The role of health economics in meeting increased mental health needs due to COVID-19

4 min read
First Published: 
Nov 2020

Key Learnings contained in this article:

COVID-19 has had an undeniable impact on mental health, both from the perspective of living through the pandemic itself, but also as a result of the economic impact of a global recession.1-5 This will likely require an increase in resources allocated to support mental health needs,6 thereby shaping existing health economic models.7

In many ways, COVID-19 is the ‘perfect storm’, affecting health economics on several fronts:

  • First, the disease itself is driving an increase in COVID-19-related healthcare expenditure, while deferred care during lockdowns may place an additional financial burden on future health budgets7,8
  • Second, the fallout of COVID-19 has led to an economic downturn, leading to rising unemployment, declining tax revenues, and a reduction in GDP, which may affect future healthcare expenditure7
  • Third, the long-term physical and mental health impacts of the disease (and the economic downturn it has caused) are likely to continue to rise long after the COVID-19 curve has flattened, placing continued pressure on healthcare budgets for years to come7,8

The potential mental health impact of COVID-19 should not be underestimated. Prior to COVID-19, depression and anxiety disorders were estimated to cost the global economy US $1 trillion each year in lost productivity, with unemployment being a major risk factor.9 Following the Global Financial Crisis of 2007–2008, many countries reported higher rates of depression, anxiety, suicide and alcohol and drug use. In the 2008 recession, the 13 percent increase in suicide rate attributable to unemployment and income inequality led to the reported loss of 46,000 lives.10 Comparable outbreaks (the Spanish Flu and the 2003 severe acute respiratory syndrome outbreak) have also been associated with an increase in suicide attributed to social isolation, psychological distress and anxiety.11

With COVID-19, isolation, contact restrictions and economic shutdown has completely transformed the psychosocial environment,3,12 disrupted the care of those with existing mental health or substance abuse disorders, and placed a greater proportion of the population at risk of developing mental health disorders.8 In the first two months of the UK lockdown, mental health worsened by 8.1% with young women disproportionately affected.5  In the US, 35 million+ additional people may experience mental health conditions, including over 1.6 million people directly affected by COVID-19 illness or loss.8 This may mean that the demands on mental health services will exceed the existing capacity of the system.1,8

So how might health economic models address the rising mental health burden of COVID-19? In the short term, we will likely see an increase in health spending in many countries financed through the reallocation of currently available resources,13 with a proportion allocated to mental health. Investment in mental health interventions will require a thorough assessment of existing health and service-use outcomes in clinical practice to determine which practices should be further developed and which discontinued.2 We may see increased investment to extend the mental healthcare system workforce or in subsidising mental health support services for public and frontline health workers, and in research into novel interventions.2,14 Virtual health or telehealth offerings may expand following their rapid adoption and initial success in response to the pandemic.2,7  This may supplement mental health services in areas where there is restricted access to healthcare resources, and the approach could be further adapted to treat patients with chronic or episodic conditions. 2,7 Over the longer term, greater community monitoring and mental health screening may be required, and the role of community support groups may expand. 2 Resource allocation to mental health requires continued monitoring of needs, and assessment of quality and efficiency to ensure that interventions are not implemented based on affordability alone.2 As such, health economics will play a vital role in determining how to best manage the mental health burden of COVID-19.

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Emma Donadieu
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