Mental Illness: Economically "Taxing" As Well?!

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Shreya Gupta

25 July 2020

6 Min

Mental Illness: Economically "Taxing" As Well?!

Table of Contents

According to the World Health Organisation (WHO), the definition of mental health is “a state of wellbeing in which individuals realize their abilities, cope with the normal stresses of life, work productively and fruitfully and make a contribution to their communities.”

Apart from being a constitutional obligation, to provide citizens with a healthy life, free from suffering, it is also in the economic interest of the government to improve mental health in a country. This is because neglecting mental health can impose huge costs on the economy.

An OECD study claims that mental health disorders are one of the largest and fastest-growing categories of disease. Mental health problems impose two kinds of costs - direct and indirect. The direct costs include the cost of diagnosis, treatment, and medication. In contrast, indirect costs are those incurred if mental health is neglected. Several cross-sectional studies have concluded that the direct costs of mental illnesses are significantly less than the indirect costs.

The indirect costs incurred due to neglect of mental health can be further classified into costs due to employment and productivity issues, costs due to health and well-being issues, and costs due to other issues.

How Do Mental Health Disorders Impose Costs on Employment and Productivity?

  • Unemployment

Mental illness tends to reduce the employment prospects of patients. This is due to two reasons:

  1. The patients themselves are unable to cope with the pressures of a job.

  2. Employers prefer to the patients, their healthier counterparts, giving them a disadvantage when facing employment prospects. According to an OECD report, people with severe mental health conditions are six to seven times more likely to be unemployed than healthy people.

  • Absenteeism

Mental health problems make it harder for patients to be present at work. They are very often absent due to bouts of sickness. Moreover, mental illness gives rise to a lot of psychosomatic symptoms like headaches, back-aches, etc., which make it even more difficult for them to report to work. In many developed countries, 35-45% of absenteeism is due to mental health problems. Similar data relating to developing countries is not readily available.

  • Presenteeism

Even if present at work, the patients face a low level of ‘frustration tolerance’, poor communication skills, lack of concentration, difficulty to cope with pressure and stress, and exhibit a general lack of productivity. So, on the whole, the effective work done by them is very less.

In an ideal situation, a GDP boost of 4% can be expected worldwide if people with mental health problems are made a part of the labor force and work as efficiently as a healthy person.

How Do Mental Health Disorders Impose Costs On Health and Well-being?

  • Higher Morbidity and Mortality

Individuals with severe mental health disorders (the most common ones being acute depression, bipolar disorder, and schizophrenia) are more likely to suffer from morbidities like heart attack and other cardiovascular diseases, stroke, fatigue, chronic aches, etc. These can result in death. According to OECD studies, an individual with severe mental illness dies (on average) 20 years earlier than the general population (typically of chronic physical condition). A WHO study about ‘Investing in Mental Health’ claims that “four of the six leading causes of years lived with disability, are due to disorders like depression, alcohol abuse, schizophrenia, and bipolar disorders.”

  • Suicide, Homicide, and Violence

Mental illnesses, mostly acute depression, anxiety disorders, or bipolar disorder are the primary causes of suicide. Personality disorders (like schizophrenia or Dissociative Identity Disorders) are known to be associated with violence and crime in the form of homicide, sexual offenses, violence against family members, elderly and child abuse. A study by the Institute of Mental Health, Osmania Medical College, Hyderabad claims that patients with severe mental illness commit one in twenty violent crimes (5% attributable risk). Apart from losses on humanitarian grounds, the direct economic consequence of this includes huge costs to public health and safety, as well as, to the criminal justice system.

  • Avoidable Burden on Physical Healthcare System

Mentally ill people also suffer significantly more from physical illnesses. They tend not to look after themselves, do not get proper physical exercise, skip taking their medications, etc. They also tend to develop hypochondria and unnecessarily worry about their health. They make more frequent visits to the doctor and get medical tests done. All these put an avoidable burden on the healthcare system. Especially in developing countries, where there already is a scarcity of proper medical services, it is injurious for the population in general, apart from being a burden on the government.

What Are the Other Costs Imposed by Mental Health Disorders?

  • Mental Health Problems among Children

Mental illness among children results in poor academic performance as well as a lack of social skills. Children of today are the future of tomorrow, and thus neglecting a child’s mental health is synonymous with jeopardizing future productivity and development. The economic consequences of this are far-reaching.

  • Emotional Burden

The emotional turmoil that the patients and their families go through is enormous. There is an emotional strain due to social stigma and isolation, failure, and lack of self- esteem and poor quality of life; these sometimes drive the patient to commit suicide. The emotional burden cannot be measured in monetary terms. Still, this tremendous loss in quality of life is an imputed economic cost.

  • Substance Abuse

Mental health disorders lead to the patients and their families resorting to substance abuse (like alcohol, or drugs). This not only causes a loss in their productivity but is also detrimental to their health. This destroys the efficiency of a potential labor force while, at the same time, imposing a burden on the healthcare system.

What Are the Economic Benefits of Mental Health Awareness?

A report of the World Economic Forum provides a comparison of economic costs imposed by various NCDs (non-communicable diseases). It concludes that the economic burden imposed by mental disorders is one of the highest. More than 50% of the total economic burden of NCDs comes from mental illness. About two-thirds of this burden is in the form of indirect costs, i.e., a result of neglecting mental health. Approximately 35% of the global loss of output is attributable to mental health problems. These costs are expected to more than double by 2030. Since the indirect costs (cost due to ignorance) are significantly more than the direct costs (cost of treatment), taking cognizance of the importance of mental health is expected to have the following direct economic outcomes:

  • There can be a boost in both employment and output, as a result of psychological and behavioral therapy. The resulting economic benefit will be more than the cost of treatment. Studies show that curing all depression, anxiety, and other mental health disorders would boost GDP by around 4%. Although we cannot expect a 100% cure rate, a significant amount of productivity loss can be avoided if we do not neglect mental health issues.

  • Psychological therapy can significantly reduce a person’s annual physical health care costs, thus helping them economically at a personal level, and also unburdening the healthcare system.

  • According to a study by the ‘World of Labor’, “for each $1 spent in psychological therapy, roughly $1 is saved on welfare benefits and another $1 is saved on physical health care.” So a direct cost incurred on the treatment of mental disorders can result in double the amount of benefit, i.e., a cost-benefit ratio of 2.

In the words of Nobel Laureate neuroscientist, Santiago Ramon y Cajal, “The brain is a world consisting of a number of unexplored continents and great stretches of unknown territory.” The benefits from taking good care of this brain, as well as awareness and treatment of mental health disorders, can more than compensate for the loss arising out of neglect, both on humanitarian grounds as well as in economic terms.

Edited by Annanya Chaturvedi

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