetime
costs for 40,676 fatalities, 5.2 million nonfatal injuries, and 27 million damaged vehicles, in both police
reported and unreported crashes. Property damage costs of $52.1 billion accounted for the largest share
of costs, while lost market productivity accounted for $42.4 billion. Medical expenses totalled $17
billion. Each fatality resulted in an average discounted lifetime cost of $830,000. Alcohol-involved
crashes caused $45 billion or 30 percent of all economic costs, and 78 percent of these costs occurred in
crashes where a driver or pedestrian was legally intoxicated (>= .10% BAC). Crashes in which police
indicate that at least one driver was exceeding the legal speed limit or driving too fast for conditions cost
$27.7 billion in 1994. Public revenues paid for 24 percent of medical costs, and 9 percent of all costs
resulting from motor vehicle crashes. These crashes cost taxpayers $13.8 billion in 1994, the equivalent
of $144 in added taxes for each household in the United States.

17, Key Words 18. Distribution Statement
Economic costs - Motor Vehicle Crashes Document is available to the U.S.
Alcohol - Speed - Source of Payment ublic through the National Highway Traffic
Public Revenues - Highway Safety Trends Safe Administration, NAD-4
Motor Vehicles Fatalities, Injuries 400 7th Street S.W., Room 6117
Washington, DC 20590
19. “Security Clasail, (of this report) 20. Security Classil. (of this page) 21 No. of Pages | 22. Price

76

Form DOT F 1700.7 (8-72) Reproduction of completed page authorized


44

Table 15 to produce final estimates of source of payment. This process is illustrated in Table
16. The net results indicate about 14 percent of all medical care costs are paid from federal
revenues and 10 percent from state revenues, for a total governmental share of 24 percent.
Private insurance pays the largest portion, 55 percent, while individuals pay roughly 15
percent out of their own funds. The variation in payment distributions for different treatment
levels is illustrated in Figure 6.

It should be noted that this estimate is based on hospitalized cases, but does not include any
source of payment data on costs that are incurred from visits to private physicians. In
addition, for most states, there was no source of payment data for physician visits to
hospitalized victims. This analysis assumes that the source of payment profile for those cases
is similar to that for all hospitalized cases.

Table 16
Calculation of Weights and Average Source of
Payments for Medical Care
ER Inpatient _ | Rehabilitation] Total

1% Who Exp Treatment (a) 86.52% 13.48% 0.56%)

Cost/Treatment Cat. (b) $591 $14,549} $47,362}

[Total Relative Costs (axb) $512 $1,961 $265] $2,737] :
Weights 18.69% 71.63% 9.68%] 100.00%

[Federal 8.39%) 13.89% 29.81%} __14.40%|

State 6.28% 9.49% 18.53%] 9.76%

Private Insurance 45.33% 57.96% 50.20%] 54.85% ‘
Self 26.79% 13.23%) 1.46%] 14.62%

Other 13.21% 5.43% 6.36%)



28

Table 7
Portion of Drivers Correctly Identified as Drinking by Police

General Hospital Injuries
Terhune, 1982 48.9% 18.5% 41.9%

Trauma Center Injuries

Soderstrom, 1991 51.5% 45.5% 50.0%

Soderstrom, 1990 70.7% 70.7%

Dischinger & 51.7% 28.6% 47.3%

Cowley, 1988

Maull et at, 1984 57.1% 57.1%
Total 57.4% 36.0% 54.9%

Fatals
Baker & Fisher, 1977 29.0% 20.0% 26.8%
Total 52.1% 25.8% 47.7%

Total Less Fatals 54.6% 26.9% 50.3%



37

Table 12
Estimated 1994 Economic Costs Due to Motor Vehicle Crashes Where Ex e Speed was a Factor

