Tallying Mental Illness' Costs

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It's a debate with which the U.S. workplace has yet to come to grips: should employees' mental and physical health be considered equal in importance?

Corporate America's answer has traditionally been unambiguous, with few employer-backed health plans offering any coverage for workers' mental conditions. But that line has been shifting recently — a change that could save the U.S. economy billions of dollars in lost income, a new government-funded study suggests.

Serious mental illnesses (SMIs), which afflict about 6% of American adults, cost society $193.2 billion in lost earnings per year, according to findings published in this month's American Journal of Psychiatry. Surveying data from nearly 5,000 participants, researchers determined that people suffering from a SMI — defined as a range of mood and anxiety disorders, including suicidal tendencies, that significantly impaired a person's ability to function for at least 30 days over the past year — earned at least 40% less than people in good mental health. "The results of this study confirm the belief that mental disorders contribute to enormous losses of human productivity," says Ronald Kessler, a Harvard professor of health care policy and lead author of the study, funded by the National Institute of Mental Health.

Researchers arrived at that figure using data from the 2002 National Comorbidity Survey Replication, a nationally representative study designed to gauge the overall mental health of Americans, and extrapolated it to the general population. Kessler and his colleagues determined that a person suffering from SMI had earned $23,000 on average in the previous year. Those respondents without SMI averaged nearly $40,000. The researchers attributed 75% of that difference to the person's mental illness. The other 25% was attributed to a greater likelihood that a mentally ill person would not have worked at all, thus earning nothing — Kessler says, for example, that very few participants with autism, schizophrenia or other chronic illnesses were included in the $193 billion figure.

Though these figures may seem high, Kessler and his colleagues caution that they are likely too conservative. For one thing, the study's conclusions are based on data from 2002; today, Kessler says, the rate of mental illness is likely higher due to a variety of causes, including the Iraq war starting in 2003. But, more importantly, lost earning potential is only one of the many indirect costs of mental illness in American society. Social Security payments, homelessness and incarceration add to that economic burden, as well as direct costs such as medications and physicians' care. "The actual costs are probably higher that what we have estimated," Kessler says.

What's more, Kessler's report considers only severe mental illness in its calculations. Yet more than one in four American adults suffers from shorter-term, but clinically diagnosable mental disorders in a given year — including depression or an eating disorder — and such disorders are the leading cause of disability among U.S. workers under age 45. In 2005, research by Kessler showed that 60% of Americans with a mental disorder got no treatment for their ailment at all.

One longtime barrier to psychiatric care has been reluctance by insurance companies to consider mental illnesses on par with physical ones and thus not pay as well to treat them. Only 6.2% of current U.S. health care spending is devoted to the treatment of mental disorders. Federal lawmakers may soon change that. Following the lead of many states, the U.S. House of Representatives in March passed legislation that would require equal health insurance coverage for mental and physical illnesses, when policies offer coverage for both. "Mental illness and drug addiction are every bit as real and serious as physical illness," said Congressman Joe Courtney, a Democrat from Connecticut, of his vote in favor of the bill. "And by providing intervention and early treatment we may be able to prevent more serious and costly conditions down the road."

The Senate passed a narrower version of the bill last September, and the two houses are currently working on a compromise to send to President Bush. Both the drug industry and large insurers have been vocally opposed, saying the legislation could result in higher premiums for customers. "[The bill] would offer more generous mental health benefits to Americans," said Sonya D. Sotak, director of federal affairs for drugmaker Eli Lilly, "but it risks doing so on the backs of the sickest and poorest Americans." Rep. John Sullivan, a Republican from Oklahoma, admitted the changes could adversely affect the pharmaceutical (a clause in the House bill could force drugmakers to lower prices) and health care industries but decided to support the bill anyway. "Each year the economic cost of untreated mental illness is staggering — over $100 billion on untreated mental health disorders and $400 billion on addiction disorders," Sullivan said. "Our country cannot afford to continue losing $500 billion a year to these treatable diseases."