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Mental Health, United States, 2010. Rockville (MD): Substance Abuse and Mental Health Services Administration (US); 2012.

4PAYERS AND PAYMENT MECHANISMS

4.1. Narrative

4.1.1. Overview

Funding for mental health care has changed considerably in the past decade, and change seems likely to continue. Ongoing budget crises in many States threaten the availability of some services for many vulnerable populations. For people with third-party coverage—such as private insurance, Medicare, and Medicaid—recent parity legislation is part of a series of legislative attempts to make the coverage for behavioral health care equivalent to that for general medical care. Forthcoming health care reform is likely to provide third-party coverage for behavioral health services for millions of people who were not covered previously. In the face of such changes, decision makers who must budget and plan the provision of care need access to data that monitor how much is spent on mental health services, from what sources, and on what services.

This section provides national information on mental health expenditures and how these expenditures relate to expenditures on all health care, as well as information on the major funders, including private insurance, Medicare, Medicaid, the U.S. Department of Veterans Affairs (VA), and State Mental Health Agencies (SMHAs). The data directly address the Substance Abuse and Mental Health Services Administration's (SAMHSA's) strategic initiative Data, Outcomes, and Quality, which is intended to improve the accessibility of mental health information for staff, stakeholders, funders, and policy makers (SAMHSA, 2011).

4.1.2. Mental Health Expenditures: Overview

(Exhibits 14 through 18 and Tables 70 through 77)

The exhibits and tables on mental health expenditures begin with a broad overview of mental health expenditures at the national level from 1986 to 2005. Data on U.S. mental health and all health expenditures are from the SAMHSA Spending Estimates Project (SAMHSA, 2010). The estimates are developed to mirror the National Health Expenditure products of the Centers for Medicare & Medicaid Services (CMS) and thus are developed using many of the same data sources, methods, and definitions (CMS, 2011). In keeping with previous volumes of Mental Health, United States, dollar estimates are expressed in nominal terms, unless otherwise stated. That is, no adjustment is made for inflation in general prices.

Overall, expenditures on mental health treatment in the United States were about $113 billion in 2005, which is about 6.1 percent of the total U.S. expenditures on all types of health care (Tables 70 and 71). Mental health expenditures by all types of payer sources increased from 1986 to 2005, but as a share of all health expenditures, mental health expenditures declined or remained relatively stable across all types of payers (Tables 70 and 71).

From 1986 to 2005, there were substantial changes in the distribution of mental health expenditures across provider type and by payer. More was spent on specialty mental health providers than nonspecialty providers from 1986 through 2005 (Exhibit 15 and Table 72). However, specialty care as a percentage of all mental health expenditures decreased over this period. During this same period, the share of mental health expenditures accounted for by prescription medications increased from 7.4 percent in 1986 to 26.6 percent in 2005. The main changes in the distribution of expenditures for mental health care by payer included the increase in the share of expenditures by private insurance and Medicaid and the decrease in the share of expenditures by other State and local sources (Exhibit 18 and Table 75). Finally, the share of total mental health expenditures on inpatient mental health services decreased from 1986 to 2005, while the share of outpatient mental health services increased steadily (Tables 76 and 77).

Exhibit 15 is a bar graph showing the distribution of mental health expenditures by type of service in the United States in 1986 and 2005. For 1986, 61.3% expenditures were in specialty services, 26.4% expenditures were in nonspecialty services, 7.4% expenditures were in retail prescription drugs, 4.9% were in insurance administration. For 2005, 50.0% expenditures were in specialty services, 16.0% expenditures were in nonspecialty services, 26.6% expenditures were in retail prescription drugs, 7.4% were in insurance administration.

Exhibit 15

Distribution of mental health expenditures, by type of service, United States, 1986 and 2005. NOTES: The data include revisions and may differ from previously published data. Data are based on national expenditures for mental health services. See Table (more...)

Exhibit 18 is a bar chart showing the distribution of mental health expenditures by payer in 1986 and 2005. For 1986, 17.5% of expenditures were out of pocket, 19.9% of expenditures were private insurance, 5.0% of expenditures were other private, 6.6% of expenditures were Medicare, 17.3% of expenditures were Medicaid, 6.3% of expenditures were other Federal, 27.4% of expenditures were other state and local. For 2005, 12.2% of expenditures were out of pocket, 27.0% of expenditures were private insurance, 2.6% of expenditures were other private, 7.7% of expenditures were Medicare, 27.6% of expenditures were Medicaid, 5.0% of expenditures were other Federal, 18.0% of expenditures were other state and local.

