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Total employer and employee spending on mental health services as a percentage of total spending rose from 6.8% in 2013 to 8.2% in 2020, a new report found. Employers and employees spent almost $77 billion on mental disorders in 2020, researchers estimated.

The Employee Benefits Research Institute (EBRI) released the report on Tuesday. Researchers used the MarketScan Commercial Claims and Encounters database to conduct the study.

Mental health challenges have become more prevalent in recent years: the percentage of people under the age of 65 with employment-based health insurance diagnosed with a mental disorder increased to 18.5% in 2020 compared to by 14.2% in 2013.

Not surprisingly, employees are also using mental health services more than in the past. The percentage of enrollees using outpatient services rose from 12% in 2013 to 16% in 2020. The percentage of those using prescription drugs rose from 19% to 21% during the same time period. However, landline services remained the same with 0.3% of employees using the services.

“The Covid-19 pandemic has exacerbated mental health issues nationally and in the workplace. With both the number of individuals diagnosed with mental disorders and the use of health care services increasing, higher costs are of great concern to planned sponsors of health benefit programs,” said Paul Fronstein, director of benefits research for health at EBRI.

Other key findings from the report:

  • The average annual cost of mental health services by employees with a diagnosed mental illness increased from $1,987 in 2013 to $2,380 in 2020, an overall increase of 20% and an increase of 3% per year.
  • Spending by both employers and employees on outpatient mental health services increased by 37%. Outpatient mental health services accounted for two-thirds of total mental health spending in 2020, up from just over half in 2013.
  • However, employer and worker costs of prescription drugs for mental health services have declined. It went from 34% of mental health spending in 2013 to 23% in 2020. This is due to lower average drug prices.

The findings suggest that mental health should be a top priority for employers when offering benefits, especially if the desire is to reduce overall health care costs.

“Employers are looking for ways to meet the mental health needs of workers given the current economic climate,” Fronstin said. “And they are particularly interested in addressing mental health needs because of the link between depression and loss of productivity.” Taking responsibility for workers’ mental health can not only reduce health care costs, but can increase worker productivity. It is estimated that mental illness costs employers over 200 million lost work days each year.

Photo: Ta Nu, Getty Images

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