The costs of depression and other mental health conditions are considerable both at the individual level and at the aggregate national level. Individuals aged 45 to 64 years who have retired early due to depression personally have 73% lower income then their full time employed, healthy counterparts and those retired early due to other mental health conditions have 78% lower incomes. This equated to an annual national loss of income of $1 billion (£0.55 billion) for those with depression and $1.5 billion (£0.83 billion) for those with other mental health conditions. The national aggregate impact of depression and other mental health conditions through the loss of labour force participation amongst 45 to 64 year olds, equated to $278 million (£152.9 million) in lost income taxation revenue, $407 million (£223.9 million) in additional transfer payments and around $1.7 billion in GDP in 2009 alone.
A limitation of this study is that the results are based on a relatively small sample size of individuals who are not in the labour force due to depression and other mental ill health - 43 and 54 individuals from the original 2003 SDAC survey respectively. The findings are also based upon cross sectional data from the original 2003 SDAC, rather than longitudinal data, although respondents do identify the reason they left the labour force including whether this was due to illness and what their main health condition was. The findings are also based upon respondents' self-reported data, and as such the potential for bias in the results cannot be excluded. However, self-report health and economic status are regarded as valid measures [21
The direct health costs of treating mental health conditions was estimated to be $4.1 billion (£2.3 billion) for all age groups in 2003-04. This estimate covered health expenditure in hospitals, non-hospital medical services, pharmaceuticals, research, and community mental health services; with the majority being spent on hospital patients and community mental health services[5
]. (The United Kingdom, with a population about three times that of Australia invests £3.9 billion per annum in mental health services for adults alone). However, it should be noted that only 62% of those with a mental illness seek medical help in Australia [23
] and thus the potential direct medical costs may be higher if adequate services were available. It is also estimated that $1.2 billion (£0.66 billion) is spent on aged care programs in Australia, and significant other amounts on housing and accommodation programs, workforce participation programs and disability services for those people with a mental illness [24
So while the direct costs are significant, so too are the indirect costs, with the combined costs of lost income, lost taxation revenue, increased government social security payments, and lost GDP in 2009 totalling more than the estimated government expenditure on mental health in 2003. Other studies have estimated the costs of workforce participation in terms of the number of working days lost due to mental ill health, lost income or disability support payments [1
]. However, these studies were more limited in scope and did not include taxation and GDP costs. They also have a number of additional limitations, including only using average earnings, or average disability support payments, to estimate costs of lost income, or only presenting the aggregate national cost - not the cost to individuals [1
Average estimates of earnings and disability support payments may not be representative of the population with mental health conditions. Our study used individual level income, tax payment and government support payment data to estimate the cost to individuals because of their early retirement due to mental illness.
There are numerous cost effective drugs for treating mental illness [33
], these may be used to help overcome the costs to both individuals and governments that can result when conditions impact on the functional capacity of individuals, and lead to early retirement. The UK Department of Health has support the prevention and early treatment of mental health conditions in recognition of the potential to avoid the large financial burden of the disease on the state [37
]. However, within Australia only 62% of those with a mental illness seek medical help [23
] and as such there is much room for improving the management of these conditions. Amongst those who do seek treatment in Australia, only six visits per year to a psychologist are funded under Medicare [38
] as such, there may be gap in what is provided to patients and what is actually required to meet their medical needs, Furthermore, it has been noted that there is a shortage of psychiatrists in Australia [39
] that may be leaving some mental health patients without access to care or with long waiting periods. The role for government in supporting the wider uptake of the management or prevention of mental health conditions, can well be justified when the savings in terms of increased labour force participation and the associated avoidance of taxation revenue loss and increased disability payments outlined in this paper are considered.
Despite the increases of government spending on mental health services [40
], the costs of mental health conditions which falls to governments is still far larger than their spending on mental health services. These arguments provide further support to the need for governments to invest in mental health services and prevention and support measures, to steam these costs[23
]. There is currently limited government spending on prevention and early intervention[41
]. Governments would benefit from prevention and reduction of mental health through increased taxation (income tax, payroll tax, etc), reduced transfer payments, and reduced expenditure on other services (medical, justice, housing, etc)[41
]. For example, it has been estimated that in Victoria (Australia's second most populated state) a 1% reduction in the burden of mental health would cost around $26 million (AU) and would deliver a net benefit of $7 million (AU)[41
Australia has a poor record of employing those with any disability, ranking amongst the lowest for OECD countries[42
]. The current Australian employment system is failing to maximise the employment of those with a mental health condition in the labour force[42
]. This suggests that a multifaceted strategy is required that aims to prevent the onset on mental health conditions, assist sufferers in manage much of their mental health conditions when it is occurring, and also helping individuals remain integrated within society.