Exhibit 18

Distribution of mental health expenditures, by payer, United States, 1986 and 2005. NOTES: The data include revisions and may differ from previously published data. Data are based on national expenditures for mental health services. See Table 75 for more (more...)

4.1.3. Revenues and Expenditures by Public Funding Source

(Tables 78 through 88)

Nearly 60 percent of all mental health spending is from public funding sources (SAMHSA, 2010). Thus, sources such as Medicare, Medicaid, VA, and SMHAs play a very important role in providing access to mental health treatment. Medicaid alone—which covers qualifying people with lower incomes and with disabilities—accounts for nearly 30 percent of mental health spending. Tables 78 through 81 present estimates based on claims data from Medicaid beneficiaries with fee-for-service coverage in 13 States for the year 2003. These estimates reveal how the use of mental health services under Medicaid varies across population characteristics such as age, sex, Hispanic origin and race, eligibility status, diagnoses, and use of service type. For example, in 2003, 26.8 percent of beneficiaries who were eligible for Medicaid because of a disability used mental health services, compared with only 8.6 percent of adults and 8.2 percent of children (Table 78).

Medicare provides coverage to two vulnerable groups: those who qualify by disability and those aged 65 or older. Although Medicare accounted for 18.3 percent of spending on all medical conditions in 2005 (see Table 75), it accounted for much less (7.7 percent) of mental health spending. Nevertheless, because of the aging U.S. population, data are needed to track spending on mental health conditions. Tables 82 through 84 present estimates on use of mental health services among Medicare beneficiaries.

VA is an important provider of services to veterans, and estimates of VA behavioral health spending are presented in Table 85. From fiscal year (FY) 2008 to FY 2009, the number of specialty mental health encounters increased for inpatient stays and outpatient visits and decreased for residential days.

SMHAs have a particularly important role in funding mental health services. For example, when examining all sources of spending on mental health (e.g., Exhibit 17 and Table 74), nearly 20 percent of all mental health spending in 2005 was through other State and local sources, which includes funds controlled by SMHAs. Because their funding sources are from State funds, such as general funds, SMHA funds are at risk with the ongoing State budget crises. Tables 86 through 88 illustrate the impact that the recession is having on State financing for behavioral health services. Many States are reporting budget cuts for FY 2010 and FY 2011.

Exhibit 17 is a bar chart showing mental health expenditures as a share of all health expenditures by payer in the United States in 1986 and 2005. Total expenditures in 1986 were 7.2% and in 2005 were 6.1%. Out-of-pocket expenditures in 1986 were 5.4% and in 2005 were 5.6%. Private insurance expenditures in 1986 were 4.6% and in 2005 were 4.4%. Medicare expenditures in 1986 were 2.7% and in 2005 were 2.5%. Medicaid expenditures in 1986 were 12.1% and in 2005 were 10.0%. Other state and local expenditures in 1986 were 24.2% and in 2005 were 18.7%.

Exhibit 17

Mental health expenditures as a share of all health expenditures, by payer, United States, 1986 and 2005. NOTES: The data include revisions and may differ from previously published data. Data are based on national expenditures for mental health services. (more...)

4.1.4. Private Employer-Sponsored Mental Health Benefits

(Tables 89 through 94)

Tables 89 through 91 present information on mental health benefits offered by private employers. Approximately 30 percent of mental health expenditures are funded through private insurance (see Table 75). Private insurance policies can have a significant impact on the amount and types of services that persons with mental health conditions receive.

Information from private employers provides an important baseline against which to evaluate the Mental Health Parity and Addiction Equity Act (MHPAEA). The data in this section come from a variety of sources, including the Bureau of Labor Statistics (Table 89); the Brandeis Health Plan Survey on Alcohol, Drug Abuse, and Mental Health Services (Tables 90 and 91); the Mercer National Survey of Employer-Sponsored Health Plans (Table 92); and the Kaiser Family Foundation/Health Research & Educational Trust Employer Health Benefits Survey (Tables 93 and 94). Data from all sources are consistent in showing that before the MHPAEA, the majority of plans offered by private employers had separate limits on mental health outpatient and inpatient services, such as limits on the number of outpatient visits and inpatient days.

