Will we see a big jump in mental health spending in 2021 because of the coronavirus pandemic’s aftermath? That was the question that came to mind when I read our recent analysis of U.S. mental health spending.
Mental health spending rose to $225 billion in 2019—an increase of 52% in the past decade, from 2009 to 2019 (see our most recent analysis, The U.S. Mental Health Market: $225.1 Billion In Spending In 2019: An OPEN MINDS Market Intelligence Report). This is notable because the medical inflation rate was 34% and the U.S. population increased by 6.9% during that period.
The distribution of spending did not change much. In 2019, public payers accounted for the majority (62.7%) of mental health spending at $149.5 billion, while private payers accounted for the remaining $88.9 billion (37.3%). In 2009, public payers accounted for the majority (60%) at $88 billion, while private payers accounted for the remaining $59 billion (40%). The increase in spending and the modest change in payer distribution was likely because of behavioral health parity.
The question is whether the pandemic will cause a big jump in behavioral health spending in 2021—for both mental health and addiction treatment. What we do know is that demand will likely increase. An early April poll by the Kaiser Family Foundation (see KFF Health Tracking Poll – Early April 2020: The Impact Of Coronavirus On Life In America) shows that nearly half (45%) of all U.S. adults say the pandemic has affected their mental health, while 19% say it has had a “major impact.” Prescriptions for anti-anxiety drugs spiked 34% between February 16 and March 15, and also increased for antidepressants (18.6%) and anti-insomnia drugs (14.8%), according to a report from Express Scripts (see America’s State Of Mind: U.S. Trends In Medication Use For Depression, Anxiety & Insomnia).
A Health Affairs blog notes that social distancing and self-quarantine are risk factors for relapse for people with addiction disorders (see Once The Coronavirus Pandemic Subsides, The Opioid Epidemic Will Rage). Trauma is another behavioral health challenge expected to be exacerbated by COVID-19 (see Coronavirus Pandemic Could Inflict Emotional Trauma & PTSD On An Unprecedented Scale, Scientists Warn). Lancet Psychiatry reports that suicide risk might increase because of stigma towards individuals with COVID-19 and their families, while depression, anxiety, and post-traumatic stress might increase among the general population (see Suicide Risk & Prevention During The COVID-19 Pandemic).
But an increase in demand does not necessarily translate into an increase in spending. There are some mitigating factors to consider in projections about behavioral health treatment spending. There are the demographics of the crisis. Mortality in the crisis is heavily skewed toward individuals with compromised immune systems and those with diabetes, hypertension, obesity, and heart disease—a group in which there will be a high proportion of consumers with behavioral health conditions. Then there is the rising proportion of the U.S. population that is uninsured (from 7.9% to 8.5% in the years 2017 to 2018). That will likely increase as the number of unemployed Americans surges past 30 million. Typically, the uninsured population in the U.S. does not get the basic services they need for any type of health care.
We are also seeing a changing model for delivering services. Use of inpatient and residential treatment settings for behavioral health are on the decline (see The Future Of Residential Treatment: How Technology & Innovative Program Models Are Redefining Service Delivery Models and Behavioral Health Stays Comprise Approximately 28% Of Inpatient Stays)—with growing use of intensive outpatient and home-based models. The use of virtual services is on the increase (see Overcoming The Virtual Health Paradox). Outpatient services—and particularly virtual outpatient services—are less expensive than other models of treatment. Combine that with the use of artificial intelligence-driven computer-based therapies (for more on this, check out Augmented Intelligence In The Here & Now and Yes, There Are Organizations Using Augmented Intelligence), and per-consumer spending on behavioral health treatment will likely drop.
Finally, there is the “big picture” budget issue. The U.S. government debt was $17 trillion before the crisis—and the four CARES Act bills added $2 trillion to the deficit. States are so short of funds that there are serious proposals to let them go bankrupt. Just yesterday, Politico reported on how states have been cutting Medicaid budgets over the past few weeks (see States Cut Medicaid As Millions Of Jobless Workers Look To Safety Net). States did receive a temporary six percent increase in the federal portion of Medicaid spending in an earlier CARES Act relief package. The states that have accepted the temporary relief are prohibited from cutting enrollment but do have the option of cutting benefits or provider organization payments. Overall, lower tax collections and higher federal and state government spending will compress the funding available for all government services with education and health care likely to take the largest cuts.
Taken together, these four factors—all of which are in flux—make it difficult to predict what behavioral health spending will look like in 2021. But we will track the shifts in market trends as they happen. In the meantime, check out these resources on post-crisis recovery planning:
- Strategy In Uncertain Times: Planning Resources For The New Normal
- Looking Ahead—Addiction Treatment In The Post-Crisis Recovery
- Being Agile & Thinking Ahead—At The Same Time—To Navigate The Pandemic Crisis
- Can We Learn From This? 12 Steps For Leaders To Manage Beyond The Crisis
- Surviving The Health Crisis & The Financial Crisis Created By The Pandemic: Executive Resources
- Later Is Too Late: Why A Crisis Is The Time For The Long-Term View
- The OPEN MINDS Executive Blueprint For Crisis Management: Building Resiliency In The Face Of Adversity
- Getting Relief From The CARES Act & Other Updates For Crisis Management During The Pandemic Emergency
- The Workforce, Post COVID-19
- Go Virtual To Keep Your Consumers (& Your Revenue) – Resources You Can Use
For more on planning your post-crisis recovery, learn more about our seven-stage plan for crisis recovery in the recording of my web briefing and my briefing deck, Building Resiliency In The Face Of Adversity: The Crisis Management Executive Blueprint. For more on post-recovery strategy in our OPEN MINDS Executive Blueprint for Crisis Management series, check out these upcoming web briefings: