A New Analysis

The study found that public payers (government agencies) fund the majority of mental health and substance abuse treatment spending—the opposite of all health care funding. While public sources provided 58 percent of mental health and substance abuse treatment services dollars in 1997, they supply only 46 percent of all health spending.

For all health care services, including mental health and substance abuse treatment, public sector spending has increased since 1987. This trend is primarily due to slower growth in private sector spending and rapid growth by Medicare and Medicaid.

Insurance Parity

The study, National Expenditures for Mental Health and Substance Abuse Treatment, 1997, was released by the federal Substance Abuse and Mental Health Services Administration's (SAMHSA) Center for Substance Abuse Treatment (CSAT) and Center for Mental Health Services (CMHS). The findings also appear in a special section of the July/August 2000 issue of the peer-reviewed journal Health Affairs.

"Approximately 28 percent of American adults experience a mental health or substance abuse disorder in the course of any given year," said SAMHSA Administrator Nelba Chavez, Ph.D. "All Americans need to know treatments for mental illness and substance abuse are effective and promise recovery. So all Americans can get the treatment and services they need to live full and productive lives we need to continue to work to strengthen our nation's mental health and substance abuse treatment system. We must continue to fight the stigma and work for insurance parity."

CSAT Director H. Westley Clark, M.D., J.D., M.P.H., emphasized that "In the substance abuse area, over 64 percent of treatment dollars came from the public sector. The other 36 percent includes everything spent by private insurers, philanthropy or out-of-pocket by patients and families. The stigma of substance abuse is preventing adequate health insurance coverage for substance abuse treatment, unlike what is available for treatment of other illnesses."

CMHS Director Bernard S. Arons, M.D., noted, "The study shows a growing trend toward outpatient treatment; hospital expenditures as a proportion of all mental health and substance abuse treatment spending dropped over 10 percent between 1987 and 1997. Changes in treatment philosophy, coupled with new technologies and, of course, managed care, have all contributed." He observed that prescription drug spending became a much larger share of the mental health spending, fueled by the increase in sales of anti-depressants, and new anti-psychotic drugs.

Still Not Covered

State and local governments play a very substantial role in the funding of mental health and substance abuse treatment. This is most obvious in comparison to their role in all health care services. State and local governments supported 28 percent of mental health and substance abuse treatment expenditures in 1997, compared to only 13 percent of all health care services.

The SAMHSA study was designed to provide periodic updates on annual estimates and expenditure trends for mental health and substance abuse treatment in a way that allows direct comparisons with the figures for national health care spending produced by the federal Health Care Financing Administration.

Because the study focuses on expenditures for treatment and not disease burden, estimates include expenditures only for the direct treatment of mental illness and substance abuse. Estimates are categorized by provider type (e.g. community hospital, physicians, psychiatric hospitals, specialty substance abuse centers) and source of payment (e.g. private insurance, client out-of-pocket, Medicaid, Medicare, state/local government).

This report is the second in the series of reports planned. Since release of the first report, National Expenditures for Mental Health, Alcohol and Other Drug Abuse Treatment, 1996, more refined methodologies have been adopted and the estimates in this report are intended to replace the entire set of prior estimates. The new report was prepared by The MEDSTAT Group, with assistance from Actuarial Research Corporation and The Lewin Group, for the Offices of Managed Care in CSAT and CMHS. Authors from SAMHSA—Joan Dilonardo, Ph.D., CSAT and Jeffrey Buck, Ph.D., CMHS; the MEDSTAT Group—Rosanna M. Coffey, Ph.D. and Tami Mark, Ph.D., M.B.A.; Actuarial Research Corporation—Edward King, David McKusick, Ph.D, and Jim Genuardi; and The Lewin Group—Henrick Harwood.

National Expenditures for Mental Health, Alcohol and Drug Abuse Treatment, 1997 is available on the SAMHSA website.