America’s Highest Healthcare Cost in 2016? Mental Health

Before the 1960s, America spent the majority of it’s mental health budget providing treatment to people with serious mental illness. Since then, a shift took place and some mental health professionals argue the seriously mental ill have been abandoned. Despite this, a recent Huffington Post article revealed that the United States spends an estimated $201 billion on mental disorders like anxiety and depression, making it the most costly medical condition in the country.

Charles Roehrig, a researcher and founding director of Michigan State University, compared spend on ten different condition categories and  found that heart conditions were the second most expensive condition, costing around $147 billion a year. After that, trauma and injury came in at third with $143 billion in spend. Only a decade ago, heart conditions cost the United States far more than mental health disorders. Heart conditions cost and estimated $105 billion in 1996, while mental health cost $79 billion. This finding shows the dramatic uptick in spend allocated for mental health and how important it is to highlight mental health as a public health challenge.

A decade ago, heart conditions cost the U.S. far more than mental health disorders. Heart conditions cost an estimated $105 billion in 1996, while mental health cost $79 billion.

Ten medical conditions with the highest estimated spending in 2016

Healthcare Spending by Health Condition


A System in Tatters

Due to a massive reduction in hospital beds for the mentally ill, many who need care are ending up in emergency rooms, county jails and city streets. Why is this happening? One reason is that states looking to save money are neglecting community and mental health services put in place to keep people healthy. States have been reducing hospital beds for quite some time due to insurance pressures and the desire to provide care outside of institutions. The recession forced many to make devastating cuts. Between 2009 and 2012, states cut $5 billion in mental health services and eliminated over 4,000 public psychiatric hospital beds, which is nearly 10 percent of the entire supply in the country. In this new reality, too often people suffering from mental health disorders don’t receive the care they desperately need.

During the recession, states cut $5 billion in mental health services and eliminated over 4,000 public psychiatric hospital beds (10 percent of the entire supply in the country).


Protecting American Businesses’ Bottom Line

A mentally healthy workforce is good for business, according to a recent report by the partnership for Workplace Mental Health, a program of the American Psychiatric Foundation. A mentally healthy workforce is linked to lower medical costs along with less absenteeism and presenteeism. In order to become an organization with a mentally healthy workforce, evaluating your current mental health benefits and health services is a good place to start. You should question your health plan or behavioral health vendor.

Do your employees have ready-access to mental health information through referral programs, the Internet or other self-screening tools?

If management is skeptical, you may need to develop a business case to convince them to allocate greater funds to the cause of improving employee mental health. Mental health and substance abuse are much more common and costly to employers than most understand. One in five adults with experience a diagnosable mental illness in any given year and about 15 percent will also experience co-occurring problems with substance abuse. Among working age Americans, it is estimated that up to 25 percent of people are affected by mental illness or substance abuse.


Appropriate Treatment Access can Lower Overall Costs

Mental illness treatments can be highly effective, with advances in medication and psychotherapy producing very good results. According to a recent study, about 80 percent of individual with depression will recover fully with appropriate diagnosis, treatment and monitoring. In most cases effective treatment has a net positive impact on employees and the bottom line, even when you factor in the costs of treatment. Net benefits are achieved through savings in cost offsets and increased productivity.

Ignoring mental illness can be even more costly than treating it. When employers neglect mental health, they often end up paying more. These direct costs include expenses for health and mental healthcare services, pharmaceuticals, short and long term disability and other care services. Additionally, inpatient and outpatient services, laboratory and diagnostic procedures, and pharmaceutical expenses are also incurred. Failure to effectively treat mental health disorders can also adversely affect the rate of disability claims and their duration.


Other ways businesses who ignore mental health plans actually end up paying more:

  • People with untreated mental illness use non-psychiatric inpatient and outpatient services three times more than those who are treated.
  • Individuals who are depressed but not receiving care consume two to four times the healthcare resources of other enrollees.
  • A corporation that aggressively tried to contain mental healthcare costs was able to dramatically reduce mental healthcare service use and costs by one third, but triggered a 37 percent increase in medical care use and sick leave.

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Building a Strong Mental Health Program

There are plenty of ways to strengthen your company’s mental health program. A good place to start is integrating all of your healthcare services to improve patient outcomes reduce time away from work and minimize the cost and impact of mental health conditions on your organization. Ideally, your employees should be able to access the right treatment regardless of where they enter your system. Another tip is to ensure your healthcare plans are following best practices and delivering the services you actually want. You can also collaborate with other employers and stakeholders to leverage market power to purchase better healthcare. Overall, you should develop a proactive approach to influence both provide appropriate care and de-stigmatize the issue. Make others aware of the programs your company has undertaken that might be helpful to them and encourage employees who need medical care to seek it out without fearing for their jobs.

Despite having the highest cost in healthcare, mental health is not projected to grow as rapidly as other positions (i.e personal care aids, registered nurses, home health aids, medical assistants, etc.), according to the BLS.  To learn more about the outlook of the healthcare recruiting industry, check out our blog post.