New IU study highlights billions in annual losses from untreated mental illness in Indiana

Researchers said a lack of sufficient treatment is associated with “sizeable losses in productive human capital.”

By: - November 1, 2023 6:30 am

Research published by Indiana University in October showed that untreated mental illness in the Hoosier state comes at a cost of more than $4 billion a year. (Getty Images)

Untreated mental illness in the Hoosier state comes at a cost of more than $4 billion a year, according to a new Indiana University study.

The research published by the IU Richard M. Fairbanks School of Public Health found that one in five Indiana residents with mental illness do not receive the treatment they need. Hoosiers who do not receive such treatment are also more likely to experience other chronic health conditions, such as diabetes and cardiovascular disease, researchers said.

The economic burden of untreated mental illness in Indiana is estimated to be $4.2 billion annually, including $3.3 billion in indirect costs — like unemployment and caregiving — $708.5 million in direct health care costs, and $185.4 million in non-health care costs.

The largest cost attributable to untreated mental illness was premature mortality, at over $1.4 billion. Productivity losses were estimated to cost $885 million each year.

“These costs represent a significant public health and financial challenge for our state,” said Heather Taylor, lead author on the study and assistant professor at the Fairbanks School, in a news release. “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 study

The findings were published Oct. 13 in the Journal of the American Medical Association.

Researchers worked with the Indiana Behavioral Health Commission to perform their analysis. The research was used in support of Senate Enrolled Act 1, which passed during the 2023 legislative session. 

The sweeping legislation will create a new mental health care system in Indiana, fortifying the relatively new 988 crisis response center and hotline with funding for mental health emergencies. It hinges on three concepts: someone for Hoosiers to call, someone to respond and somewhere for Hoosiers to go.

The IU study population consisted of more than 6.1 million individuals of whom an estimated 429,000 had untreated mental illness in 2019, according to the research paper. 

Researchers derived survey responses given by those individuals in the 2018 to 2019 National Survey on Drug Use and Health, as well as the National Survey of Children’s Health.

The analysis determined that in 2019, costs were more than $4 billion, making the economic burden of untreated mental illness in Indiana 1.2% of the state’s gross domestic product in the same year. 

For context, researchers emphasized that corn — the leading agricultural commodity for Indiana which accounts for nearly 30% of agricultural production — had $3.8 billion in sales in 2018.

Considering the average wage in Indiana, $4 billion represents approximately 100,000 jobs. Spread across all residents, that equals a loss of more than $600 annually for each state resident or nearly $1600 for each family annually.

Other factors include direct health care 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 supports.
  • $566 million for caregiving.
  • $407 million in unemployment for those unable to work.

Individuals who do not receive treatment for their mental illness are also more likely to experience other “debilitating physical health conditions,” which can be exacerbated by untreated mental illness. Those other conditions can also be associated with higher overall medical care costs and a greater likelihood of hospitalization.

“Thus, there is a need for better patient management, early recognition, and continued insurance coverage of mental health treatments,” researchers said. 

Telehealth was another method mentioned to expand access and treatment within Indiana and elsewhere.

Noting that Indiana recently enabled Medicaid reimbursement for telehealth services to deliver intensive outpatient treatment for psychiatric services, researchers doubled down that “these measures of intervention may encourage better long-term outcomes and overall cost savings to health care systems and society as whole.”

Significant losses

Researchers said the findings help shed light on the “societal burden” associated with untreated mental illness. Specifically, the lack of sufficient treatment for mental illness was associated with “sizeable losses in productive human capital.”

“Given the cost of premature mortality, unemployment, and absenteeism and presenteeism in the workplace, it is evident that employers bear substantial costs associated with untreated mental illness,” the IU paper said. “Thus, there is a business case for employers to support screening for early identification, counseling, and access to and use of mental health services and treatments.”

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

Eliminating barriers to seeking and accessing treatment should be prioritized, including offering “culturally responsive care and recognizing populations stigmatized or discriminated against for seeking treatment,” researchers concluded. 

They said, too, that investing in interventions that improve access to and delivery of mental health services will reduce the need for social services — and decrease the economic burden to the state. Cost savings could come from:

  • 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.

Still, Taylor said the report is not meant to be a cost-effectiveness analysis: “Indiana will need to invest in mental health services to realize financial returns.”

The researchers additionally said that other states could benefit from the proposed framework, especially for tracking and evaluating state policies or interventions, expanding treatment options and organizing clinician reimbursements.

“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 Justin Blackburn, associate professor at the Fairbanks School. “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.”


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Casey Smith
Casey Smith

A lifelong Hoosier, Casey Smith previously reported on the Indiana Legislature for The Associated Press. Internationally, she has reported on water quality across South America. She holds a master’s degree in investigative reporting and narrative science writing from the University of California/Berkeley’s Graduate School of Journalism. She previously earned degrees in journalism, anthropology and Spanish from Ball State University, where she now serves as an instructor of journalism.