Behavioral Health Patients Drive Nearly 57% of Health Care Costs — Yet Little Spent on Behavioral Treatment

Patients with behavioral health conditions in addition to physical ones drive nearly 57% of all health care spending; however, very little of that money goes toward treating behavioral conditions.

That’s according to a new report from Milliman commissioned by The Path Forward for Mental Health and Substance Use. The study was funded by the Mental Health Treatment and Research Institute LLC, a tax-exempt subsidiary of The Bowman Family Foundation.

To reach the findings, Milliman reviewed 2017 commercial health care claims data for 21 million people. The analysis breaks down the prevalence of behavioral health conditions within the total patient population and among the highest-cost patients. 


Researchers found that, while only 27% of those in the study had a behavioral health condition, the cohort accounted for 56.5% of the total annual health care costs. 

The vast majority of that spending went toward physical and surgical health care services — despite the fact that behavioral health conditions seemed to be a cost driver. 

Researchers found that half of all behavioral health patients saw less than $68 per year go toward treating their behavioral health conditions. Meanwhile, another 25% had very limited spending — between $68 and $502 per year — for behavioral health treatment.


In all, only 4.4% of total annual health care costs for the entire study population went toward behavioral health treatment.

Henry Harbin, an adviser to The Path Forward partners and the former CEO of Magellan Health, called the study results “astonishing.”

“This is despite having been diagnosed or treated by a healthcare professional for a behavioral illness,” Harbin said in a press release announcing the results. “This is a tragedy. And now we know this population accounts for more than half of our total healthcare spending.”

Researchers noted that their study methodology didn’t allow them to attribute causality between high physical health care costs and behavioral health conditions; However, they said it’s clear that management of behavioral health conditions is important to reducing health care costs and improving patient outcomes. 

American Psychiatric Association CEO and Medical Director Saul Levin agreed.

“This latest study shows, yet again, the urgency for early identification and treatment for mental illness and substance use disorders by expanding the evidence-based collaborative care model,” Levin said in a press release.

The collaborative care model is a systematic, integrated approach treating behavioral health conditions in primary care settings. It relies on the integration of care managers, psychiatrists and primary care physicians to better manage behavioral conditions holistically as chronic diseases.

“We simply cannot ignore the connection between mental health and physical health, which is now echoed by leaders, physicians, health providers, patients and the public, and demonstrated by the COVID-19 pandemic,” Levin said. “The costs to human lives and health care systems are too high.”

While the study didn’t look at COVID-19’s impact on behavioral health, other research has. For example, 45% of respondents to a Kaiser Family Foundation poll reported their mental health has been negatively impacted by the coronavirus. Additionally, texts to the Substance Abuse and Mental Health Administration’s emotional distress hotline increased 1,000% year-over-year in April. 

“While the Milliman report did not study the effect of COVID-19 on mental health, its analysis of 2017 claims data provides a baseline for estimating the potential subsequent impact of the pandemic on the treatment of behavioral conditions and medical spending,” Andy Keller, president and CEO of the Meadows Mental Health Policy Institute, said in the press release.

In addition to implementing collaborative care models in primary care settings, The Path Forward recommends employers, health insurers and providers work to increase access to affordable in-network specialty behavioral providers and to improve parity law compliance. Additionally, it is advocating for early behavioral health condition detection and expanded access to tele-behavioral health services. 

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