4.1.5. Mental Health Prescription Medication Use

(Exhibits 19 and 20 and Tables 95 and 96)

Exhibit 19 contains two line graphs. The line graph on the left shows the number in millions of users of selected mental health/substance abuse (MH/SA) medications for an MH/SA condition among persons aged 18 or older, by selected therapeutic categories in the United States in 1998, 2003, and 2008. All classes of medication: 1998, 15.1 million users; 2003, 22.5 million users; 2008, 27.2 million users; antianxiety medication: 1998, 5.4 million users; 2003, 6.8 million users; 2008, 9.3 million users; antidepressant medication: 1998, 11.2 million users; 2003, 18.0 million users; and 2008, 21.5 million users; antipsychotic medication in 1998, 1.4 million users; 2003, 1.8 million users; and 2008, 2.8 million users; antimanic and anticonvulsant medication in 1998, 1.0 million users; 2003, 1.6 million users; and 2008, 2.3 million users. The line graph on the right shows expenditures in millions of dollars on selected mental health/substance abuse (MH/SA) medications for an MH/SA condition among persons aged 18 or older, by selected therapeutic categories in the United States in 1998, 2003, and 2008. All classes of medication in 1998, 10,077 million dollars; 2003, 18,966 million dollars; and 2008, 25,449 million dollars; antianxiety medication in 1998, 1,341 million dollars; 2003, 2,258 million dollars; and 2008, 1,825 million dollars; antidepressant medication in 1998, 6,584 million dollars; 2003, 11,793 million dollars; and 2008, 12,243 million dollars; antipsychotic medication in 1998, 1,418 million dollars; 2003, 2,609 million dollars; and 2008, 6,788 million dollars; antimanic and anticonvulsant medication in 1998, 560 million dollars; 2003, 1,494 million dollars; and 2008, 2,609 million dollars.

Exhibit 19

Number of users of and expenditures on selected mental health/substance abuse (MH/SA) medications for an MH/SA condition among persons aged 18 or older, by selected therapeutic categories, United States, 1998, 2003, and 2008. NOTES: For the sake of clarity, (more...)

Exhibit 20 contains two line graphs. The line graph on the left shows the number of users of psychotropic medications for a mental health condition among persons aged 17 or younger, by selected therapeutic categories in the United States in 1998, 2003, and 2008. All classes of medication: 1998, 2.6 million users; 2003, 3.3 million users; 2008, 3.5 million users; antidepressant medication: 1998, 0.6 million users; 2003, 1.2 million users; and 2008, 0.8 million users; antipsychotic medication in 1998, 0.1 million users; 2003, 0.3 million users; and 2008, 0.7 million users; stimulant medication in 1998, 2.0 million users; 2003, 2.3 million users; and 2008, 2.8 million users. The line graph on the right shows expenditures in millions of dollars on psychotropic medications for a mental health condition among persons aged 17 or younger, by selected therapeutic categories in the United States in 1998, 2003, and 2008. For all classes of medication in 1998, 1,082 million dollars; 2003, 2,906 million dollars and 2008, 4,094 million dollars; antidepressant medications in 1998, 248 million dollars; 2003, 732 million dollars; 2008, 192 million dollars; antipsychotic medications in 1998, estimates are considered unreliable; 2003, 334 million dollars; 2008, 1,065 million dollars; stimulant medications in 1998, 653 million dollars; 2003, 1,539 million dollars; and 2008, 2,584 million dollars.

Exhibit 20

Number of users of and expenditures on psychotropic medications for a mental health condition among persons aged 17 or younger, by selected therapeutic categories, United States, 1998, 2003, and 2008. NOTES: Antianxiety medication and antipsychotic medication (more...)

