Mental health inequities will cost U.S. $478B in 'unnecessary' expenses in 2024

Inequities in mental health across the U.S. will run the country nearly half a trillion dollars in avoidable costs through 2024—and could escalate to $1.3 trillion in 2040 if left unchecked, according to a recent report from Deloitte.

The projection, put together by the firm’s Health Equity Institute and the School of Global Health at Meharry Medical College, attributes most of the “avoidable and unnecessary expenses” to premature death ($332.2 billion in 2024) and productivity loss ($116 billion in 2024) that disparately affect certain demographics.

However, the researchers also highlighted $5.3 billion in 2024 excess costs tied to overutilization and “excessive reliance” on the emergency department for acute mental health incidents. That utilization—which also can tie up capacity and lead to longer wait times for other patients—tends to be driven by “a large portion” of repeat visitors whose condition could be better served with appropriate access to mental health services.  

“Whereas patients with appropriate access may schedule a visit with a primary care physician or behavioral health specialist, populations that lack that level of access may be more likely to use the ED as both their primary care service and mental health service as it is open 24/7, does not require a prior appointment, and in general, has fewer barriers than primary care to see a physician,” researchers wrote in the report.

Should current trends continue, they wrote, the cumulative cost of ED overutilization due to mental health inequity could run $17.5 billion by 2040.

The analysis also quantified the intersection of mental health inequities and chronic physical health conditions. As the “invisible counterpart of physical health,” untreated mental health can worsen these conditions and fuel excess health spending, the analysts wrote.

Per their estimates, unaddressed mental health inequities alongside five prevalent chronic conditions (diabetes, stroke, hypertension, ischemia and HIV) could drive $23.9 billion in excess care costs in 2024 and $771.1 billion in cumulative costs through 2040.

“With my patient experiences coupled with the findings from this report, there's no denying that there is an urgent need to make mental health more visible and prioritize actions to improve health outcomes and reduce costs associated with managing these conditions,” Jay Bhatt, coauthor of the report and a managing director of the Deloitte Center for Health Solutions and Health Equity Institute, said in a statement.

Deloitte and Meharry Medical College’s estimates draw on data from the Agency for Healthcare Research and Quality, the Centers for Disease Control and Prevention and real-world health data company Komodo Health.

Unlike prior research quantifying the impact of mental health issues, their analysis sought to measure the differences in mental health outcome inequities among different demographics segmented by race and ethnicity, socioeconomic status and age.

Speaking broadly, the researchers said that these and other demographic groups who weren’t specifically targeted in the analysis (e.g., incarcerated individuals, those with disabilities, the LGBTQUIA+ community) tend to face a higher mental health burden.  

“Although the white population shows the highest prevalence of mental health diagnosis, it is non‐white populations that tend to bear more of the cost associated with mental health struggles,” the researchers wrote. “This is likely due to the long-standing structural racism and the legacy of policies that disadvantage certain populations, as well as social and economic conditions.”

The business argument for addressing the inequities “are as compelling as the moral argument,” they wrote in the report. Employers could find clear value in addressing the cause of workplace absenteeism, while private and public payers would find savings from reduced care utilization. Plans and providers could also see improvements in quality measures that could translate to higher payments from Medicare or other value-based care programs, the researchers added.

On the macro scale, the report points to estimated medical expenditure growth of 5.4% on average through 2023. However, data among privately insured individuals from 2019 to 2022 spotted a 15.4% annual increase in spending on mental health services. Mental health currently claims 5% of overall medical spending but is on the rise.

Deloitte predicts a break in the cost curve for medical expenditures, reducing health care spending between now and 2040—resulting from advancements in disease prevention, detection, and treatments; emerging technologies (increased data-sharing and interoperability); and consumers being highly engaged and empowered,” they wrote in the report. “However, it will likely require a concerted and cross-sector effort to cause a parallel disruption to effectively reduce the current trajectory of the expenditures associated with mental health inequities identified within this report.”