December 6, 2023

Untreated mental illness costs Indiana more than $4 billion each year

Nir Menachemi, PhD

Research team creates framework that can be applied across the U.S.

A new study reveals the economic burden of untreated mental illness in Indiana, which results in $4.2 billion spent annually.

The study team, which consisted of researchers from IU Fairbanks School of Public Health (FSPH), Regenstrief Institute and Indiana Family and Social Services Administration (FSSA), also provided a guidance framework that can be implemented across the United States.

Researchers included Heather Taylor, PhD, MPH, an assistant professor at FSPH and former Regenstrief fellow; Justin Blackburn, PhD, an associate professor at FSPH and Regenstrief affiliate scientist; and Nir Menachemi, PhD, MPH, the executive associate dean and chief operating officer at FSPH and a Regenstrief research scientist.

“These costs represent a significant public health and financial challenge for our state,” said Dr. Taylor, the study’s lead author. “When you measure this across the state, every year there is a loss of over $600 for every person, or nearly $1,600 per family. Untreated mental illness is a hugely consequential cost for Hoosiers.”

The research found that one in four Indiana residents with mental illness do not receive the treatment they need. Individuals who do not receive such treatment are more likely to experience other chronic health conditions, such as diabetes and cardiovascular disease.

The largest cost attributable to untreated mental illness was premature mortality, at more than $1.4 billion. Productivity losses were estimated to cost $885 million each year. Other factors include direct healthcare costs, incarceration, homeless shelter costs and caregiving, totaling:

  • $142 million to Medicaid.
  • $567 million to private insurers.
  • $106 million to Indiana’s criminal justice system.
  • $9.9 million to Indiana through homeless support.
  • $566 million for caregiving.
  • $407 million in unemployment for those unable to work.

“Another way to look at this is that, with the average salary in Indiana, the loss of over $4 billion each year represents over 100,000 jobs,” Dr. Taylor said. “In 2018, the leading agricultural product for Indiana was corn, which had $3.8 billion in sales.”

“The economic burden of untreated mental illness is a major issue in Indiana and across the nation,” said Dr. Menachemi, a co-author and mentor for the study. “I am proud to have worked with the team to identify and fill a critical gap in the mental health and policy literature. Our framework was devised to assist policymakers in Indiana and across the United States.”

Dr. Menachemi is a research scientist in the Clem McDonald Center for Biomedical Informatics at Regenstrief Institute and a professor and department head in the Department of Health Policy and Management at FSPH. He also sits in the Fairbanks endowed chair in the Department of Health Policy and Management at FSPH.

The researchers worked with the Indiana Behavioral Health Commission to perform their analysis. The research was used in support of Senate Bill 1, which was known as Behavioral Health Matters. In the spring of 2023, this bill expanded access to mental health support in Indiana through community health centers and established the 988 mental health crisis hotline.

Through the researchers’ work, they developed a framework that provides Indiana policymakers with justification for the need to prioritize key areas in mental health services and treatment. The framework also provides Indiana with a baseline for tracking progress toward improvement efforts.

“One of the most significant impacts of this research is that other states can use this framework to understand the financial burden in their state,” said Dr. Blackburn, who also is the director of the PhD program in health policy and management at FSPH. “There is a scarcity of data on the costs incurred by each state – especially by individuals, families and communities – from untreated mental illnesses in the United States. Policymakers, clinicians and employers need this sort of data to determine how we should allocate our societal resources.”

Investing in interventions that improve access to and delivery of mental health services may significantly reduce the economic burden to the state. Cost savings may be achieved by:

  • Strengthening the mental health provider workforce.
  • Improving access to mental health services.
  • Ensuring that policies enable providers to use the full range of treatment options.
  • Reducing barriers to treatment initiation such as transportation challenges.
  • Increasing awareness and reducing stigma around mental illness.
  • Encouraging employers to support mental health initiatives.

“Our report is not meant to be a cost-effectiveness analysis,” said Dr. Taylor. “Indiana will need to invest in mental health services, and track and study outcomes to realize financial returns.”

The findings were published Oct. 13 in the Journal of the American Medical Association in an article titled, “Economic Burden Associated with Untreated Mental Illness in Indiana.” An accompanying podcast from JAMA was released the same day.

This research was performed in partnership with WISE Indiana (Wellbeing Informed by Science and Evidence in Indiana), the Indiana Clinical and Translational Sciences Institute’s Monon Collaborative and the Indiana Family and Social Services Administration to engage Indiana’s nationally-recognized academic experts to evaluate and inform the state’s practices, programs and policies.

A press release by IU Fairbanks School of Public Health can be found here.

Author list and affiliations, as listed in the publication
Heather L. Taylor, PhD, MPH, RDH1; Nir Menachemi, PhD1,2; Amy Gilbert, J.D., MPH3; Jay Chaudhary, J.D.3; Justin Blackburn, PhD1,2,4.

1Department of Health Policy and Management, Indiana University Richard M. Fairbanks School of Public Health, Indianapolis
2Regenstrief Institute, Indianapolis, Indiana
3Family and Social Services Administration, Indianapolis, Indiana
4Wellbeing Informed by Science and Evidence in Indiana, Indianapolis

Nir Menachemi, PhD, MPH 
In addition to being a research scientist with the Clem McDonald Center for Biomedical Informatics at Regenstrief Institute, Nir Menachemi, PhD, MPH, is the Fairbanks Endowed Professor and is a professor and head of the Department of Health Policy and Management at the Indiana University Richard M. Fairbanks School of Public Health. He is also a faculty member of the Physician MBA Program at Indiana University Kelley School of Business.

About the IU Richard M. Fairbanks School of Public Health
Located on the IUPUI and Fort Wayne campuses, the Richard M. Fairbanks School of Public Health is committed to advancing the public’s health and well-being through education, innovation, and leadership. The Fairbanks School of Public Health is known for its expertise in biostatistics, epidemiology, cancer research, community health, global health, health policy, and health services administration.

About Regenstrief Institute
Founded in 1969 in Indianapolis, the Regenstrief Institute is a local, national and global leader dedicated to a world where better information empowers people to end disease and realize true health. A key research partner to Indiana University, Regenstrief and its research scientists are responsible for a growing number of major healthcare innovations and studies. Examples range from the development of global health information technology standards that enable the use and interoperability of electronic health records to improving patient-physician communications, to creating models of care that inform clinical practice and improve the lives of patients around the globe.

Sam Regenstrief, a nationally successful entrepreneur from Connersville, Indiana, founded the institute with the goal of making healthcare more efficient and accessible for everyone. His vision continues to guide the institute’s research mission.

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