The Cost of Care part II – Mental Health

In analysing common methodologies used across the life insurance advice sector, we were able to identify a missing link that could help advice be more tailored and personalised. The Cost of Care whitepaper is an industry first, bringing together detailed research across the broad spectrum of injury and disease.

Across three articles, we will delve into three of the biggest cost burdens facing Australians today – Cancer, Mental Health and Heart and Artery. The cost of care whitepaper can be downloaded by visiting zurich.com.au/costofcare

Some illnesses can have a significant impact on your clients’ lives. Not only can they stop your client from working, their recovery may require assistance and time, and have negative repercussions for other family members. This is particularly true for those who suffer from mental health conditions; many individuals and employers report prolonged absences from work and poor mental health is associated with the lowest likelihood of being in the labour force.

Despite this, a key finding of the research study was that Australians see themselves as ‘bulletproof' and found that – compared to their peers in other developed economies – Australians also have the most faith in the adequacy of social security to protect them in times of need, and unsurprisingly, the lowest interest in purchasing life insurance. Despite this perceived safety net, the direct and indirect costs of serious illness and injury can create a significant out of pocket burden.

Mental health in Australia

Almost half of the total population (45.5%) experience a mental health condition at some point in their lifetime¹, and mental or behavioural conditions account for 17.5% of the total disease burden in Australia². In 2013-2014, the estimated total health system expenditure on mental health was $12.8 billion, comprising $974 million in healthcare costs and importantly, $11.8 billion in productivity loss³.

Mental health conditions are most common in those aged between 25 and 34 years, affecting nearly one in four and decline with age⁴. They affect women more than men across all age groups and those living in rural areas¹. Anxiety disorders, affective disorders and substance-use disorders are the most common mental health conditions in Australia and they often occur in combination.

Figure one: Three most common mental health conditions

Source: Australian Bureau of Statistics 2008. Survey of Mental Health and Wellbeing: Summary of Results, 2007. October 2008.

Mental health conditions may affect how an individual functions in social, family, educational and vocational roles, therefore the early age of onset may have long-term implications, including relapse. Of six major health conditions, poor mental health is associated with the lowest likelihood of being in the labour force⁵ and individuals with mental health conditions lose an average of 38 working days annually⁶. In other words, poor mental health can impact a person’s financial wellbeing.

The cost of mental health in Australia

Although healthcare in Australia is largely publicly funded, there are still significant out-of-pocket costs associated with mental health, estimated at $1,350 per year⁷.
Informal caregiving often falls onto family members⁶ and of those:

• 24% receive carer payments
• 34% receive any assistance in their caring role
• 35% do not know the services that are available to support carers

The annual cost of mental health⁸

Although the dollar cost is lower than many other illnesses, the financial impact on sufferers and carers cannot be ignored. Nationally, carers for people with mental health conditions spend an average of 36 hours per week providing care, which is 208 million hours each year, a figure that cannot help but have a negative financial impact on those carers.

A snapshot of mental health conditions in Australia

Affective and anxiety orders impact 2.4 million and 4.2 million Australians respectively9. Affective disorders include depression, bipolar and schizophrenia, and affect more people who are widowed, separated or divorced (11.2%), unemployed (14.9%) and who did not complete school (8.1%). Anxiety disorders include panic, agoraphobia, social phobia, generalised anxiety, obsessive-compulsive and post-traumatic stress disorders. Anxiety is the most common mental health condition in Australia affecting one in four people and as with affective disorders, affect more people who are widowed, separated or divorced (19.0%), those not in the labour force (20.9%) and those who did not complete school (18.9%)⁹.

Figure two: Snapshot of mental health disorders in Australia

Out of all types of mental health conditions (including combinations), anxiety-related disorders contribute to the largest proportion of total treatment costs (37.2%)¹⁴.

Most affective disorders tend to be recurrent and the onset of individual episodes can often be related to stressful events or situations. Of concern is that fewer than two in five individuals (35%) with anxiety or depression seek treatment¹⁵

The cost of depression is, on average, $17,190 per individual¹⁶. Indirect spending for affective disorders includes non-health services and social costs, such as family breakdown and associated legal costs).

If an individual were paying $450/session for psychiatry treatment weekly, they would be $296 out of pocket ($154 Medicare rebate); after the seventh treatment week, the individual would have reached the Medicare Safety Net threshold ($2,093.30 out of pocket)^{17, 18}

A note on suicide

Suicide is the leading cause of death for Australians aged 15 to 44, and the second leading cause of death for Australians aged 45 to 54 years¹⁹. There are approximately 63,500 suicide attempts in Australia each year²⁰ and in 2016, there were 2,866 deaths by suicide, or eight deaths per day; men are three times more likely to be represented by these statistics²¹

In 2015/16 total health expenditure in Australia was $170.4 billion²². While the state and federal government pick up the lion’s share of this burden, individual Australians – and their families and carers – still accounted for around $30 billion of this annual cost²³

Life insurance is a vital part of the ecosystem that helps protect the financial, emotional and physical wellbeing of Australians. But without a better understanding of how each of these systems interact, and a realistic appreciation of the true costs of poor health, we are ill equipped to judge the appropriate types and levels of support to best suit our circumstances, and to navigate a complex network of services and providers. Given that many Australians adopt a ‘she’ll be right mate’ attitude, are your clients financially prepared for the cost burden of experiencing, or caring for someone experiencing, illness or injury?