What is the Cost of Mental Illness?
The cost of mental illness to patients and society - whether due to acute or chronic phases is high. According to the National Alliance for the Mentally Ill (NAMI):
Four of the top 10 causes of disability in the US and other developed countries are mental disorders, which include schizophrenia, major depression, bipolar disorder, and obsessive-compulsive disorder
- About 25% of hospital admissions in the US in 1998 were due to a psychiatric diagnosis
- In 1990, the total cost of mental health services in the US was $148 billion; about $69 billion of this was from direct costs (treatment and rehabilitation), and $79 billion was from indirect costs (lost productivity at work, school, or home).
With regard to acute care, the two greatest expenses are inpatient hospitalization and loss of productivity. (As noted earlier, many patients with acute or exacerbated symptoms of mental illness require hospitalization.
Another important factor affecting the cost of mental illness is that private health insurers are generally less likely to cover the costs of care for mental illness than for physical illnesses. Reasons for this difference include the fear by insurers that mental health coverage will result in high costs associated with long-term and intensive psychotherapy and extended hospital stays. The below table summarizes data from the National Mental Health Association comparing some costs of acute and chronic care.
The costs of mental illness are exceedingly high. Although the question of cost is discussed more fully in Chapter 6, a few of the central findings are presented here. The direct costs of mental health services in the United States in 1996 totaled $69.0 billion. This figure represents 7.3 percent of total health spending. An additional $17.7 billion was spent on Alzheimer’s disease and $12.6 billion on substance abuse treatment. Direct costs correspond to spending for treatment and rehabilitation nationwide.
When economists calculate the costs of an illness, they also strive to identify indirect costs. Indirect costs can be defined in different ways, but here they refer to lost productivity at the workplace, school, and home due to premature death or disability. The indirect costs of mental illness were estimated in 1990 at $78.6 billion (Rice & Miller, 1996). More than 80 percent of these costs stemmed from disability rather than death because mortality from mental disorders is relatively low.
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