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Prescription Drugs Replace Inpatient Mental Health Treatment With The Introduction Of New Medications And Cost Pressures  

New Health Affairs Article Also Shows Public Programs Taking On Larger Burden Of Mental Health, Substance Abuse Treatment

BETHESDA, MD—The United States’ appetite for prescription drugs has been even more powerful in the mental health field than it is for health care in general. A new federal estimate of mental health expenditures published today on the Health Affairs Web site shows that spending for mental health-related retail prescription drugs grew an average of 17.1 percent a year between 1991 and 2001, compared to just 12 percent for all prescription drugs.

The first estimate of national mental health and substance abuse spending trends published in five years shows that mental health patients increasingly were managed through medication rather than through hospitalization during the decade ending in 2001.

The introduction of new psychotropic drugs, combined with the increasing prevalence of treatment, the closure of psychiatric hospitals, and the cost pressures of managed care meant that the share of mental health spending for inpatient services declined twelve percentage points to 28 percent by 2001. The share of mental health spending for retail prescription drugs grew eleven percentage points to 17 percent in 2001.

By comparison, inpatient services constituted 33 percent of spending in the health care sector as a whole in 2001, while retail prescription drugs represented 10 percent of spending for all health care.

The research team supported by the federal Substance Abuse and Mental Health Services Administration found that the spending growth rate for mental health services lagged behind that of health care as a whole, and that public programs took on an increasing share of the costs of mental health services over the ten-year period.

The annual spending growth rate for mental health and substance abuse services was 5.6 percent over the period studied, compared with 6.5 percent for all health care services. Spending by public programs grew at an annual rate of 6.8 percent, while spending by private payers grew at an annual rate of 3.7 percent.

Other findings:

--Total mental health and substance abuse spending was $104 billion in 2001, up from $60 billion in 1991, representing 7.6 percent of all health care spending.

--Spending for substance abuse services was even slower than for mental health services, growing at just 4.7 percent a year, with public payers taking on an increasing burden of such services and expenditures by private insurers declining noticeably over the period.

--Spending for inpatient services in general hospitals’ specialty units increased only 1 percent a year over the period studied, reflecting a shift to treating mental health patients in “scatter beds.”

The article’s authors are Tami L. Mark, associate director, outcomes research and econometrics, at Medstat; Rosanna M. Coffey, a Medstat vice president; Rita Vandivort-Warren, a senior policy analyst at the Center for Substance Abuse Treatment, Substance Abuse and Mental Health Services Administration; Hendrick J. Harwood, a vice president at the Lewin Group; Edward C. King, a research analyst at the Actuarial Research Corporation; and a team of analysts.

You can read the article at content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.133 .

Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org. The full text of this Health Affairs Web Exclusive is available free of charge to all Web site visitors for a two-week period following posting, after which it will revert to pay-per-view for nonsubscribers. The abstracts of all articles are free in perpetuity. Web Exclusives are supported in part by a grant from the Commonwealth Fund.

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©2005 Project HOPE–The People-to-People Health Foundation, Inc.