Reallocating Australia’s Scarce Mental Health Resources

Abstract

IntroductionThe purpose of this paper is to describe a long-standing problem in the provision of mental health services in Australia,2 and to outline a reform that addresses this problem. By way of background, we describe first some 'big picture' financial data that put the health sector, and various components of health expenditure, into a relative, and economic, perspective. The time-period is the 22 years from 1993-94 to 2013-14, the years for which we have comparable and reliable data. The background section highlights two differences that exist between mental health and non-mental health services in Australia. First, government now funds approximately 96 per cent of mental health expenditure, compared to a government share of 66 per cent of non-mental health expenditure. The second major difference between these two parts of the health sector relates to diagnostic information to guide therapy, also referred to as treatment: time-series government expenditure data on diagnostic imaging and pathology services indicate the quantitative importance of diagnostic information to medical therapies. But this expenditure is associated with nonmental health services: the Medicare Benefits Schedule is devoid of item numbers for any diagnostic test applying the numerous psychological tests that exist for schizophrenia, depression, suicidality, narcissistic personality disorder, and so on.The paper then considers an empirical 'puzzle' that exists in Australia's mental health sector. This problem, which we refer to as 'structural imbalance', has two dimensions: first, some people with mental disorders do not consume mental health services, and, at the same time, some people who do not have a diagnosis of a mental disorder do consume mental health services. The evidence that this problem exists is not based on anecdote or adherence to a particular psychological or psychiatric theory: its existence is based on empirical evidence from carefully conducted, population-based epidemiological surveys.The paper concludes with an argument that the structural imbalance problem is connected to the non-use of the large range of psychological tests for diagnosing mental disorders. A necessary reform is to insert diagnostic item numbers in the Medicare Benefits Schedule for psychological tests for mental disorders, and make positive results from these tests a prerequisite to accessing mental health services. Such a structural reform will enable a shift in resources to people who currently have unmet need.BackgroundAustralia's mental health expenditures (funded by Commonwealth, state and territory governments, as well as private sources) were $8,011 million in 2013-14: in the same year total health expenditures were $154,622 million.3 These amounts are not trivial: measured value-added in the health sector constitutes 9.8 per cent of GDP; mental health 0.51 per cent of GDP. Further, mental health expenditure, as a component of total health expenditure, has been steadily rising, from 4.87 per cent in 1992-93 to 5.18 per cent in 2013-14 (see the lowest line graph in Figure 1). This upward trend did not happen by chance. It was a deliberate act of whole-of-government decision-making.Figure 1 also shows the relative size of the health sector compared to the total economy, as measured by GDP: recurrent health expenditure in 1992-93 represented 7.31 per cent of GDP, and was 9.76 per cent in 2013-14. Over this 22-year period, health expenditure increased at a real compound annual growth rate (CAGR) of 3.2 per cent. The mental health sector has increased in relative size compared to the health sector, increasing from 4.87 per cent at the beginning of the period to 5.18 per cent in 2013-14.Consider the two line graphs at the top of Figure 1: both describe shares of government expenditure on components of health - non-mental health expenditure and mental health expenditure. In 1992-93, government funded 64.3 per cent of non-mental health expenditure, and this had risen to 66. …