How much does mental health care cost? Part 1 of 5

(Updated 2022) One in five adults in the U.S. experience a mental health problem in any given year, yet having limited or no insurance that covers mental health care prevents more than half of them from receiving treatment.

The Affordable Care Act and the Mental Health Parity Law sought to bridge the divide between physical and behavioral health coverage that existed for decades. Under the law, insurance carriers are not allowed to differentiate between coverage for physical and mental health care. It is also illegal to deny coverage on the basis of a pre-existing condition, such as depression. Yet more than ten years after the legislation, access to mental health care still remains elusive for millions of Americans.

How Much Does Mental Health Care Cost? Well, That Depends.

With this post, we begin a series on mental health care and costs in the United States.

Over 46 million adult Americans suffer some form of mental illness, yet only 42% of them received mental health services in the past year, according to the National Institute of Mental Health. And about half of the 8 million children diagnosed with a mental health disorder do not get treatment.

For many, restrictions on length of treatment, high deductibles, or limited in-network providers create barriers that force patients to forego mental health services.

These financial barriers are a legacy of the way the mental health care system has evolved in the U.S. – a separate and unequal partner to physical health.

The Evolution of Mental Health Care: A Separate and Unequal System

“The mental health system in the U.S. is separate from the regular healthcare system. Modern mental diagnosis didn’t start until the 1980’s, with the publication of the DSM,” says Dr. John Grohol, founder of the online mental health network, PsychCentral.com and of the spinoff MySupportForums, a collection of online support groups. Before that, there were no recognized diagnoses accompanying mental health.

While it is now widely recognized that mental and physical health are interrelated, the healthcare community only began to understand the links between the two in the past decade, recognizing the need to invest in mental health.

Mental Health Care as a Smart Investment

Many mental health professionals argue that failing to provide adequate mental health services carries tremendous costs for insurance companies and society as a whole. The American Journal of Psychiatry estimates that serious mental illness costs America $193.2 billion in lost earnings per year.

“Mental health coverage reduces costs. It’s not rocket science,” says Dr. Ann Becker-Schutte, a psychologist in Kansas City, Mo., who specializes in treating patients coping with serious medical conditions. Becker-Schutte, whose blog can be found here, cited a study showing that depression is associated with poor diet and medication regimen adherence, which in turn result in higher health care costs.

While Becker-Schutte is in private practice, mental health professionals who work in hospitals witness the waste associated with denying access to therapy and medication on a grander scale. For mentally ill people who are underserved, the emergency room is often their only option for treatment.

In an op-ed that appeared in the New York Times, psychiatrist Christine Montross wrote that it is not unusual for cumulative emergency-room visits to add up to more than twice the patient’s age, pointing out that a single hospital admission costs more than a year of private outpatient care would.

Impact of the ACA and the Final Parity Rule

Recent studies underscore the connection between mental and physical health, disputing the idea that mental illness is an isolated public health problem. Research at Harvard Medical School, for example, has shown a link between anxiety and several chronic physical illnesses, including heart disease, chronic respiratory disorders, and gastrointestinal conditions. And heart attack fatalities are linked as much to depression as they are to the top five risk factors: obesity, high cholesterol, diabetes, high blood pressure, and smoking, according to a study released in 2017.

Until the mental health parity law passed in 2008, insurance companies discriminated against mental disorders and limited access to treatment. The parity law requires health insurance companies to cover mental illness just as they do physical disease. Together with the Affordable Care Act (ACA) – which promotes access to mental health care by disallowing pre-existing conditions, limiting the amount consumers are required to spend on medications and increases access through Medicaid expansion – the parity rule was aimed at opening up mental health insurance coverage for millions of underserved people.

And yet, while progress has been made in the past decade, other more subtle obstacles to mental health care persist.

First, the good news. The parity law has reduced or eliminated certain barriers to treatment, among them charging higher co-pays or deductibles for mental health care. And yet, while insurance companies may comply with the parity requirements, they are finding other ways to limit access, Grohol said, such as limiting the number of in-network mental health providers. “They make different barriers, saying that a two-hour ride to get to the nearest therapist is accessible.”

According to Parity Track, which was started by the former U.S. Congressman and mental health advocate Patrick Kennedy, patients continue to face potential parity law violations. The organization educates consumers about their rights under parity laws, identifying common violations to mental health treatment, including:

Separate deductibles for behavioral health services that are not part of the overall deductible;
Higher co-pays for behavioral health services;
Limits on how many times you can see a behavioral health provider;
Charging more for prescription medications for behavioral health treatment;
Requiring permission for patients to continue behavioral health treatment;
Limits on how many days are covered within a treatment facility.

While Parity Track aims to educate consumers about their rights, there are other forces at work taking a legal stance against insurance company violations regarding mental health parity. Psych-Appeal, a private law firm specializing in insurance coverage for mental health issues, pursues legal action against insurance companies. It was involved in a class-action lawsuit against United Behavioral Health – a unit of UnitedHealth Group. In March 2019, a federal judge in Northern California ruled in favor of the plaintiffs, stating that the insurer’s discriminatory policies aimed against patients with mental health issues was a violation of federal law.

“Unequal insurance coverage for mental and physical health is widely considered one of the major causes of the mental health crisis facing the United States. After two years of a pandemic that has fueled soaring rates of anxiety and depression and two decades into the worst drug epidemic in U.S. history, uneven coverage contributes to the current severe shortage of behavioral health services,” Lenny Bernstein of The Washington Post wrote in June 2022.

“Consumers seeking psychotherapy and drug treatment contend with administrative roadblocks, network shortfalls and more-restrictive benefits than they receive in coverage for physical health, according to advocates, public officials and a host of analyses, court cases and government reports. Caregivers, plagued by lower reimbursements than medical doctors receive, continue to flee insurance networks for cash-only arrangements.”

“It is difficult to determine the number of people who did not receive services due to inadequate behavioral health coverage — which encompasses mental health and substance abuse — but there is little question the total is considerable.”

This is the first piece in our mental health series. The series, in its entirety, is outlined here.