The high cost of psychological distress

Young women experiencing severe psychological distress have 26% higher healthcare costs than those without symptoms of psychological distress. This is particularly concerning because almost half of young Australian women report mental health disorders.

Mental health disorders are particularly prevalent among young Australians, especially women, who are twice as likely to develop depression as young men. Almost half of young women (40%) aged 16-24 have reported experiencing symptoms of a mental disorder in the past year. Understanding the healthcare costs associated with psychological distress helps to inform public policy and allocate resources effectively to address this issue.

There is limited evidence on the impact psychological distress has on healthcare costs. It is challenging to quantify the actual cost, as people with low incomes may not access healthcare services. Alternatively, they may find that the high cost of health services is a cause of psychological distress. Genetics, health literacy, and personal preference may also influence people’s mental health and use of healthcare services.

Our research attempts to fill this gap by using econometric techniques to estimate the government-funded healthcare costs attributable to psychological distress. Survey data from over 16,000 young women (aged 18–23 years) from the Australian Longitudinal Study on Women’s Health are linked to National Medicare claims data. We used women’s reported symptoms of psychological distress rather than their mental health diagnoses which could have underrepresented the issue.

We found that the additional annual healthcare cost of moderate and severe psychological distress among women aged 18-27 years is approximately $43 million and $96 million, respectively.

Young women with psychological distress spent 15% more each year on medical services and prescribed medicines than women without psychological distress. The effect was much larger for women experiencing severe psychological distress – their costs increased by 26%.

Antidepressants and the services of psychiatrists and psychologists account for a large portion of the increased healthcare costs. Women with psychological distress have higher out-of-pocket costs for these mental health-related services than non-mental health-specific services.

Individuals with symptoms of psychological distress are more likely to go on to develop major mental health conditions. The high healthcare costs associated with psychological distress underscore the significance of addressing and preventing mental health problems, particularly among this population. It is crucial to provide affordable and accessible mental healthcare for young adults to reduce the current and future healthcare burden of psychological distress and the financial burden on an already vulnerable group.

Jayawardana, D., Gannon, B., Doust, J., & Mishra, G. D. (2023). Excess healthcare costs of psychological distress in young women: Evidence from linked national Medicare claims data. Health Economics, 32( 3), 715– 734.
DOI: 10.1002/hec.4641

The research on which this paper is based was conducted as part of the Australian Longitudinal Study on Women’s Health by the University of Queensland and the University of Newcastle. We are grateful to the Australian Government Department of Health and Aged Care for funding and to the women who provided the survey data. The authors acknowledge the Australian Government Department of Health and Aged Care for providing MBS data and the Australian Institute of Health and Welfare (AIHW) as the integrating authority.