Projections of National Expenditures for Mental Health Services, 2004-2014

Published in 2008, this report presents projections of expenditures for mental health and substance abuse treatment services through 2014 along with an historical series of estimates of M/SU spending upon which the projections are based.  The report provides aggregate projections for M/SU spending as well as estimates for mental health and substance abuse expenditures separately.  The projections are discussed in terms of levels of spending, distribution among payers and providers, and average annual growth rates.   

Spending on MH treatment is anticipated to account for 85 percent of all MHSA spending (or $203 billion) by 2014. Although all-health spending growth is forecasted to slow, MH spending is expected to expand at about the same average annual rate during the projection period as it did historically. The growth rate for MH spending will likely be sustained over the next decade by the rapid increase in prescription drug spending that is a higher proportion (30 percent in 2014) of MH spending than of all-health spending (15 percent). However, as with the historic pattern, overall MH spending will likely expand over the next decade at a somewhat slower pace than the forecasts for all-health spending.

Public MH spending and private MH spending are anticipated to grow at the same rate over the coming decade, but with significant shifts within the group of public payers. Medicare coverage was expanded to include prescription drugs in 2006 for eligible Medicare beneficiaries. This Medicare expansion extended drug coverage to persons who formerly had drug coverage under Medicaid or private insurance and also to eligible persons who had no previous drug coverage. Medicare drug coverage is initially expected to offset some spending by Medicaid, which is projected to fall slightly in 2006 before gradually rising over the next decade. A drop in the share of MH spending from other state and local programs is also expected.

Growth in out-of-pocket MH spending is forecasted to slow. This slowdown is driven primarily by the expected moderation of spending for prescription drugs resulting from the anticipated increase in the use of lower-cost generic medications (which require smaller co-payments), and by the likely increase in the number of people who receive coverage under Medicare that would cause a reduction in the number of people who pay for MH drugs out of pocket.

The distribution of MH spending among providers is expected to shift as well. The overall hospital share of MH spending—especially the share for psychiatric and chemical dependency hospitals—is expected to decline throughout the projection period. This trend reflects the continuing shift of treatment to the outpatient setting and is especially noticeable in the growing share of MH spending for prescription drugs.

Full report: Projections of National Expenditures for Mental Health Services and Substance Abuse Treatment, 2004-2014.pdf (4.38 mb)