Mental health treatment spending by private insurers spikes at $220 billion, study says

The share of mental health treatment expenditures financed by private insurance, Medicare and Medicaid increased from 44 percent in 1986 to 68 percent in 2014, a study released Monday by Health Affairs showed. By contrast, insurance and government spending for substance abuse fluctuated a mere percentage point during that same period, from 45 to 46 percent.

Authors said this financing shift kick-started the integration of behavioral health treatment into general medical settings, and as a result, mental health services are moving into physicians' offices and general hospitals. Additionally, services are shifting away from psychosocial therapies and toward treatment with prescription medications, typically prescribed by primary care physicians and non-psychiatric specialists.

Substance use disorder treatment, on the other hand, continued to be financed primarily by federal block grants and state and local general revenues in 2014. The study speculates this may be due partly to the fact that development and use of substance abuse medications has lagged behind that of mental health meds. The stigma around mental health disorders, authors say, is also not as robust as that surrounding substance abuse issues.

In 2014, mental health treatment spending accounted for 6.4 percent of all health spending, while substance use disorder treatment came in at 1.2 percent -- combining for a total behavioral health expenditure of $220 billion. For most of the study period, all health spending growth exceeded behavioral health spending, but that trend was reversed from 2009-14.

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Spending by private insurance accounted for 28 percent of total mental health spending in 2014, an increase from 20 percent in 1986, according to the study. Meanwhile, it accounted for 18 percent of total substance abuse spending in 2014, a decrease from 32 percent in 1986. For all healthcare, private insurance represented 35 percent of all spending in 2014.

Spending by Medicaid amounted to 25 percent of mental health spending in 2014, an increase of 17 percent since 1986, and 21 percent of substance abuse spending, a 9 percent jump.

Medicare spending on behavioral health has almost doubled in recent years, the study found, growing from $16 billion in 2007 to $30 billion in 2014, whereas total Medicare spending increased 43 percent over the same period. The report claims this may be due to Medicare Part D. Beginning in 2006, it provides prescription drug coverage to those who receive Medicare and for those eligible for both Medicare and Medicaid -- known as dually eligible beneficiaries -- who had previously received prescription drug coverage under Medicaid. From 2007 to 20014, 51 percent of the increase in Medicare behavioral health spending was due to prescription medications, the authors said, whereas they accounted for only 22 percent of the increase across all of Medicare.

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As a result of the recent recession, inflation-adjusted spending on behavioral heathcare by state and local governments, excluding Medicaid, decreased between 2008 and 2010, according to the study, which was consistent with the sharp overall decline in state budgets. Spending began to grow again after 2010, but on average it wasn't as rapid as growth in private insurance, Medicare, and other federal sources of behavioral health financing.

The share of all healthcare spending paid for out-of-pocket has been trending downward, the data showed, from 23 percent to 12 percent over the study period, with a similar trend occurring in behavioral health, with out-of-pocket spending for mental health dipping from 18 to 10 percent over that same timeframe. For substance abuse disorders, it shrunk from 13 to 9 percent.

Spending on psychiatric medications has fallen in recent years. It grew from 8 to 29 percent from 1986 to 2009, but trailed back downward to 24 percent in 2014, resulting from the slowing growth of spending on those drugs, many of which lost patent protection and became available as less expensive generics.

The authors said that while expanded insurance coverage of behavior health services has generally been viewed as positive, there are some concerns: For instance, the need to sustain funding for people without insurance, the lack of coverage for non-traditional services like parenting education and support, and the fear that funding for behavioral health treatment will diminish as coverage becomes integrated into large, complex insurance programs. 

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