America's Continuing Struggle with Mental Illnesses: Economic Considerations

Mental illnesses affect roughly 20 percent of the US population. Like other health conditions, mental illnesses impose costs on individuals; they also generate costs that extend to family members and the larger society. Care for mental illnesses has evolved quite differently from the rest of health care sector. While medical care in general has seen major advances in the technology of treatment this has not been the case to the same extent for the treatment of mental illnesses. Relative to other illnesses, the cost of care for mental illnesses has grown more slowly and the social cost of illness has grown more rapidly. In this essay we offer evidence about the forces underpinning these patterns and emphasize the challenges stemming from the heterogeneity of mental illnesses. We examine institutions and rationing mechanisms that affect the ability to make appropriate matches between clinical problems and treatments. We conclude with a review of implications for policy and economic research.