A Larger Share Comes From Medicaid And Goes For Prescription Drugs

Armen Hareyan's picture

Over the past two decades, spending for mental health treatment shifted sharply from inpatient care to prescription medications, and Medicaid picked up a growing share of the cost.

The study, which analyzed healthcare costs from 1986 to 2003, was conducted by researchers from Thomson Healthcare and the federal Substance Abuse and Mental Health Services Administration (SAMHSA). Thomson Healthcare is a part of The Thomson Corporation.


Overall, expenditures for mental health treatment in the United States grew from $33 billion in 1986 to $100 billion in 2003 - an average annual increase of 6.7 percent. On a per capita basis, spending in the U.S. increased from $205 to $345 in inflation-adjusted dollars. The increase reflects the growing number of people treated for mental health conditions.

The study uncovered a large shift away from spending on inpatient mental health treatment, and an increase in spending for outpatient services and prescription drugs. Inpatient care accounted for 41 percent of mental health treatment costs in 1986 and declined to 24 percent in 2003. Meanwhile, mental health drugs accounted for 7 percent of total spending for mental health care in 1986 and climbed to 23 percent by 2003.

Among organizations that pay for mental health treatment, Medicaid grew in importance during the 17-year study period. Medicaid agencies covered 16 percent of total mental health costs in 1986 and 26 percent in 2003. In a separate study published last month in Health Affairs, researchers from Thomson Healthcare and SAMHSA found that Medicaid's share of U.S. spending for substance abuse treatment increased from about 10 percent in 1986 to nearly 18 percent in 2003.

"Insurance programs like Medicaid and the development of new mental health medications have improved the quality of life for many people who suffer from mental health disorders," said lead author Tami Mark, associate research director at Thomson Healthcare. "But the evolution we're seeing in the mix of treatment and funding sources raises new challenges for assuring quality, continuity of care, and access across the wide spectrum of services and payers. As more mental health care has moved away from inpatient and institutional settings, the need for adequate monitoring and coordination across systems and time has grown."