Young people are driving a rise in mental health spending

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While older people represent the lion’s share of overall health care costs, people under 25 are propelling a slow and steady rise in mental health and addiction spending, according to a report by the Employee Benefit Research Institute (EBRI).

Why it matters: Employers face an increasingly tough balancing act: They know robust mental health benefits are critical to attracting and retaining top talent but chafe at the rising expense of offering those benefits — particularly as more people use them.

Driving the news: EBRI’s seven-year survey of employer-sponsored health plans found that spending on mental health and addiction has been rising, from 6.8% of total costs in 2013 to 8.2% in 2020.

  • People under 25 are driving the trend: While they make up 36% of the population, they accounted for 42% of spending on mental health and substance abuse treatment in 2020, vs. only 20% of overall health care spending.
  • By contrast, people ages 55-64 accounted for 27% of overall health care spending but only 11% of mental health expenditures.
  • Employers and workers spent $77 billion on mental health disorders in 2020 — a number that’s likely been rising since.

By the numbers: About 1 in 5 adults and 1 in 6 youths experience mental illness each year, and these rates have been rising, EBRI said.

  • More than 20 million Americans have a substance use problem.
  • In 2020, 18.5% of people under 65 with employment-based health coverage were diagnosed with a mental health disorder, up from 14.2% in 2013.
  • Also in 2020, 16% of covered employees used outpatient mental health services, up from 12% in 2013.

Children are emerging as the biggest mental health consumers: People under 18 are “far and away using mental health and substance abuse spending more,” said Paul Fronstin, director of health benefits research at EBRI, a nonpartisan nonprofit organization.

  • In March, the American Academy of Pediatrics declared the mental health crisis among children a national emergency.

Yes, but: The EBRI results don’t include all the pandemic-related figures — the 2021 numbers won’t be out until year-end, and the 2020 results don’t fully reflect the groundswell of demand that emerged during lockdowns and layoffs.

  • A shortage of counselors and online treatment options may have artificially tamped down mental health spending — particularly early in the COVID-19 crisis.
  • “We’re missing some things in the data because people couldn’t get care,” Fronstin tells Axios. “People were afraid of telemedicine; maybe they were afraid to go out to local drugstores to get medications. That may have had an impact on our numbers.”

The big picture: Mental health has emerged emphatically as a top workplace concern, spurred by the expectations and demands of younger workers — who don’t have the same hang-ups about stigma as their parents did.

  • The priority has caught many CEOs by surprise — and prompted them to reexamine their messaging and benefits packages.
  • So far, employers are “doubling down on mental health benefits, despite the cost,” Fronstin said.
  • They know what’s at stake: If they don’t provide muscular treatment options, “it’ll affect the health of the workforce and how productive they are,” he added.

What they’re saying: “The talent wars are driving executive thinking on mental health,” said Phillip Schermer, founder and CEO of Project Healthy Minds, a new nonprofit that’s developing a playbook for corporate America about employee emotional wellness.

  • “We have one of the tightest labor markets in our lifetime,” he said. “One trend that has been loud and clear from employees is that mental health needs to be on the agenda for business.”

It’s not just white collar jobs. “We’ve heard from leaders of retail businesses as well that mental health is a top priority for workers,” Schermer said.

Between the lines: Younger people aren’t necessarily more anxious and depressed than older ones — they’re just more comfortable seeking out help, Schermer said.

  • A survey of millennials and Gen Z by Project Healthy Minds found that 2 in 3 consider their mental health when choosing an employer.
  • 60% want their employer to better prioritize mental health in the workplace.
  • 77% would leave a job if it was negatively affecting their mental health.

What’s next: Oct. 10 is World Mental Health Day, which marks its 30th anniversary this year.

Data: EBRI; Chart: Kavya Beheraj/Axios



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