For the past decade, psychotropic medications have been used increasingly to treat mental health conditions. The final set of exhibits and tables (Exhibits 19 and 20 and Tables 95 and 96) presents separate estimates on the use of and spending on psychotropic medication for adults and children. In 2008, about 27 million U.S. adults and 3.5 million children used psychotropic medications (Exhibits 19 and 20 and Tables 95 and 96). Antidepressant medications had the most users and highest expenditures for adults, whereas stimulants had the most users and highest expenditures for children.

4.2. Exhibits

Exhibits 14–20

Trends in Expenditures on Mental Health Care by Type of Service

Prescription medication spending has increased faster than any other type of mental health care.

Mental health care is provided by different providers in a number of settings: physicians; other professionals, such as psychologists, counselors, and social workers; hospitals; specialty facilities that are not hospitals, such as residential treatment centers for children; and retail prescription medication. An ongoing Substance Abuse and Mental Health Services Administration (SAMHSA) project provides estimates for mental health and substance use that are similar to the National Health Expenditure estimates (SAMHSA, 2010), which measure spending on health in the United States by type of service delivered and source of funding. Because the estimates used methods that have been consistent and comprehensive for nearly 20 years, they are the most reliable means of examining spending on mental health care over time. Exhibit 14 uses these data to show the following:

Exhibit 14 is a line graph showing mental health expenditures by type of provider in the United States during selected years from 1986 to 2005. Hospitals: 1986, 13,596 million dollars; 1993, 21,054 million dollars; 2000, 23,443 million dollars; 2003, 27,409 million dollars; 2005, 30,166 million dollars. Retail prescription medication: 1986, 2,362 million dollars; 1993, 4,607 million dollars; 2000, 16,697 million dollars; 2003, 25,826 million dollars; 2005, 29,974 million dollars. Physicians: 1986, 3,814 million dollars; 1993, 7,440 million dollars; 2000, 11,193 million dollars; 2003, 13,736 million dollars; 2005, 16,266 million dollars. Nonhospital specialty facilities: 1986, 3,916 million dollars; 1993, 8,588 million dollars; 2000, 12,205 million dollars; 2003, 13,438 million dollars; 2005, 14,259 million dollars. Other outpatient professionals: 1986, 1,519 million dollars; 1993, 3,480 million dollars; 2000, 4,765 million dollars; 2003, 5,364 million dollars; 2005, 5,812 million dollars.

Exhibit 14

Mental health expenditures, by type of provider, United States, selected years 1986–2005. NOTES: The data include revisions and may differ from previously published data. Data are based on estimates of national expenditures for mental health services. (more...)

  • From 1986 to 2005, mental health expenditures increased for all types of providers. In 1986, about $31 billion was spent on mental health, and in 2005, about $113 billion was spent on mental health (not shown; see Table 70).
  • Hospitals was one of the categories with the largest amount of expenditures over the period studied. From 1986 to 2005, it was the largest category; in 2005, it was approximately the same as retail prescription medication spending.
  • Prescription medication spending increased more rapidly than any other category from 1986 to 2005.
  • For each year examined, the amount of mental health spending on physicians has been similar to the amount of spending on all specialty facilities that are not part of a hospital, which include organizations providing outpatient and/or residential services or a combination of services to individuals with mental illness or substance use diagnoses. In 2005, about $15 billion was spent on each of these categories.

Distribution of Mental Health Care Expenditures by Type of Service

Specialty care and prescription medication accounted for most mental health expenditures in 2005.

In addition to the total dollar amount over time, it is also instructive to examine how the share of broad categories of services has changed over time. Exhibit 15 presents the distribution of mental health expenditures across the main types of services in 1986 and 2005. The data come from an ongoing Substance Abuse and Mental Health Services Administration (SAMHSA) project that provides estimates for mental health and substance use similar to the National Health Expenditure estimates (SAMHSA, 2010). The exhibit shows the following:

  • In 2005, specialty services accounted for the largest share (50.0 percent) of spending on mental health.
  • However, between 1986 and 2005, the share of mental health spending on specialty services diminished proportionately. In 1986, specialty services accounted for 61.3 percent of mental health spending.
  • The share of expenditures for prescription medication increased proportionately from 7.4 percent in 1986 to 26.6 percent in 2005.
  • The share of expenditures for insurance administration remained relatively stable over the period studied (between 4.9 and 7.4 percent).

