Reducing the Economic Burden of Unmet Mental Health Needs
It is vital to understand the full costs of the mental health crisis affecting our nation. Left untreated, mental health disorders affect the well-being of children, adults, families, and communities—both because of the emotional costs as well as the economic ramifications. These disorders were already too common before the COVID-19 pandemic, and the pandemic magnified the crisis by simultaneously increasing the need for care and diminishing access to it. As part of his Unity Agenda, President Biden has put forward a national strategy to transform how our country understands, accesses, and treats mental health. This strategy recognizes that policies that improve the affordability of mental health treatment, expand access to behavioral health providers, invest in prevention, and increase the take-up of mental health services, can reduce the economic, emotional, and physical burdens that mental health disorders can create.
The state of mental health disorders in America
The pandemic has led to profound changes that have accompanied an overall decline in mental health. About half of women and a third of men have reported worsening mental health since the beginning of the pandemic, with about a fifth saying the pandemic has had a major impact. The problem has been particularly acute for young adults, with about 50 percent reporting symptoms of depression. The problem is also magnified among those disproportionately affected by the pandemic. Women with children, Hispanic and Black people, the unemployed, and essential workers have been more likely to report mental health issues during the pandemic than the general population.
Mental health disorders cover a broad range of diagnoses, including but not limited to developmental disorders such as Attention Deficit Hyperactivity Disorder (ADHD), substance use disorders such as alcohol dependence, depressive and anxiety disorders, and schizophrenia and other psychotic disorders. Mental illnesses also range in severity, from the mild and self-limited to chronic and functionally-debilitating disorders. Effective treatments are available for many mental health disorders, and if implemented with fidelity, treatment can decrease or eliminate symptoms, promote recovery, and reduce morbidity and mortality.
There are several indications that Americans were experiencing a mental health crisis prior to the pandemic. Between 2008 and 2019, the percentage of adolescents (ages 12 to 17) that reported having experienced at least one major depressive episode in the past year increased nearly 90 percent, from 8.3 percent in 2008 to 15.7 percent in 2019, while the percentage of young adults (ages 18 to 25) reporting at least one major depressive episode in the past year increased a similar 81 percent from 8.4 percent in 2008 to 15.2 percent in 2019 (Figure 1). Over roughly the same period, suicide death rates among individuals 10 to 24 years of age increased 47 percent. Although rates of depression were highest among adolescents and young adults, more broadly in 2019, over one in five adults age 18 or older were classified as having a mental illness, and more than 13.1 million (or 5 percent) of adults had disorders that were classified as serious because they substantially interfered with or limited one or more major life activities. Rates of mental illness were highest among those age 18 to 25, females, and those reporting their race as other, as shown in Figure 2.
Among children age 3-17, the most commonly diagnosed mental disorders from 2013 to 2019 were ADHD (9.8 percent), anxiety (9.4 percent), behavioral problems (8.9 percent), and depression (4.4 percent). These disorders often begin in early childhood: approximately one in six U.S. children age 2-8 had a diagnosed mental, behavioral or developmental disorder.
The social and economic consequences of mental health disorders
Mental health disorders result in large economic costs to those afflicted, their families, and society as a whole. As discussed in this year’s Economic Report of the President, good physical and mental health are essential inputs into a productive economy, helping create educated, productive workers. Poor mental health is associated with worse educational outcomes. Mental health diagnoses such as ADHD are associated with lower school attendance, lower test scores, and higher dropout rates. Research also shows teens and adults with mental illness and substance use disorders are less likely to be in the labor force. Data from Denmark shows that mental health disorders such as depression, schizophrenia, and bipolar disorder carry significant earnings losses. These negative outcomes, among others, may further lead to what Case and Deaton have termed “deaths of despair.” These deaths from drugs, alcohol, and suicide—caused by pain, economic distress, and mental health difficulties—more than doubled between the 1960s and 2017 and have continued to rise.
The COVID-19 pandemic exacerbated secondary effects of substance use disorders. A late 2020 survey found that 15 percent of adults in the United States reported starting or increasing substance use as a way of dealing with the pandemic. The Centers for Disease Control and Prevention (CDC) estimates that for the 12 months ending in December 2021, overdose deaths were nearly 108,000, the highest count on record and nearly a 50 percent increase from the estimated drug overdose deaths for 12 months ending in December 2019. Domestic partner violence also increased in several countries by about a third in 2020 as compared to 2019.