State (iitions $) te Tous
ALABAMA $417 1.5%
ALASKA $60 0.2%
ARIZONA. $484 1.8%
[ARKANSAS $271 1.0%
CALIFORNIA $2,912 10.5%
ICOLORADO. $355 13%
CONNECTICUT $370 13%
IDELAWARE $72 0.3%
DIST. OF COL. $88 0.3%
FLORIDA. $1,678 6.1%
IGEORGIA $824 3.0%
IHAWAIL $113 0.4%
IDAHO $106 0.4%
ILLINOIS: $1,183 43%
INDIANA. $561 2.0%
IOWA $267 10%
KANSAS: $243 0.9%
IKENTUCKY $397 1.4%
LOUISIANA, $498 1.8%
MAINE $122 0.4%
IMARYLAND $599 2.2%
MASSACHUSETTS: $665 2.4%
MICHIGAN $1,020 3.7%
IMINNESOTA. $384 14%
IMISSISSIPPI $276 1.0%
MISSOURI $592 2.1%
IMONTANA. $84 0.3%
INEBRASKA $166 0.6%
INEVADA $192 0.7%
INEW HAMPSHIRE. $83 0.3%
INEW JERSEY $1,112 4.0%
INEW MEXICO: $209 0.8%
INEW YORK $2,220 8.0%
INORTH CAROLINA $877 3.2%
INORTH DAKOTA $42 0.2%
OHIO $1,233 4.5%
|OKLAHOMA, $329 1.2%
IOREGON. $273 1.0%
PENNSYLVANIA. $1,005 3.6%
IRHODE ISLAND $75 0.3%
ISOUTH CAROLINA. $390 14%
ISOUTH DAKOTA $71 0.3%
(TENNESSEE $591 2.1%
TEXAS $2,048 74%
UTAH $170 0.6%
VERMONT $41 0.1%
VIRGINIA $622 2.3%
|W ASHINGTON $566 2.0%
WEST VIRGINIA. $184 0.7%
IWISCONSIN $456 1.6%
WYOMING $60 0.2%
(Total $27,656 100.0%



23

characteristics may account for some of this discrepancy, but is seems likely that variation in
injury reporting is also a contributing factor. Finally, the impact of crash costs must be viewed in
light of each state’s economy. Smaller less populated states may have lower absolute costs, but
they also have fewer resources available to address these costs. A significant portion of these
costs is borne by the general public through state and local revenue, or through private insurance
plans. This issue is addressed in the Source of Payment section of this report.


Table 1
Summary of Total Costs, 1994
(Millions of 1994 Dollars)
PDO | MAIS 0| MAIS 1] MAIS 2|MAIS3]MAIS4|MAIS5]| Fatal | Total |% Total

Injury Components:

ical $0} $4] _$4,423] $3,246] $4,682] $1,726] $2,453] _ $492] $17,026] 11.32%
[Prem. Funeral $0} $0 $0) $0 $0] Sof $138] _ $138] 0.09%
IEMS $66 $70}__$703]__ $134) $84 $20] $8 $43] $1,724] 1.15%]
VOC Rehab $ $o]__ $69) $39] $36 $7 $4 $0] __ $156] _ 0.10%
[Market Prod. $O}_$6,084] $4,641] $5,969] $994) $1,274} $23,440] $42,403] 28.18%
JHH Productivity] $987] __$104]_$1,911] $1,434] $1,819] $321] __$374] $5,395] $12,345] 8.20%
Ins. Admin. $2,420] __$255]__ $2,651] _ $1,387] $1,872] $362] _ $343] $1,165] $10,456] 6.95%)
Workplace Cost] $1,026] $108] $1,004) $670} _ $612 $69] $49] $305] $3,844] 2.55%
[Legal Costs $0} $O]__ $629] __ $868] $1,277] __$293]__ $317] $2,472] _ $5,857] 3.89%
Subtotal | ssoef__ ssai} $17,474] $12,421] $16,353] $3,793] $4,823] $33,449] s93,948] 62.44
INon-Injury
|Components:
Travel Delay} $2,92 $395] _ $939 $81 $34) $3 $1 $18] $4,401] 2.93%]
IPropDam $30,894] $3,258] $15,096] $1,338] $963] $143 $55] $372] $52,119] 34.64%)
Subtotal $33,823] $3,653] $16,035] $1,418] $997] $146] $57] ~_ $390] $56,520] 37.56%
(Total $38,919] _ $4,194] $33,510] $13,839] $17,349] $3,939] $4,879] $33,839] $150,4691100.00%
I% Total 25.86%} 2.79%} 22.27%] 9.20%] 11.53%] 2.62%] 3.24%] 22.49%] 100.00%|
Note; MAIS is the maximum injury level experienced by the victim. PDO is property damage only. Totals may not add due|
[to rounding.



