Mental health care spending saves money, and that’s worth investing in

Unlike other chronic diseases, targeted spending on mental health care keeps people in the prime of their lives in the workforce. Sebastian Gauert/Shutterstock

Mental health has become the awakening giant of health care, as Australians realise how ubiquitous mental illness really is in their everyday lives. But there’s a growing disconnect between this grassroots awareness and decisive action towards providing the full spectrum of care for those in need.

The prevailing consensus of the mental health sector is that we need progressive growth in investment to reach parity with the other major threats to human health, such as cancer and heart disease. But binary debates and false dichotomies have plagued progress.

Futile arguments about hospital versus community care, for instance, or prevention versus treatment, and the needs of children and young people versus older Australians prevail, all fuelled by scarcity and fiscal neglect. There’s undoubtedly a need for sectoral changes to help obtain value for money at the front line of care, but real growth is vital.


And this puts the sector at odds with the widespread view that growth in health spending is unsustainable; that the current fiscal climate cannot support growth in investment. Mental health has to be an exception to these arguments, because it is, in fact, a key solution: it will save money if we reach the sweet spot of sufficient investment. We need growth in direct care so we can save in other government expenditures.

Youth and productivity

Unlike the other non-communicable diseases, such as diabetes and heart disease, where costs are rising rapidly, targeted spending on mental health care keeps people in the prime of their lives in the workforce. Because unlike cancer, diabetes and heart disease, which strike in later life, 75% of mental disorders emerge in young people on the threshold of productive life.

We invest heavily as a society in young people so they can contribute to the common prosperity and fulfil their potential. But at least half of them will experience at least one period of mental ill-health during their transition to adulthood.


If they die tragically from suicide, develop a sustained mental disorder, or even underachieve because of the vocational derailment that even a mild to moderate disorder can produce, then the human, social and economic impacts last for decades.

Current under-investment in mental health care is also creating huge new costs in welfare payments and in incarceration, to name two obvious examples. As the National Mental Health Commission’s recent report highlighted, the result of inadequate investment in timely, effective care means almost half (48.8%) of the Commonwealth’s funding is now accounted for by A$4.7 billion in disability support pension payments.

New allies

This all means that the best allies for the millions of Australians with mental ill health and poor access to quality care are increasingly economists rather than health professionals.


In 2011, the World Economic Forum produced a report showing that of the five major non-communicable diseases, mental illness had the biggest impact on the world economy in terms of reducing gross domestic product (GDP). While heart disease reduces global GDP by 33% and cancer by 18%, mental ill health does so by 35%.

The OECD joined the fray in 2015 with its report Making Mental Health Count, which showed only 10% of people in the OECD with clinical depression were receiving even minimal care. This, despite the fact that we have as strong an evidence base for effective care in mental health as there is for other non-communicable diseases. It’s just not available in a timely and sustained way that most ordinary people can engage with.

Clearly, the return on such investment will be enormous. But mental health remains the poor cousin to other heath care, leading to poor morale and dysfunction in much of the existing system.


And threats to the sector are set to increase as Commonwealth contributions to hospitals fall from 2017. Mental health care, especially in the community, is certain to suffer further as cash-strapped hospitals struggle to sustain other health services.

Getting worse

Few people realise how vulnerable the public mental health system has become since it was embedded in and yoked financially to the mainstream public hospital system. Not only is it not growing in line with population growth, it’s steadily shrinking and likely to shrink further.

We need both a renaissance of the culture and therapeutic quality of acute settings, which now often resemble clearing stations and custodial holding environments, as well as the creation or revival of proactive well-resourced community mental health services that are optimistic, responsive, and recovery focused.

Australians with mental ill-health deserve a fair deal. We can deliver this with more investment, and the strategic, sequential targeting of a modest number of “best buys” within an initial phase of reform, starting today.

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