The Insurance Industry and the Business of Mental Health

In the past twenty years, employers have gradually limited the inclusion of mental health care benefits due to a rise in medical treatment costs. This nationwide trend is largely due to employers’ and insurance companies’ efforts to keep healthcare costs under control. Doing so has left millions of individuals suffering from mental disorders without the adequate medical care they need to treat debilitating disorders and diseases.

Although in the past decade, lawmakers have tried to reduce the erosion of mental health coverage for patients, research shows that the parity mandates have done little to impact or change the ways that employers and insurance companies approach mental health care.

Since the 1980s, mental health care costs have fluctuated. For most of this time, mental health care costs were in line with other health care spending costs. The rates of deviance between mental health care costs and regular health care spending were no higher than one or two percentage points. Between 1991 and 1996, mental health care costs increased by only 4.8 percent, which was lower than the overall percentage rise of health care spending (6.5 percent).

However, in the early 2000s, mental health care costs began to gradually increase, with the single most important causal factor being the rise in the use of psychotropic drugs. Psychotropic drugs were relatively easy to prescribe and use, especially antidepressants, making them very appealing to primary care services. Between 2001 and 2003, the proportion of mental health services delivered through the general health sector increased from 32 percent to 50 percent. During this same period, the spending on prescription drugs increased from 7 percent to 21 percent.

Health Care Coverage

Historically, employers’ health insurance plans have provided less coverage for mental health services compared to that of physical health (that is, medical and surgical) services. In 2008, due to this common bias practiced by employers and health insurance companies, Congress passed the Mental Health Parity and Addiction Equity Act. This federal law mandates that all companies that employ more than 50 full-time individuals and that offer mental health care insurance must provide equal coverage for mental illness and substance use disorders as other medical and surgical procedures. Although the plan closes several key loopholes left open by the 1996 Mental Health Parity Act, it does not require employers to provide mental health care coverage, which some have argued encourages employers to drop all mental health care coverage, however limited it may be.

Despite the rise in health care costs, numerous statistics clearly show the importance of mental health care coverage. As the American Psychological Association states, about 2 percent of adults ages 55 and over suffer from a mental disorder. In 2005, almost half of all nursing home residents suffered from dementia, while 20 percent suffered from other psychological diagnoses. However, due to the current limitations on mental health care provisions, less than 3 percent of diagnosed adults regularly treat their mental disorders.

Mental Health Disorders

The following are examples of how restricted mental health care can marginalize patients suffering from common mental health disorders. In many cases, limiting mental health care benefits can worsen symptoms that remain untreated.

  • Depression: In a survey conducted by the National Institutes of Health, about 20 percent of regular patients who used medical care were diagnosed as suffering from depression or other mental disorders dealing with depression. Out of these patients, less than half (42.4 percent) had visited a mental health specialist in the last two years. This suggests that most patients suffering from mood disorders and depression cannot afford regular checkups with mental health professionals.
  • Anxiety and Panic Disorders: Although anxiety disorders are treatable, only about one third of all patients suffering from anxiety and panic disorders receive treatment. High costs of cognitive-behavioral therapy and prescription drugs deter individuals from receiving the treatment they need. Currently, anxiety and panic disorders cost about $42 billion annually, which is one-third of the country’s total $148 billion mental health bill.
  • Schizophrenia: Although there is no cure for schizophrenia, it is a highly treatable disorder. Both antipsychotic medications and psychosocial therapies have a high success rate in treating schizophrenic patients. However, its devastating symptoms are very costly to treat, with about $22.7 billion going to direct health costs to treat schizophrenia.

Mental-health Allied Organizations

The following is a list of mental health nonprofit organizations based in the United States and abroad, which lobby to improve mental health care benefits, services and support for individuals suffering from mental disorders and diseases:

  • Mental Health America: Mental Health America promotes mental health care and provides information on mental health disorders through advocacy, education, research and community services. The website includes an event calendar, position statements, and current mental health news and facts.
  • World Federation for Mental Health: The World Federation for Mental Health’s goals include improving and promoting mental health services, reducing the stigma associated with mental and emotional disorders and protecting human rights of the mentally ill.