It’s the Economy
The Half-Trillion-Dollar Depression
Illustration by Jasper Rietman
Published: July 2, 2013
Eliza, who asked that I not disclose her last name, successfully battled depression for most of her life. She persevered through college and graduate school and worked steadily for more than a decade as a pharmacist. Then, about two years ago, she suffered from an unusually debilitating stretch in which she didn’t respond to antidepressants, and her insurance company refused to pay for experimental treatments that her doctors recommended. Now in her 40s, she has become one of the more than 1.4 million Americans on the federal disability rolls for mood disorders. She also receives Medicaid, food stamps and fuel assistance. “I never wanted a handout,” Eliza told me last month, adding that she has held on to her pharmacy license in the hope that her condition may yet improve. “I would give anything to get out of this and go back to where I was before.”
Mental illness has been an increasingly significant health concern over the past several decades, but it’s now becoming an economic one too. The number of Americans who receive Social Security Disability Insurance for mental disorders has doubled during the past 15 years. Eliza is now one of an estimated 11.5 million American adults with a debilitating mental illness, on whom the country spends about $150 billion annually on direct medical costs — therapy, drugs, hospitalizations and so forth. But the biggest blow to the overall economy are the many hidden, indirect costs. People with serious mental illness earn, on average, $16,000 less than their mentally well counterparts, totaling about $193 billion annually in lost earnings, according to a 2008 study published in The American Journal of Psychiatry. And many mentally ill workers, who are more likely to miss work, also suffer from what social scientists call presenteeism — the opposite of absenteeism — in which they are very likely to be less productive on the job when they show up.
Reduced earnings and a lower likelihood of being, or staying, married compound the problem. The mentally ill are at higher risk of poverty than their peers, which subsequently increases their need for other public safety-net services like food stamps and subsidized housing. Their use of those services, according to one recent estimate, probably costs taxpayers another $140 billion to $160 billion a year. All together, our cumulative mental-health issues — depression, schizophrenia and bipolar disorder, among others — are costing the U.S. economy about a half-trillion dollars. That’s more than the government spent on all of Medicare during the last fiscal year.
With a major expansion of health insurance slated to take effect next year under Obamacare, policy makers are obsessing over how to bring down such costs. But listening to Eliza talk about getting back to work, it was hard not to wonder whether the best way to cut the long-term costs associated with mental illness was, paradoxically, to spend more money on directly treating it now. Economists refer to this as the cost offset, and it’s sort of like a return on an investment that comes from helping mentally ill people become more productive and less dependent on taxpayers.
There is evidence that suggests this might work. A study published in 2007 in The Journal of the American Medical Association, for example, enrolled depressed employees at 16 large companies in a randomized controlled trial. Some of them received telephone outreach, care management and optional psychotherapy, while others received their usual care. The employees in the “enhanced care” group not only worked longer weeks than those in the other group but also demonstrated greater job retention. Those increases in hours on the job brought companies an average annual value of $1,800 per worker, which was estimated to exceed the cost of both the outreach program and the roughly 10 additional mental-health specialty visits made by subjects in the treatment group. Another study conducted at 12 primary-care facilities found increased productivity and reduced absenteeism for patients who received enhanced treatment.
The question is whether those findings will apply on a much larger scale. Obamacare — coupled with another recent law that forces insurers to cover behavioral-health care the same way they cover other medical care — will significantly increase coverage for mental illness for about 62.5 million people. And there is one subtle way that this expansion of coverage could improve Americans’ outcomes almost immediately. The recent Oregon Medicaid experiment, in which poor people received Medicaid coverage by lottery, found that having health coverage didn’t necessarily improve outcomes for certain physical ailments, like diabetes, but it did reduce rates of depression by 30 percent, even though antidepressant use barely increased. The mere fact that people didn’t have to worry about a costly medical emergency, researchers deduced, may have helped reduce rates of depression.
The main way expanded coverage would help people with mental illness, though, would be to get more of them into successful treatment. And Obamacare alone won’t get that done. Even though tens of millions of people will get more coverage, estimates suggest that only 1.15 million new users will take advantage of mental-health services. A lot of people who will be extended coverage don’t need care; others, fearful of the stigma around mental health, may not take it. What’s more distressing, from both an economic and a social perspective, is that a lot of people who do muster the courage still won’t get the right kind of treatment. About half of Americans who seek care for serious mental illnesses get treatment that does not help them or is not even recommended for their condition. Some, like Eliza, have illnesses that are resistant to first-line antidepressants. It took years before she could get her insurance company to foot the bill for an alternate treatment that her doctors said was medically necessary. By then she had already fallen into poverty.
One way to address the quality-of-care issue is to invest in more comparative-effectiveness research, which is a fancy term for pitting health care options head to head to see which works best for which patients and under what circumstances. Economists have long advocated this as a way to ensure we’re spending our money more wisely, but the United States sponsors surprisingly little of it. There’s a popular distaste for anything that smacks of government telling doctors or patients what to do. Also comparative-effectiveness research is ridiculously expensive. But just as it’s important to think dispassionately about the costs and benefits of expanding mental-health-care insurance, its also important to think dispassionately about what we spend our mental-health-care dollars on. If we want to realize the long-term economic and social benefits that come from helping people burdened by mental illness, we may have to endure some short-term economic pain.
Catherine Rampell is an economics reporter for The Times. Adam Davidson is off this week.