The effects of mental health disorders can persist into the future, and even extend to the next generation. Depression during adolescence has been linked to longer-term consequences, such as higher engagement in crime. Mothers with inadequately treated mental illness often adopt less effective parenting strategies and struggle to develop close, emotionally healthy relationships with their children. This can result in poor emotional development in young children, lower cognitive scores and academic performance, and higher rates of behavior and mental health problems. The magnitude of intergenerational transmission is substantial, with one study finding that children of parents with mental health problems were twice as likely to develop mental health problems in adulthood.
Society also bears many of the costs of mental health disorders through public disability programs that pay for income support for those who cannot work. People with psychiatric disabilities were the largest contributor to growth in Social Security Disability Insurance (SSDI) rolls in the early 2000s. As of 2020, 18 percent of SSDI beneficiaries, or 1.4 million individuals in current payment status, suffered from depression, bipolar, or psychotic disorders. Overall, the mental disorder category accounted for 29 percent of beneficiaries in 2020, or 2.4 million people—a share larger than beneficiaries who cannot work due to injuries, cancer, or diseases of the circulatory and nervous system, combined. While these supports are important and necessary, too many people fall through the cracks and do not receive the treatment that could both improve their livelihoods and reduce their reliance on disability insurance.
Additional costs to society of inadequately treated mental illness include increased homelessness and incarceration. The homeless population has significantly higher rates of mental illness than the population as a whole, and lifelong mental illness is associated with higher rates of incarceration. Both homelessness and incarceration are likely to be exacerbated by difficulties maintaining work or close relationships due to mental illness. In addition to the severe economic consequences for those affected, supportive services for the homeless impose large societal costs, and incarceration leads to millions of dollars of direct and indirect costs on society. Other societal costs include increased co-occurring mental health problems, loss of earnings, and premature death.
How can the burden of mental health disorders be reduced?
Given the costs to those suffering from mental health disorders with unmet needs and the costs that spillover to society as a whole, it is important to consider ways that public investments can be made most effectively to improve overall outcomes.
Many individuals who suffer from mental health disorders do not get the treatment and care that they need. Among those age 18 and older with serious mental illness in 2020, almost half reported that they did not receive treatment when they needed it at least once over the previous year. This rate was higher for 18- to 25-year-olds, women, and the unemployed or uninsured. With appropriate care and support, many may be able to live happier, healthier, and more productive lives.
A significant share of those with serious mental illness with perceived unmet needs reported not receiving care in the past year due to reasons related to costs (see Figure 3): 46 percent reported that they could not afford the cost of treatment, and 19 percent reported that their health insurance did not pay enough for mental health services. 29 percent reported that they did not know where to go for services, suggesting issues related to access. Outside of the top five reasons, stigma-related issues were also reported, including concerns regarding confidentiality (12 percent) and that others would have a negative opinion (11 percent).
The Federal Government covers some of the costs of treating mental health disorders. Around $280 billion were spent on mental health services in 2020, about a quarter of which came from the U.S. Medicaid program. But more could be done. Expanding health insurance coverage is an important component of addressing cost-based barriers to adequate treatment, and there is a growing body of evidence that health insurance coverage directly leads to increased take-up of effective mental health services and reduces stressors that could negatively impact mental health. For instance, Medicaid expansions have been shown to increase utilization of mental health services. Causal evidence from randomized access to Medicaid coverage through a lottery in Oregon finds that Medicaid coverage resulted in better self-reported mental health overall, reduced the prevalence of undiagnosed depression by almost 50 percent, and reduced untreated depression by more than 60 percent. These reductions were accompanied by increased use of medications frequently prescribed to treat depression and substantial improvement in the symptoms of depression. In addition to improving access to treatment, Medicaid coverage decreased financial strain by reducing the probability of having to borrow money or skip paying other bills due to medical expenses by more than 50 percent—virtually eliminating out-of-pocket catastrophic medical expenditures. This reduction in financial hardship likely also contributed to improved mental health.