Trends in Mental Health Expenditures by Payer

Between 1986 and 2005, there were particularly large increases in spending on private insurance and Medicaid.

Mental health care is financed through a variety of private and public sources. Exhibit 16 describes mental health expenditures by payer, including private insurance and several types of public funding sources. Private payers include insurance, usually through an employer, and out-of-pocket payments. Public payers include Medicare, Medicaid, other Federal, and other State and local sources. The data come from a Substance Abuse and Mental Health Services Administration (SAMHSA) project that provides estimates for mental health and substance use similar to the National Health Expenditure estimates (SAMHSA, 2010). The exhibit shows the following:

Exhibit 16 is a line graph showing mental health expenditures by payer in the United States in selected years from 1986 to 2005. Out-of-pocket: 1986, 5,569 million dollars; 1993, 6,916 million dollars; 2000, 10,232 million dollars; 2003, 12,612 million dollars; 2005, 13,802 million dollars. Private insurance: 1986, 6,308 million dollars; 1993, 11,160 million dollars; 2000, 19,106 million dollars; 2003, 25,964 million dollars; 2005, 30,417 million dollars. Medicare: 1986, 2,099 million dollars; 1993, 4,812 million dollars; 2000, 6,629 million dollars; 2003, 7,641 million dollars; 2005, 8,630 million dollars. Medicaid: 1986, 5,503 million dollars; 1993, 11,535 million dollars; 2000, 20,193 million dollars; 2003, 27,574 million dollars; 2005, 31,115 million dollars. Other state and local: 1986, 8,698 million dollars; 1993, 14,670 million dollars; 2000, 17,219 million dollars; 2003, 18,973 million dollars; 2005, 20,261 million dollars.

Exhibit 16

Mental health expenditures, by payer, United States, selected years 1986–2005. NOTES: The data include revisions and may differ from previously published data. Data are based on national expenditures for mental health services. For the sake of (more...)

  • Mental health expenditures increased for every category of payer between 1986 and 2005.
  • Between 1986 and 2005, there were particularly large increases in spending for private insurance and Medicaid. These two sources of payment each accounted for about $30 billion in mental health expenditures in 2005 compared with about $6 billion in 1986.
  • In the 1980s and 1990s, other State and local government spending was the largest single source of spending on mental health care. By 2005, this source was the third largest, behind private insurance and Medicaid.
  • Medicare spending on mental health services has been lower than out-of-pocket spending. Out-of-pocket spending refers to direct spending by consumers for health care services that is not covered by insurance, such as a co-payment. In 2005, Medicare spending was about $9 billion and out-of-pocket spending was about $14 billion.

Trends in Mental Health Expenditures as a Percentage of All Health Expenditures by Payer

Between 1986 and 2005, total mental health expenditures declined as a share of all health expenditures.

Previous exhibits have used Substance Abuse and Mental Health Services Administration (SAMHSA) data to show how mental health expenditures have increased between 1986 and 2005 (Exhibits 14 and 15). The data come from a SAMHSA project that provides estimates for mental health and substance use similar to the National Health Expenditure estimates (SAMHSA, 2010), which is one of the most reliable sources for examining spending on mental health care over time. The exhibit shows the following:

  • As a share of all health expenditures, mental health expenditures declined or remained relatively stable from 1986 to 2005 across all types of payers.
  • Between 1986 and 2005, the proportion of all health expenditures accounted for by mental health remained the same for three categories of payer: out-of-pocket, private insurance, and Medicare.
  • The share of all health expenditures accounted for by mental health decreased for Medicaid expenditures from 12.1 percent in 1986 to 10.0 percent in 2005.
  • The share of all health expenditures accounted for by mental health decreased the most in the other State and local category from 24.2 percent in 1986 to 18.7 percent in 2005.

Distribution of Mental Health Expenditures by Payer

Medicaid and private insurance accounted for the largest share of mental health expenditures in 2005.

The role that different payers play in financing mental health spending has changed over time. Exhibit 18 displays the percentage distribution of mental health expenditures accounted for by payer type. The data come from an ongoing Substance Abuse and Mental Health Services Administration (SAMHSA) project to produce estimates on national spending on mental health (SAMHSA, 2010). The exhibit shows the following:

  • In 2005, Medicaid and private insurance accounted for the largest share of mental health expenditures—just under 30 percent of total mental health expenditures.
  • Between 1986 and 2005, the share of mental health expenditures accounted for by Medicaid and private insurance grew proportionately.
  • In the 1980s, State and local government sources accounted for the largest proportion of mental health expenditures, but the share diminished proportionately over time.