59

APPENDIX A

COMPREHENSIVE COSTS

The costs examined in the body of this report are the economic costs that result from goods and
services that must be purchased or productivity that is lost as a result of motor vehicle crashes.
They do not represent the more intangible consequences of these events to individuals and
families such as pain, suffering and loss of life. Measurement of the dollar value of those
consequences has been undertaken through numerous studies. These studies have estimated
values based on wages for risky occupations and purchases of products for improvements in
safety among other measurement techniques. These “willingness-to-pay” costs can be an order of
magnitude higher than the economic costs of injuries. Currently, most authors seem to agree that
the value of fatal risk reduction lies in the range of $2-5 million per life saved.

An estimate of “comprehensive costs”, which combines both economic costs and values for
“intangible” consequences was made based on a comprehensive analysis previously undertaken by
Miller (1991). These estimates, updated to 1994 economics, are summarized in Table A-1.

Table A-1
Comprehensive Fatality and Injury Costs
Injury Severity 1994 Values*

MAIS1 $10,840
MAIS2 $133,700
MAIS3 $472,290
MAIS4 $1,193,860
MAISS $2,509,310
Fatal $2,854,500
*Includes the economic cost components from this report
and a valuation for reduced quality of life.



45

Figure 6

Source of Payment for Medical Costs in Motor Vehicle Crashes By
Treatment Level

ER iH
Inpatient. ~~ be /
ane

Rehab.

ea Private Insurance Federal

[] State [_] sett
Other


47

Table 18
Estimated Source of Payment
1994 Motor Vehicle Crash Costs
(Millions of 1994 ph
Total
Federal State Goyt. | Insurer | Other | Self | Total
IMedical $2,452) $1,662] $4,114 $9,339] $1,083] $2,490] $17,026
[Pre-funeral $0 $0 $0} $ $O]__ $138 $138)
[Emergency Service $67 $1,306] $1,373 $254) $29] $68] $1,724)
Voc. Rehab. $23 $15) $38) $8 $10] $23 $156)
IMarket Prod. $6,869} $1,300] $8,169] $17,421 $657] $16,155] $42,403}
HH Prod. $0} $0} $0} $5,072) $191} $7,082] $12,345}
Ins. Adm. $93 $53} $146] $10,309} $i $O}_ $10,456
|[Wkplce Costs $0 $0) $0) $ $3,8. $0] $3,844)
[Legal/Court $0} $0) $0) $5,857 $ $0} __ $5,857
[Travel Delay $0) $0) $0) Sol $4,401 SO} $4,401
rop. Damage $0} $0 $0} $33,877] $O} $18,242] $52,119}
‘otal $9,503 $4,337] $13,840] $82,21 $10,217] $44,197] $150,469
b% Total 6.32% 2.88%] 9.20% 54.64%] 6.79%] 29.37%] 100.00%

To some extent, it is illusory to disagregate costs across these types of payment categories
because ultimately, it is individuals who pay for these costs through insurance premiums, taxes,
direct out-of-pocket payments, or higher charges for medical care. A real distinction can be
made, however, between costs borne by those directly involved in the crashes, and costs that
impact society at large. Costs paid out of federal and state revenue are funded by taxes from
the general public. Similarly, costs borne by private insurance companies are funded by
insurance premiums paid by policyholders, not all of whom are involved in crashes. Even
unpaid charges, which are absorbed by health care Providers, are ultimately translated into
higher costs that are borne by a smaller segment of the general public - users of the health care
facility. From this perspective, perhaps the most significant point from Table 18 is that
society at large picks up over 70 percent of all crash costs that are incurred by individual
motor vehicle crash victims.



10

Figure 1
Components of Total Costs

Market Prod. $42,403

HH Prod. $12,345

Wkple. Cost $3,844
Insurance $10,456,

Legal $5,857

Other $6,420

>

Medical $17,026

Prop. Damage $52,119

(Millions of 1994 dollars)
Other includes: prem. funeral,
emergency, voc. rehab., travel delay