Behavioral health spending spikes to 40% of all children’s health expenditures

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Behavioral health spending spikes to 40% of all children's health expenditures

Expenditure nearly doubled in a decade; families paid $2.9 billion in out-of-pocket costs in 2022

• Behavioral health includes mental health conditions and substance use disorders
• Out-of-pocket costs increased at more than twice the rate of other medical expenses
• Findings provide a striking perspective on the youth behavioral health crisis

CHICAGO --- Behavioral health care surged to represent 40% of all medical expenditures for U.S. children in 2022, nearly doubling from 22% in 2011, according to a new study from scientists at Northwestern University Feinberg School of Medicine and Ann & Robert H. Lurie Children's Hospital of Chicago.

Behavioral health encompasses both mental health conditions and substance use disorders, and includes conditions such as anxiety, ADHD, depression, autism and suicidal thoughts. The study found behavioral health expenditures totaled $41.8 billion in 2022, with families paying $2.9 billion out-of-pocket. Most concerning, out-of-pocket costs for children's behavioral health increased at more than twice the rate of other medical expenses, leaving many families struggling with significant financial burden.

The findings will be published Dec. 15 in JAMA Pediatrics.

The study analyzed data on nationally representative spending patterns for U.S. children ages 6 to 17 from 2011 to 2022. Researchers found that pediatric behavioral health out-of-pocket spending increased 6.4% annually, compared to 2.7% annually for non-behavioral health medical spending. By 2022, more than one-quarter of total pediatric out-of-pocket spending for health care was directed toward behavioral health.

"We were surprised by the magnitude of spending for children's behavioral health, and especially the dramatically rising out-of-pocket costs for families," said senior author Dr. Kenneth Michelson, associate professor of pediatric emergency medicine at Feinberg and an emergency medicine physician at Ann & Robert H. Lurie Children's Hospital of Chicago. "Our findings provide a striking perspective on the youth behavioral health crisis."

Substantial financial impact on families

The study found one in 21 U.S. families experiences extreme financial burden due to out-of-pocket health care costs, meaning that more than 10% of family income is allocated toward those costs. Families with at least one child receiving behavioral health services were about 40% more likely to experience extreme financial burden.

"Many families are forced to seek care outside of their insurance network, facing higher out-of-pocket costs for their children's behavioral health care. Our findings underscore the critical need for adequate networks and improved insurance coverage to reduce the financial burden on families," said co-author Dr. Jennifer Hoffmann, an assistant professor of pediatric emergency medicine at Feinberg and an emergency medicine physician at Lurie Children's. "We need stronger state-level insurance parity laws, meaning equal insurance coverage for behavioral and non-behavioral health care."

The study also revealed significant shifts in how and where children receive behavioral health care. Expenditures increased dramatically for home health care (25% per year), outpatient in-person visits (11% per year) and outpatient telehealth visits (99% per year from 2020-2022).

"Telehealth rapidly expanded during the pandemic and is likely to remain a lasting component of behavioral health delivery in the U.S.," Hoffmann said. "However, gaps in funding for telehealth remain. Better reimbursement rates are needed. Regulations also need to be adjusted to enable children to access telehealth across state lines."

Funding for the study was provided by the National Institute of Mental Health (grant K23MH135206) and the National Center for Advancing Translational Sciences (grants KL2TR001874 and KL2TR001854), both of the National Institutes of Health, and Children's Hospital Los Angeles and The Saban Research Institute through its intramural funding program.