September 1993
Government Relations
Practice Directorate

Why Employers Should be Concerned About Mental Health

• Twenty-eight million American adults have a serious mental disorder other than substance abuse. These mental illnesses cost society an estimated $129.3 billion annually, about half of which is attributable to lost productivity in the workplace (Rice et al., 1990)

• In any one-month period almost 8 million people experience depression at an estimated annual cost of $16 billion, $10 billion of which is money lost in absenteeism and lost productivity (Regier et al., 1988; NIMH, D/ART Office, 1990).

• Mental illness, including depression, can be as functionally disabling as a serious heart condition, and more disabling than other chronic physical illnesses such as lung or gastrointestinal problems, angina, hypertension and even diabetes (Wells et al., 1989).

• Standard prevalence estimates of primary care patients with diagnosable mental disorders have been shown to average twice as many visits to their primary care physicians as those without a mental disorder (Borus, 1985).

Medical Savings Stemming from Mental Health Treatment

Besides improving health and increasing well-being, evidence has accumulated to show that psychological treatments can actually lower medical expenditures.

• Medicaid patients hospitalized for physical ailments and provided mental health interventions realized average cumulative savings of $1,500 over a subsequent 2½ year period. The cost of the mental health intervention was entirely paid for (i.e. totally offset) by these savings. Patients hospitalized without physical ailments who received mental health treatment realized savings ranging from $296 to $392 depending on the severity of diagnosis (Fiedler and Wight, 1989).

• A three year study of over 10,000 Aetna beneficiaries showed that after initiation of mental health treatment client medical costs dropped continuously over 36 months. The health costs of one mental health treatment group fell from $242 the year prior to treatment to $162 two years post treatment. Other subject groups demonstrated similar dramatic offset effects, leading the researchers to conclude that a decrease in total health care costs can be expected following mental health interventions even when the cost of the intervention is included. (Holder and Blose, 1987).

• Research on 20,000 enrollees at the Columbia Medical Plan, Maryland, showed that untreated mentally ill persons increased their medical utilization by 61% during a one- year period. In contrast, the mentally ill who received psychological treatment increased their medical expenditures by only 11% during the same period. A mental health comparison group averaged a 9% increase. (Hankin, 1983).

• Three hundred veterans who received abbreviated mental health treatment following a history of excessive medical health utilization were able to reduce outpatient medical visits by 36%. Control groups, who received no psychotherapy, actually increased outpatient medical utilization (Massad et al., 1990).

• In other studies, which included elderly subjects, even modest psychological interventions were shown to reduce hospital stays approximately 1.5 days below the control group's average 8.7 days. (Mumford, et al., 1984).