Spending on mental health services rose by 53% during the COVID-19 pandemic

Reviewed by Danielle Ellis, B.Sc.Aug 25 2023

Spending on mental health services among Americans with private health insurance has surged since the beginning of the COVID-19 pandemic, continuing to rise even as the use of telehealth has plateaued, according to a new study.

Spending on mental health services rose by 53% from March 2020 to August 2022 among a large group of people with employer-provided insurance, according to researchers from the RAND Corporation and Castlight Health. During the same period, use of mental health services increased by 39%.

The researchers say it is uncertain if the trend will continue since some rules that expanded payment for telehealth services expired when the nation's public health emergency ended in May. The findings are published by the journal JAMA Health Forum.

If greater utilization of health services drives higher health care spending, insurers may begin pushing back on the new status quo. Insurers may look for ways to curb costs and that could mean less flexibility about using telehealth for mental health services."

Jonathan Cantor, lead author of the study and policy researcher at RAND

To examine trends in mental health services after the start of the pandemic, researchers examined claims from about 7 million commercially insured adults from January 2019 through August 2022.

The conditions examined were anxiety disorders, major depressive disorder, bipolar disorder, schizophrenia and PTSD. The claims information was from Castlight Health, a health benefit manager for employer-sponsored health insurance plans for about 200 employers in all 50 states.

Researchers found that during the acute phase of the pandemic (March 2020 to December 2020), in-person mental health services declined by 40% while tele-mental health services increased roughly 10-fold as compared to the year prior. Overall, there was a 22% increase in use of mental health services during the period.

During the post-acute period (December 2020 to August 2022), tele-mental health service utilization stabilized at roughly 10 times pre-pandemic levels. By contrast, in-person mental health services increased 2.2% each month over the period.

By August 2022, in-person mental services had returned to 80% of pre-pandemic levels. Overall, mental health service use in August 2022 was nearly 39% higher than before the pandemic. The trends were generally consistent across mental health conditions.

During the post-acute period, there was a gradual increase in spending rates as tele-mental health service spending remained stable while spending on in-person care gradually increased. The average spending rate in the post-acute period was more than $3.5 million per 10,000 beneficiaries per month, compared to about $2.3 million per month during the pre-pandemic period.

"The changes that occurred during the COVID-19 pandemic have triggered a significant expansion in the use of mental health services among adults with employer-based health insurance," Cantor said. "It's remains uncertain whether this trend will continue or return to levels similar to those seen before the pandemic."

"The demand for mental health services further underscores the critical need to integrate behavioral health services into primary care," said Dena Bravata, study co-author and senior scientific advisor, apree health. "Through this integration we can address the growing issues around lack of access, affordability and stigma, while providing a more comprehensive, person-centered approach to overall health."

Support for the study was provided by the National Institute of Mental Health and the National Institute on Aging.

Other authors of the study are Ryan K. McBain and Christopher Whaley of RAND, and Pen-Che Ho of Castlight Health, a part of apree health.

RAND Health Care promotes healthier societies by improving health care systems in the United States and other countries.