Jan 29, 2024 - Health

Mental health and addiction care falls short because it's not profitable

Illustration of a collage of a silhouetted profile of someone's face, a person looking through a window, abstract scribbles and money elements.

Illustration: Shoshana Gordon/Axios

Some of America's most challenging behavioral health care problems include a key disadvantage: They're not very profitable to treat.

Why it matters: Serious mental illness and addiction have a profound effect on families and communities, but their complexity and their concentration among lower-income people make them issues that the private market has little incentive to solve.

The big picture: More than 100,000 Americans are dying of drug overdoses every year, and around 5% of the adult population experiences serious mental illness each year.

  • Fentanyl use, addiction and serious mental illness — often in the context of homelessness — have become increasingly controversial political topics, partially a reflection of their growing societal impact.
  • But despite a clear need for more behavioral health care, the supply of such care is lacking, and millions of Americans go without treatment.

Between the lines: U.S. health care is a big, successful business, and companies are able to command the highest prices in the developed world for their products and services.

  • But some parts of the market are much more lucrative than others. Oncology, for example, is generally much more attractive from a business perspective than primary care.
  • Near the bottom of the profitability ranking is behavioral health care. That's in no small part because people suffering from serious mental illness and addiction tend to have poorly paying government insurance or can't pay at all.

What they're saying: "At root, the folks being affected are often the ones who don't have the ability to pay, which [limits] the incentives for the market participants," said Zack Cooper, a public health and economics associate professor at Yale. "Those challenges are both really hard for the individuals, and they have negative externalities to those around them."

People suffering from behavioral health issues face a vicious cycle: Their health conditions often have a negative impact on their income, and being low-income makes it much harder for them to receive the care they need.

  • This can be true of people with physical health conditions, too. But mental health care faces a unique set of hurdles beyond its demographics and lingering stigma.
  • Behavioral health conditions are often scientifically complex and require labor-intensive, long-term treatment. They also tend to overlap with several other socioeconomic issues, and successful treatment can require interventions outside of the traditional health care arena.

Yes, but: It's not just about money.

  • "A lot of mental health professionals, particularly psychiatrists and psychologists, they tend to steer away from the sickest patients, because very sick people with serious mental illness or serious addictions are difficult populations to deal with," said Richard Frank, a senior fellow at the Brookings Institution.
  • "If you talk to people who have been social workers, mental health therapists, it's an extremely taxing job. It's hard, it's not well paid, we have these issues with the supply of providers," added Catherine Maclean, a health economist at George Mason University.

The other side: The market dynamics are better for people who do have access to employer coverage.

  • "I think there will be more of an understanding on the part of corporations that they need to invest in these kinds of services to keep the workforce productive," said Dan Mendelson, CEO of Morgan Health.

The bottom line: Under the current structure, no one has clear incentives to solve these behavioral health issues.

  • "You're talking about the edge between health care and social services, which is always a messy edge," Mendelson said.
  • "It's very intertwined with social issues and food security and having a home — all of these things are wrapped together."
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