Cain Brothers Newsletters: Industry Insights
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The Costs of Untreated Mental Illness Are Significant and Access Remains a Key Challenge for Improving Outcomes
May 23, 2025 – Banker Commentary by Erika Haanpaa
The mental health problem in America continues to worsen, and the challenge is even more acute as it relates to our young people. In 2023, 40% of high school students reported persistent feelings of sadness or hopelessness1; suicide and homicide rates have been on the rise since 2010; and diagnoses of mental or behavioral health problems among 12- to 17-year-olds increased from 15% in 2016 to more than 20% in 20232.
This is particularly concerning given that 50% of lifetime mental illness starts by age 14 and 75% by age 24. Left untreated, mental and behavioral challenges can have significant consequences including continued deterioration of mental health, worsening physical health, lost productivity, and numerous other indirect effects.
Mental illness can increase the likelihood of preventable chronic conditions, and several studies have noted higher costs related to chronic physical healthcare conditions, such as diabetes and heart disease, in patients with mental illnesses. A Deloitte report estimated the total incremental cost of chronic physical health conditions at $23.9 billion in 20243, and a Milliman research report found that medical costs for patients with comorbid mental health or substance use disorders (MH/SUD) are two to three times higher than those for patients without MH/SUD comorbidities4.
A working paper published by the National Bureau of Economic Research estimates the economic costs of mental illness at more than $280 billion annually in the United States5. There are also several indirect costs when considering the overall impact of untreated mental illnesses, including the societal costs of homelessness and incarceration as well as the impacts on family caregivers, notably parents of children with mental or behavioral health challenges, who can experience increased levels of anxiety and burnout.
There are evidence-based treatments that can lead to improved overall outcomes for people with mental or behavioral health challenges; however, barriers persist. While destigmatization and awareness have led more people to seek treatment, concerns with perceptions remain a barrier for patients in need of treatment. There are also significant access constraints, particularly for child and adolescent services. Nearly half of children who needed services in 2021 and 2022 did not receive mental health care when needed, primarily due to difficulties getting an appointment, issues related to costs, and lack of availability of needed services in the area6. Inadequate networks are contributing to the overall barriers to access for mental health treatment.
Under the Mental Health Parity and Addiction Equity Act (MHPAEA), insurers are required to offer comparable coverage for mental health care as for medical/surgical (M/S) services. However, the 2024 MHPAEA Report to Congress issued in January 2025 found many disparities related to coverage of mental health and substance use disorder treatment. As part of its work to review parity compliance, the DoL’s Employee Benefits Survey Administration (EBSA) conducted surveys using a ‘secret shopper’ approach to randomly selected providers listed in network directories as accepting new patients and found that only 8 to 28% of providers listed for MH/SUD services offered a way for callers to obtain the services sought7. The report also outlines investigations into other areas that suggest significant network inadequacies, including meaningfully higher utilization of out-of-network providers for MH/SUD services vs. M/S services; differences in standards for monitoring network adequacy for MH/SUD services, including lower provider to member ratios and a failure to differentiate between types of MH/SUD services providers; disparities in network reimbursement rates, such as an issuer paying 120-123% of Medicare rates for M/S services and only 88-98% for MH/SUD services; and impermissible exclusions or limitations on key treatments for MH/SUD, including ABA therapy for autism spectrum disorder and medication assisted treatment for opioid use disorder.
Through their investigations into compliance with parity requirements, EBSA and CMS have worked with payers and plans to correct actions that are potentially noncompliant and improve access for patients across the country. There is meaningful work yet to be done, but access is improving; and perhaps, as more stakeholders acknowledge the significant benefits that can come from early, effective treatment, not only in terms of reduced costs but also in greater societal and economic opportunities and outcomes, there will be even more pathways for individuals to gain access to this much needed care.
1 CDC: Youth Risk Behavioral Survey
2 CDC: National Survey of Children’s Health
3 Deloitte.com: The projected costs and economic impact of mental health inequities in the United States
4 psychiatry.org: Potential economic impact of integrated medical-behavioral healthcare
5 nber.org: Macroeconomics of Mental Health
6 cdc.gov: Factors Associated with Not Receiving Mental Health Services in Children with a Mental Disorder in Early Childhood in the United States, 2021-2022
7dol.gov: 2024 MHPAEA Report to Congress
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