Mental illness is a significant clinical and economic burden. 

• In a study of 23,000 workers at a major U.S. corporation, depressive illness was associated with a
mean of 9.86 annual sick days, significantly more than any other condition monitored in the study.
Medical costs for employees with depressive illness plus diabetes, heart disease, hypertension or
back problems were 1.7 times more than those with the comparison medical conditions alone.1
• Mental illness and substance abuse cost employers about $80 billion to $100 billion each year.2
• Patients with depression and diabetes experience a higher risk of severe complications – including
kidney failure, blindness, heart attack and stroke – compared to patients with diabetes alone.3

Psychotherapy reduces utilization of medical care and saves money. 

• In a survey of 91 studies on the effect of psychological services on medical costs, 90% of the
studies reported a decrease in medical utilization following some form of psychological intervention.4
• On average, psychological interventions result in a 20% cost savings in total medical care. This
savings is usually greater than the cost of providing the psychological services.4
• Researchers observed an almost 70% reduction in return visits to the hospital following
psychological services.5
• Compared with pharmacological treatments, the clinical benefits of psychotherapy are more
enduring. They are also cost effective, which offsets future medical costs, increases productivity and
life satisfaction.6

Case management of mental health services wastes money and threatens patient privacy. 

• According to an independent audit, up to 50% of every dollar devoted to outpatient mental health
care by behavioral management providers is spent on case management, administration and profits
rather than on direct patient care. In contrast, a typical medical HMO requires only 13% for
administration and profits, and Medicare manages to oversee its program for 5%.7
• According to the U.S. Surgeon General’s report on mental health, “Strong confidentiality laws are
critical in creating assurances for individuals seeking mental health treatment and their willingness to
participate in treatment to the degree necessary to achieve successful outcomes.”8 Since this report
was issued more than a decade ago, NJPA has been a steadfast advocate for the protection of
patient confidentiality.

An independent audit of the Mental Health portion of the State Health Benefits Plan is available here, as well as its key points.


1. Druss, B.G., Rosenheck, R.A., & Sledge, W.H. (2000). Health and Disability Costs of Depressive Illness in a
Major U.S. Corporation. American Journal of Psychiatry, vol. 157, pp. 1274-1278 
2. A Mentally Healthy Workforce: It’s good for business. (2006) Retrieved from  
3. Hughes, R. and Lin, E. (2010, January 27). “Severe complications of diabetes higher in depressed patients”,
Press release. Retrieved 2010, February 16.
4. Chiles, J.A., Lambert, M.J., & Hatch, A.L. (1999) The impact of psychological intervention on medical cost
offset: A Mata-analytic review. Clinical Psychology: Science and Practice, vol. 6, no. 2. pp. 204-220.
5. Published in the Canadian Journal of Emergency Medicine, the study was titled:  "Intensive short-term dynamic
psychotherapy to reduce rates of emergency department return visits for patients with medically unexplained
symptoms: preliminary evidence from a pre-post intervention study."
6. Hollon, S.D., Stewart, M.O., & Strunk, D. (2006). Enduring effects for cognitive behavior therapy in the
treatment of depression and anxiety. Annual Review of Psychology, 57, 285-315.
7. J. Wrich and Associates (2004). “Managed Behavioral Health Loss Ratio Bill: Rationale and Benefits.”
Presentation prepared for New Jersey State Assemblywoman Loretta Weinberg. 
8. Surgeon General's Report on Mental Health, 1999.