Mental Health and Total Spending in Medicare Patients

By March 23, 2020 March 26th, 2020 Commentary

Serious mental health conditions are somewhat widely prevalent in the United States and are estimated to account for over 5% of all health care spending.  They may also result in higher medical condition spending, as patients with mental illness may do a worse job of managing their health and health care.  A study reported in Journal of the American Medical Association Network Open looks at the association of mental health conditions with additional medical spending in the fee-for-service Medicare population.   (JAMA Article)   The researchers identified beneficiaries with mental health issues and sought to understand how much of their total spending was for the mental health condition; how much more medical spending they had than comparable beneficiaries without mental health problems and what types of additional utilization they tended to have.  Those with mental illness diagnoses were grouped into serious conditions such as schizophrenia or bipolar disease and those with milder conditions such as anxiety or depression.  Out of their study sample, 23% had a serious mental health illness and another 7.5% had a milder one.  The group with serious mental health conditions tended to have more comorbidities.

Overall, the beneficiaries had average spending of $14,757 per year, of which $616 or 4.2% went for mental health treatment.  Patients with serious mental health illness averaged $19,676 in annual spending and those with milder mental health conditions, $15,596 and with no mental illness, $13,072.  As you would expect, patients with serious mental illness had more mental health spending; $2042 per year on average, versus $343 for those with mild mental health conditions and $189 for none.  But their spending on physical illness was also higher, averaging $17,651 versus $15,253 for mild illness and $12,883 for none.  So beneficiaries with serious mental health conditions incurred about $4768 in additional medical spending per year.  Much of this additional spending was for chronic diseases.  These patients had more utilization across most categories, including drugs, inpatient hospital, nursing home, home health care and emergency room.  The findings suggest that Medicare, and probably commercial payers as well, are incurring substantial additional medical spending for beneficiaries with mental health illness.  So managing the mental health illnesses effectively may also reduce medical spending.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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