The Murdoch University study highlights the need for increased Medicare support for mental health services and is the most comprehensive national analysis of how mental health affects household spending on healthcare to date.

The research followed 3,391 Australians between 2006 and 2022, examining 57,647 individual records from the HILDA survey. 

It found that when a person’s mental health worsens, their healthcare costs rise, highlighting the need for increased Medicare support for mental health services.

Lead author, Md Ehsanul Tamal, a PhD candidate from Murdoch University’s School of Business said the study identified key structural issues in Australia’s mental health system.

“Previous analysis shows that GP bulk billing rates have declined from 89% to 77% since the COVID-19 pandemic, and mental health specialists bulk bill only 26% of the time," he said. 

“The high costs of treatment compound the burden of poor mental wellbeing on patients, leaving them significantly financially worse off.

“We believe increased rebates for mental health services should be considered to help address this inequity.”

Associate Professor Khurshid Alam from Murdoch University’s College of Business, said the study showed Australia underinvests in mental health care compared to global benchmarks.

“Mental illness is the leading cause of disability in Australia, but mental health care receives one of the lowest proportions of health funding,” he said. 

“Australians face higher prevalence rates of anxiety and depression than Europe and Asia, yet Australia spends substantially less per person on mental health care compared with other high income nations.

“This gap means more of the burden falls onto individuals and families.”

The researchers argue that Medicare does not adequately protect people with mental illness from out of pocket costs.

They recommend:

• improving mental health literacy.

The research team used advanced statistical methods to separate the effects of mental health from other factors such as age, income, or chronic illness.

They found a clear correlation between declining mental health and increased healthcare costs. The increased costs include GP fees, specialist consultations, mental health professionals, and prescription medicines.

The study also found city residents had higher healthcare costs than those living in regional areas, and people experiencing poor mental health were adversely affected by the COVID-19 pandemic.