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» Behavioral Health Spending Correlates with Higher Overall Healthcare Spending

September 8, 2020

Behavioral Health, Research

According to a new study, people with behavioral health conditions tend to have higher healthcare costs than those who don’t, based on data from employers and other commercial payers.

Researchers looked at insurance claims for 21 million people in 2017 and came away with some important findings:

  • 27% of people who had a behavioral health condition in addition to other medical problems accounted for 57% of total annual healthcare costs.
  • Annual costs were 3.5x higher for people who had a behavioral health condition, such as anxiety, depression, or a substance abuse disorder, than costs for people without those conditions.
  • Across all people in the study, total annual healthcare costs were $5,932 per person on average. People with a behavioral health condition had total healthcare costs of $12,272, about 3.5x the total costs of individuals without a behavioral health condition: $3,552.
  • Despite the impact of behavioral health issues on healthcare costs, spending on treatment accounted for only 4.4% of total healthcare costs for the 21 million people. The vast majority of spending was on patient’s physical health needs. For the people with a behavioral health condition, treatment for their condition averaged $965 per patient or 8% of their total healthcare costs.
  • Half of people with a behavioral health issue had less than $68 in total annual costs for behavioral health treatment.

High Cost Claimants Tell the Whole Story

One point we bring up again and again are the impact of high-cost claimants in any dataset. This study was no exception, as of the 10% most expensive people, representing 2.1 million high-cost patients, 57% had a behavioral health condition, and they represented 44% of total healthcare costs for the entire population.

Their average total healthcare costs were $45,782 per person, while just $2,620 of that was for behavioral health treatment. In fact, half of these high-cost individuals had less than $95 per year of total spending on behavioral health treatment.

Among those high-cost people, those with behavioral health conditions had higher costs for medical and surgical treatment, with average costs of $43,162 compared to $36,183 for those without behavioral health conditions.

“[Behavioral conditions] exacerbates their medical conditions, so the cost for their medical condition really goes up much more than if they weren’t depressed or had a substance use disorder,” according to Steve Melek, one of the authors.

“If you can effectively coordinate treatment for (people’s) behavioral and medical conditions, you can end up reducing healthcare costs by a significant amount,” he said.

The Economics of Mental Healthcare

But the economics of mental healthcare are a major barrier to people getting the mental health services they need.

While most health insurers cover behavioral health, they tend to pay providers less than Medicare. For example, a 2019 study by the Congressional Budget Office found that commercial plans were less than fee-for-service rates in Medicare. Behavioral health providers are usually out of network as a result, which makes treatment for patients more expensive. And high specialist copays and deductibles deter low-income patients as well.

Additionally, behavioral health just isn’t as high a priority as other issues and providers don’t screen patients for behavioral issues like they do with chronic illnesses. Behavioral health services are usually delivered in response to an episode, rather than as a preventative measure.

Bright Spots in the Future of Behavioral Care

One bright spot in the behavioral care landscape is the rapid increase in adoption of telehealth by providers during the COVID-19 pandemic, as this can increase availability of providers and care for those most at-risk.

And in terms of care coordination, collaborative care models have proven to be effective at treating depression, anxiety, and other disorders, and have been proven to save costs. These models occur when primary care clinicians, care managers, and psychiatric consultants work together to care for patients with behavioral health conditions and track their progress. While most insurers now reimburse for collaborative care, health systems haven’t caught up, according to Andy Keller, CEO Of Meadows Mental Health Policy Institute.

“We don’t try to detect it… We don’t detect mental illness until the person is suicidal, or until there’s a crisis that pushes us to do something.”

Notes about the Study

As with any study, there are a few things to keep in mind.

First, the study was paid for by the Mental health Treatment and Research Institute, part of The Bowman Family Foundation.

The data set was compiled of 2017 medical claims for people ages 2 to 64 with commercial insurance, mostly through an employer, or as a dependent on an employer plan. Since the claims predate 2020 and COVID-19, researchers did not address how the pandemic and social isolation may affect behavioral health conditions and the cost of treatment. Much has been made of COVID-19 leading to higher demands for mental health services (Link 1  & 2).

People were considered to have a behavioral health condition if they had a diagnosis, received behavioral health-specific treatment including certain prescription drugs, had costs for behavioral health services, or attempted suicide or self-harm.


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Source: Shelby Livingston. “Behavioral health patients spur 57% of commercial healthcare spending.” Shelby Livingston. Modern Healthcare. Aug 13 2020.

Posted by in Behavioral Health, Research