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Study sees less growth in spending on behavioral health

Spending on psychiatric drugs grew 5.6 percent from 2004 to 2005, down from the 27.3 percent growth from 1999 to 2000, according to a study in the February issue of Health Affairs.

The study, conducted by the Substance Abuse and Mental Health Services Administration, analyzed healthcare costs from 1986 to 2005 to determine patterns in expenditures for behavioral health services.

In 2005, the latest year for which comparable data is available, behavioral health spending accounted for 7.3 percent ($135 billion) of the $1.85 trillion spent on all healthcare services in the United States. During the 20-year study period, annual spending on both mental health and substance abuse spending grew more slowly than all other health spending – 4.8 percent for substance abuse, 6.9 percent for mental health and 7.9 percent for all healthcare services. The same pattern held in the most recent 2002-2005 period, in which annual spending for substance abuse grew slowest (5 percent), followed by mental health (6.4 percent) and all health (7.3 percent).

[See also: Spending on healthcare M&A rises 44 percent]

"Behavioral health services are critical to health systems and community strategies that improve health status and they lower costs for individuals, families, businesses and governments," said SAMHSA Administrator Pamela S. Hyde.

"The value of behavioral health services is well documented," she said. "Studies have shown that every dollar invested in evidence-based treatments yields $2 to $10 in savings in health costs, criminal and juvenile justice costs, educational costs and lost productivity. Yet too many people don't get needed help for substance abuse or mental health problems and healthcare costs continue to skyrocket."

The study found that spending on behavioral health treatment (mental health and substance abuse) comprised 4.8 percent of private health insurance expenditures in 2005 and grew by 7 percent from 2004 to 2005. Officials say this estimate provides an important baseline for evaluating the impact of the Mental Health Parity and Addictions Equity Act and Affordable Care Act. In contrast, Medicaid behavioral health was responsible for 11.5 percent of total spending by Medicaid.

The study indicates that the level of public spending on behavioral health issues may be related to a lack of private insurance benefits for many with mental health needs, and that these problems may be addressed through parity.

[See also: Survey: Two-thirds of physicians can't get mental health services for patients]

The study's key findings are:

  • Unlike overall health spending, most behavioral health services are publicly funded. In 2005, public payers accounted for the 79 percent of spending on substance abuse treatment services and 58 percent of spending on mental health services. In contrast, public payers accounted for 46 percent of all-health spending.
  • Psychiatric drug spending growth is declining. In the past, psychiatric drugs have been a major driver of overall mental health spending – contributing almost half of the increase in mental health spending between 1998 and 2002. However, because of the wider use of less-expensive generic drugs and reduced numbers of new people using psychiatric medications, the growth rate in spending for these drugs slowed from 27.3 percent from 1999 to 2000 to only 5.6 percent from 2004 to 2005
  • Spending on addiction medications is increasing but still remains relatively small. As a result of the introduction of new medications to treat substance dependence, spending on addiction medications has grown rapidly – from $10 million in 1992 to $141 million in 2005. More recent data from IMS Health shows continued rapid increases of up to $780 million in 2009. However, that's only a small fraction of the entire amount spent on substance abuse treatment (0.6 percent of $22 billion in 2005).

Read the study here.

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