Behavioral health utilization is one of the main factors driving up commercial health plan spending.

According to a new report by PwC, commercial health care spending would grow 8% and 7.5% between 2024 and 2025. The increased use of weight loss drugs, including GLP-1s, was another force driving up health care spending.

In the wake of the COVID-19 pandemic, behavioral health utilization skyrocketed. This was paired with a continued rise in per-claim costs, resulting in overall higher costs.

“While historical [per-member-per-month costs] for these services were too low to be considered an inflator to overall medical costs, spending on mental health has increased more than 50% since the pandemic, driven by a nearly 40% rise of in-person behavioral health utilization. With this rise in utilization and unit costs rise, BH services are accounting for a greater percentage of overall medical spending each year following the pandemic. BH services were listed as a top three inflator by 30% of health plans surveyed.”

The authors of the report also noted that the supply and demand imbalance in the behavioral health care sector has led to competition among providers. This problem is only likely to intensify over the next decade.

“The market size for BH is expected to increase 53% from 2023 to 2033, widening the gap between demand and supply in the mental health space,” the authors of the report said. “This shortage also raises concerns about the accessibility and quality of care, including specialized services such as applied behavior analysis (ABA). Inflated medical costs are expected as the health industry looks to address insufficient resources, limited access to providers and inadequate funding for MH or SA services.”

One of the other main challenges in behavioral health is current reimbursement trends. Behavioral health providers are typically reimbursed at lower rates than physical providers. According to the report, medical or surgical clinicians were reimbursed at a rate about 22% higher than behavioral health clinicians.

“Health plans will likely face the challenge of striking a balance between adequately covering BH services and managing medical costs,” according to the report. “The high demand for MH or SA treatments requires careful strategizing, especially considering the forefront issue of reimbursement with providers. Health plans may need to explore innovative solutions, such as condition-specific value-based payment models that incentivize quality outcomes and efficient resource utilization in behavioral health services.”