Mental health spending surges as in-person visits rebound

Spending on mental health grew by 53% during the COVID-19 pandemic years, a new report from RAND Corporation and Castlight Health has found.

The report said that overall utilization of mental health services increased 39% during that same time period, between March 2020 and August 2022. The RAND researchers drew on claims data from approximately 7 million U.S. adults enrolled in commercial health insurance plans in all 50 states.

With the pandemic a much smaller concern for many Americans, and some services no longer supported by government programs, there could be an impact on utilization, especially in the area of telehealth, the authors say.

“If greater utilization of health services drives higher health care spending, insurers may begin pushing back on the new status quo,” said Jonathan Cantor, lead author of the study and a policy researcher at RAND, a nonprofit research organization. “Insurers may look for ways to curb costs and that could mean less flexibility about using telehealth for mental health services.”

Telehealth takes off during the pandemic

The study found that during the first 8 months of the pandemic (March through December of 2020), in-person mental health services declined by 40% while telehealth mental health services increased roughly 10-fold as compared to the year prior. The researchers found a 22% overall increase in mental health service utilization, part of an ongoing wave of increased interest in mental health treatment.

During the post-acute period of the pandemic (December 2020 to August 2022) in-person mental-health treatment began to rebound, increasing 2.2% each month over that time period. Telehealth treatment for mental health remained at about the same level, at roughly 10 times the utilization pre-pandemic. By August 2022 in-person mental services had returned to 80% of pre-pandemic levels. At that time, mental health service utilization was close to 39% higher than before the pandemic started.

Other research suggests that increased use of telehealth remains popular with the public, and that employer-based health plans have embraced the approach, partly because of high demand from members. In June a coalition of purchasers and HR policy experts published a study that found tele-behavioral health services were important to 95% of employers, and that 65% were satisfied with these services.

But that report also warned that barriers such as lack of access to services and the cost of providing services are among the concerns voiced by plan sponsors.

An increase in spending

The study found that during the later stages of the pandemic, there was a gradual increase in spending as demand for telehealth services stayed the same, while in-person spending slowly increased. “The average spending rate in the post-acute period was more than $3.5 million per 10,000 beneficiaries per month, compared to about $2.3 million per month during the pre-pandemic period,” a RAND statement said.

The study raises questions on how insurers will react to this new reality of increased costs in the area of mental health. Some are calling for a new approach to mental health and its relationship to primary care.

“The demand for mental health services further underscores the critical need to integrate behavioral health services into primary care,” said Dena Bravata, co-author of the RAND study and senior scientific advisor, apree health. “Through this integration we can address the growing issues around lack of access, affordability, and stigma, while providing a more comprehensive, person-centered approach to overall health.”

Related: Employee spending on mental health services reveals downward trend

Christopher M. Whaley, a health care economist at RAND and a co-author of the study, said the higher costs are a challenge for insurers. “This is a huge cost, and we pay for that cost through increased premiums and higher deductibles,” said Whaley in an interview with the New York Times. He noted those higher costs could be balanced out by the fact that patients who utilize mental health services may have fewer health emergencies and other health problems. “The insurer’s challenge, and what we should think about as a health care system, is what cost is actually bigger,” he added.