Spend more to save more: investing in mental health reduces public expenditure
An in-depth look at the findings of the latest report Headway - A New Roadmap in Brain Health (2024), an initiative created by The European House – Ambrosetti (TEHA) in collaboration with Angelini Pharma.
In recent years, healthcare budget cuts have often been in the spotlight, particularly after the pandemic exposed the dramatic consequences of these policies. The idea is simple: cut healthcare spending to free up funds for other areas. But is this strategy truly beneficial? According to the Headway – Mental Health Report by TEHA Group and Angelini Pharma, the answer is no – at least when it comes to mental health. In the long term, these cuts actually lead to increased overall spending.
Launched in 2017, Headway aims to create a multidisciplinary platform for strategic reflection, analysis, and debate on managing mental health disorders. Over the years, its focus has ranged from eco-anxiety to the role of institutions in mental health, sparking discussion at a European level. In this latest edition, the spotlight is on the economics of mental health and wellbeing, particularly the advantages of investing in this sector.
THE STATE OF MENTAL HEALTH IN EUROPE
Mental health in Europe is on the decline. Before the pandemic, 85 million people were living with mental health disorders; by 2021, this figure had risen from 14.9 to 16 cases per thousand inhabitants. Anxiety and depression are the main drivers of this increase, rising by 20% and 13%, respectively. But the cost of this situation isn’t just measured in health – it’s economic too.
According to the latest estimates, mental health costs for EU27+UK countries amount to €600 billion per year, with a negative impact on GDP of -4%. Of this, €190 billion are direct healthcare costs, €240 billion relate to lost productivity, and €170 billion are linked to social security expenses.
So, as mental health deteriorates, expenditure rises, while investment in mental health services has actually decreased (-7% between 2011 and 2018). In response to this, the Lancet Commission on Global Mental Health recommended in 2018 that high-income European countries allocate at least 10% of their healthcare budget to mental health, while low- and middle-income countries should aim for at least 5%. For many countries, however, these targets remain distant.
HEADWAY’S FINDINGS: SPEND MORE TO SAVE MORE
The economics of mental health is the central issue of this year’s Headway report. Drawing on European data, researchers have estimated the investment needed to optimise the system.
The findings, in line with The Lancet's recommendations, highlight the urgent need to increase investment in mental health. For high-income countries, the 10% healthcare spending threshold remains valid, while low- and middle-income nations should aim for a slightly higher percentage, targeting 6.5%. These figures are significant, but the economic returns – along with the wellbeing benefits for the population – far outweigh the costs.
According to the report’s estimates, an additional annual investment of €27.4 billion, needed to meet these targets, would lead to direct savings of €79.4 billion for national healthcare systems. This is without accounting for a further €43.5 billion in indirect savings through reduced social service use and increased workforce participation. In short, for every euro invested, there would be a return of four euros and fifty cents.
BALANCING INVESTMENTS TO MAXIMISE BENEFITS
Investing in mental health leads to significant savings. However, to optimise the system’s efficiency, it is not just about investing more, but also investing better.
The graph illustrates the relationship between spending levels and marginal benefits to population mental health. Analysis of the correlation lines shows that beyond a certain point, increasing healthcare spending yields minimal additional benefits. By contrast, investments in social services continue to provide consistent advantages.
Therefore, balancing healthcare expenditure with social service funding is the optimal strategy for addressing mental health challenges and improving a country’s overall performance.
Take-Home Messages:
- Budget Cuts Backfire: Cutting mental health funding leads to higher long-term costs and worsens health outcomes.
- Growing Demand, Low Investment: Mental health issues are rising in Europe, yet investment remains insufficient, increasing economic and social burdens.
- High Returns on Investment: Every euro invested in mental health yields a four-euro return, benefiting both public health and the economy.
- Balance is Essential: Optimal mental health outcomes require balanced spending across healthcare and social services.
- A Critical Priority: Increased and strategic investment in mental health is essential for sustainable economic and social wellbeing in Europe.