Public Spending for Mental Health, Substance Abuse Treatment Increases

By Rebecca A. Clay

Over the last decade, the mental health and substance abuse field has seen a shift in spending away from inpatient care and toward outpatient care. The field has seen much greater spending on prescription medication. And the Government's share of total spending has increased significantly.

These findings are highlights from a new report, National Expenditures for Mental Health Services and Substance Abuse Treatment, 1991-2001. Presented by SAMHSA's Center for Substance Abuse Treatment (CSAT) and Center for Mental Health Services (CMHS), the report tracks trends in national spending on mental health services and substance abuse treatment between 1991 and 2001.

The report provides spending estimates on direct treatment but not on the social costs of substance abuse and mental illness, such as their effect on productivity and link to crime.

"This report provides a bird's-eye view of mental health and substance abuse spending," said SAMHSA Administrator Charles G. Curie, M.A., A.C.S.W., noting that mental health services accounted for 6 percent and substance abuse 1 percent of the almost $1.4 trillion spent on health care overall in 2001.

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Key Findings

The report identifies several major trends:

• Spending increases. Spending on mental health and substance abuse treatment is growing, with expenditures increasing by nearly 6 percent a year between 1991 and 2001. All health care spending grew even faster, approaching 7 percent.

• Medication's growing importance. Between 1991 and 2001, several new medications for mental disorders became available, more people started taking these medications, and prices went up. In 1991, for example, prescription drugs represented 1 of every 14 dollars spent on mental health. A decade later, such drugs represented 1 of every 5 dollars. Antidepressants accounted for more than half of these drug expenditures and antipsychotics nearly a quarter.

• Decline in inpatient treatment. As a share of total spending, inpatient expenditures—especially those for psychiatric hospitals—declined over the decade. The same trend occurred in the substance abuse field. In 1991, for example, 46 percent of substance abuse treatment spending went to inpatient care. By 2001, that percentage had dropped to 30 percent.

• Shift to public spending. An increasing share of the payment for mental health and substance abuse treatment comes from public sources such as local, state, and Federal governments. "It's clear the public sector is now the major financial driver," said Mr. Curie. Public financing of mental health services and substance abuse treatment grew from 58 percent of total spending for those services in 1991 to 65 percent in 2001.

The growth of public financing was even more pronounced in substance abuse treatment, where it jumped from 62 percent of total substance abuse treatment spending in 1991 to a whopping 76 percent in 2001. While private insurance payments for health care overall grew at a rate of almost 7 percent annually, private insurance payments for substance abuse treatment dropped by 1 percent annually.

• Dominance of Medicaid. Medicaid is playing an increasingly prominent role. For mental health services, for example, Medicaid spending is growing faster than that of any other payer. As a result, it has become the Nation's largest payer of mental health services.

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A Crucial Resource

Who uses this information?

"The target audience is anybody who's concerned with health care spending trends—policymakers, researchers, treatment providers, advocates, and the like," explained Jeffrey A. Buck, Ph.D., one of the report's co-authors and the Associate Director for Organization and Financing at CMHS. "We've already established these reports as the primary source for people to find out what's happening with mental health and substance abuse spending in the Nation."

The report's popularity derives from its comprehensiveness, added Rita Vandivort, M.S.W., another of the report's co-authors, the project officer, and a public health analyst in the Division of Services Improvement at CSAT.

"There's really no other report on mental health and substance abuse services that is comprehensive across all public and private payers like this expenditure study is," she explained. "It provides a benchmark for looking at where we are and how spending for services is changing." Readers can also compare the report to the National Health Accounts from the Centers for Medicare & Medicaid Services, which reports spending on all health services.

SAMHSA produces these spending reports periodically. But because each report takes advantage of better data sources and improved methods, it's unwise to compare spending estimates in one report to those published in earlier documents.

"Every time we do one of these reports, we go back and re-estimate the values for previous years," said Dr. Buck. "Whenever one of these new reports comes out, you should replace your old report with the new one."

For a copy of the full report, visit www.samhsa.gov/spendingestimates/toc.aspx or call SAMHSA's National Clearinghouse for Alcohol and Drug Information at 1 (800) 729-6686.

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Distribution of Mental Health Services and Substance Abuse Treatment
Expenditures by Payer, 2001

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