Trends in Adult Utilization of and Expenditures on Mental Health/Substance Abuse Medication

In 1998, 2003, and 2008, antidepressant medications were the most utilized medication class and also had the highest expenditures.

Expenditures on prescription medication accounted for more than one quarter of all expenditures on mental health treatment in recent years. The Medical Expenditure Panel Survey (MEPS) includes a component that gathers data about adult use of and expenditures on psychotropic medications from pharmacies across the United States. This data collection method makes MEPS a particularly reliable source of information for assessing trends in psychotropic medication. Exhibit 19 shows trends in the use of and expenditures on psychotropic medications for adults by class of medication. The exhibit shows the following:

  • The number of adult users and the amount of expenditures on psychotropic medications increased over time. In 2008, about 27 million adults used psychotropic medications, accounting for about $25 billion in expenditures. In comparison, in 1998, about 15 million adults used psychotropic medications, accounting for about $10 billion in expenditures.
  • Of the four classes detailed, antidepressant medications had the most adult users and the highest expenditures. The number of adult users of antidepressants grew rapidly during this period. In 2008, about 22 million adults used antidepressant medications, accounting for about $12 billion in expenditures on this class of medication.
  • Antidepressant medication expenditures grew rapidly from 1998 to 2003, but then leveled off from 2003 to 2008. Antipsychotic medication expenditures increased somewhat from 1998 to 2003 and increased greatly from 2003 to 2008.

Trends in Utilization of and Expenditures on Psychotropic Medication for Children and Youth

By 2008, stimulant medications—such as medications for attention deficit hyperactivity disorder—had the most users and accounted for the highest expenditures.

Because the mental illnesses that are most prevalent among children and youth are quite different from the mental illnesses that are most prevalent among adults, the classes of psychotropic medication used to treat children and youth are also quite different. The Medical Expenditure Panel Survey (MEPS) includes a component that gathers data from pharmacies across the United States about use of and expenditures on psychotropic medications for children and youth. This data collection method makes MEPS a particularly reliable source of information for assessing trends in psychotropic medication. Exhibit 20 describes the trend in use of and expenditures on these medications for children and youth in 1998, 2003, and 2008. The exhibit shows the following:

  • Between 1998 and 2008, the number of children using psychotropic medications and the associated expenditures increased. In 2008, about 3.5 million children used psychotropic medications, accounting for about $4 billion in expenditures. In comparison, in 1998, about 2.6 million children used psychotropic medications, accounting for about $1 billion in expenditures.
  • Of the three medication classes detailed, stimulant medications—such as medications for attention deficit hyperactivity disorder—had the most users and expenditures. In 2008, 2.8 million children used stimulant medication, accounting for about $2.6 billion in expenditures.
  • The number of children using antidepressant medications and the associated expenditures increased between 1998 and 2003, but decreased between 2003 and 2008.
  • Expenditures on antipsychotic medications for children overtook expenditures on antidepressants between 2003 and 2008.

4.3. References

  1. Centers for Medicare & Medicaid Services (CMS). National health expenditure data: Overview. 2011. Retrieved from http://www​.cms.gov/NationalHealthExpendData/ [PubMed: 21351678]
  2. Substance Abuse and Mental Health Services Administration (SAMHSA). National expenditures for mental health services and substance abuse treatment, 1986–2005. Rockville, MD: Center for Mental Health Services and Center for Substance Abuse Treatment, SAMHSA; 2010. (DHHS Publication No. SMA 10-4612)
  3. Substance Abuse and Mental Health Services Administration (SAMHSA). Leading change: A plan for SAMHSA's roles and actions 2011–2014. Rockville, MD: SAMHSA; 2011. (DHHS Publication No. SMA 11-4629)
  4. Zuvekas SH. Prescription drugs and the changing patterns of treatment for mental disorders, 1996–2001. Health Affairs. 2005;24(1):195–205. [PubMed: 15647230]

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