However, having health insurance does not mean that costs do not present barriers to care. While Federal and State laws require parity in coverage between mental and physical health services, mental health services are more than 5 times as likely to be charged out-of-network, and in-network provider reimbursement rates are 20 percent higher for primary care than mental health visits. Those differences create barriers to accessing care, with one survey finding that only about half of insured adults find their plans to have adequate mental health coverage. While the evidence is mixed, parity has been shown to decrease out of pocket costs and increase certain types of care utilization, such as admissions for substance use disorders.
Even if treatment is affordable, treating mental health disorders requires adequate capacity of the behavioral health workforce so that access to mental health providers is widely available. As of 2021, 37 percent of the population live in areas with mental health practitioner-shortages. Two-thirds of the shortages are in rural areas, but other groups, such as ethnic minorities and those in under-resourced urban areas, also lack access. In total, over 6,000 mental health professionals are needed to fill the gap. Proposed policies that can help address this gap include: expanding programs like the National Health Service Corps, which provides loan repayment and scholarships for those providing health care services in underserved communities; and scaling training programs that prepare people for jobs in behavioral health. In addition, increasing Medicaid and Medicare provider payment rates, and policies to reduce provider burnout, could help expand the supply of mental health professionals.
Temporary regulatory changes enabling reimbursement for telehealth visits during the COVID-19 pandemic led to a rapid increase in the use of telehealth for outpatient visits, accounting for 13 percent of visits between March and August 2020. While telehealth use declined to about 8 percent of visits one year later, this is still significantly higher than its rate of less than 1 percent prior to the pandemic. The share of mental health and substance use disorder visits via telehealth remains elevated, and telehealth represented over 35 percent of these visits between March and August 2021. Fifty-five percent of rural residents relied on telehealth for behavioral health services during this period compared with only 35 percent of urban residents, suggesting that telehealth offers potential to increase access in areas that are experiencing provider shortages and is a promising way to meet mental health needs in underserved areas. However, more permanent regulatory changes at the Federal and State levels will need to be in place for providers to continue to offer telehealth services after the COVID-19 public health emergency eventually ends.
Because one-half of all lifetime cases of mental disorders are estimated to start before age 14, school-based mental health programming is one promising strategy for increasing early detection of mental health disorders while also improving access to treatment. Indeed, in a recent National Academies report on addressing mental health and well-being challenges of youth that arose from or were exacerbated by the pandemic, experts identified several school-based strategies. These include school-wide screenings for mental health needs; school-based health centers or partnerships with health and mental health providers in the community; balancing academic learning opportunities with social, emotional, and behavioral support; and promoting and building resilience. Relatedly, interest in social and emotional learning (SEL) has increased because strong SEL skills in childhood are associated with positive academic, social, and mental health outcomes. If schools can help children master these non-academic skills, then perhaps they can prevent future mental health problems in adults. A 2017 review of randomized control trials evaluating popular school-based SEL programs reported positive effects on reducing depression and anxiety.
Expanding access to behavioral health services may not address unmet needs if help-seeking remains inconvenient or stigmatized. Thus, moving beyond traditional healthcare relationships and expanding community-based mental health services can improve the uptake of mental health treatment. This could include building a peer mental health workforce and expanding the availability of Certified Community Behavioral Health Clinics (CCBHCs), which have been shown to improve health outcomes by delivering care for mental health and substance use disorders regardless of ability to pay. In addition, programs that expand the availability of school-based mental health professionals and embed mental health services into settings such as libraries, community centers, correctional facilities, and homeless shelters can reduce barriers to care.
Access to mental health treatment can mitigate economic losses, with one study finding that the approval of treatment for bipolar disease in Denmark eliminated one third of earnings losses and half of the disability risk associated with bipolar disorder. However, current treatments are not effective for all people, and treatment nonadherence is higher among patients with psychiatric disorders than other chronic conditions. As a result, continued investment in research is needed to develop and improve treatment efficacy and adherence.
Conclusion
The mental health crisis facing Americans imposes significant costs to the well-being of affected individuals, their loved ones, and society as a whole. This crisis took hold long before the onset of the COVID-19 pandemic, but its effects were amplified as the pandemic resulted in the loss of lives and livelihoods and unprecedented social isolation. Increasing the productive capacity of the economy going forward requires improving people’s mental health, which can be done by improving the affordability of mental health treatment, expanding the behavioral health workforce, and removing barriers to seeking care.
