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SAMHSA Press Releases

 Date: March 29, 2005
Media Contact: SAMHSA Media
Phone: 240-276-2130



Spending on Mental and Substance Use Disorders Concentrated In the Public Sector


The percentage of mental health and substance abuse services paid for by public sources is increasing, with a smaller percentage provided by private sources, including private health insurance.   Public sources paid for 63 percent of mental health spending in 2001, up from 57 percent in 1991.  Public sources paid for 76 percent of substance abuse treatment in 2001, up from 62 percent in 1991, according to a new analysis announced today by the Substance Abuse and Mental Health Services Administration (SAMHSA).

The study, National Expenditures for Mental Health Services and Substance Abuse Treatment 1991-2001, shows that public spending for mental health services and substance abuse treatment amounted to $67.4 billion in 2001, while private spending amounted to only $36.3 billion. The data will appear today in the online edition of Health Affairs at

The report provides data on all national expenditures for mental health and substance abuse treatment, and does not include indirect costs such as the impact of mental illness on productivity or societal costs linked to drug-related crime.  Public spending includes spending by all levels of government, federal, state and local, and includes Medicaid and Medicare.  Private spending includes insurance payments, patients paying out of their own pockets and charity care.

“Mental health and substance abuse treatment services spending accounts for a sizeable portion of the health care economy, $104 billion out of a total of $1.4 trillion in 2001,” SAMHSA Administrator Charles Curie said.  “Two of the most important developments from 1991 to 2001 are common to both mental health and substance abuse treatment.  Overall, we have seen a decline in inpatient spending and a shift to publicly financed care.  As we continue to work to improve the community-based services available to people in need, it is clear the public sector is now the major financial driver.”

The report calculates that spending on mental health services totaled $85.4 billion in 2001.  Substance abuse treatment costs amounted to $18.3 billion.  The report notes that mental health spending on psychiatric hospitals has decreased, while expenditures for other types of care, particularly prescription drugs, have increased. One in every five dollars spent on mental health treatment is now spent for retail psychotropic prescription drugs (21 percent), up from 7 percent in 1991.

For substance abuse treatment, the report finds that private insurance payments fell by an average rate of 1.1 percent annually, declining from 24 percent in 1991 to 13 percent of expenditures in 2001. The proportion of spending by all private sources fell from one third of all substance abuse treatment spending to one quarter of this spending between 1991 and 2001. 

In contrast, private insurance paid for 22 percent of mental health expenditures in both 1991 and 2001.  Payments grew 5.8 percent annually for mental health care, largely due to payments for prescription medications.  Insurance payments have increased for all health care by 6.9 percent.

The report notes that Medicaid is now the largest single payer of mental health services, exceeding private insurance, Medicare, or other state and local spending.  Medicaid paid 27 percent of mental health expenditures in 2001; Medicare paid 7 percent; other federal spending accounted for 5 percent; other state and local spending 23 percent; private insurance 22 percent; and other private 16 percent.  Spending on psychotropic retail drugs was $18 billion.  Retail prescription medications in substance abuse amounted only to $78 million.

The report is available on the SAMHSA website.


SAMHSA, a public health agency within the U.S. Department of Health and Human Services, is the lead federal agency for improving the quality and availability of substance abuse prevention, addiction treatment and mental health services in the United States.



This page was last updated on 29 March, 2005
SAMHSA is An Agency of the U.S. Department of Health & Human Service