The Hidden Cost of Untreated Behavioral Health Conditions Shows Up on the Medical Side

In a well-known study of 21 million commercially insured lives, Milliman found that 5.7% of the population accounted for 44% of total healthcare costs.¹ Those people shared two traits. They were among the most expensive 10% of patients, and they had a behavioral health condition. That's where the hidden cost of untreated and undertreated behavioral health conditions starts: it's large, and it rarely gets billed as behavioral health.

Below, we look at where that spending actually lands, why so much of it goes unnoticed and what health plan and employer leaders can do to find it earlier.

The Spending Lands on the Medical Side
You already know behavioral health is a growing line item. The harder part is seeing how little of the real cost sits on that line. In the same Milliman analysis, half of the people with a behavioral health condition had less than $68 a year in behavioral health treatment costs.¹ Yet as a group, members with behavioral health conditions accounted for more than half of total healthcare costs.¹

Most of that money went to physical healthcare, such as emergency visits, inpatient stays and care for chronic conditions like diabetes and heart disease. A member's depression or alcohol use disorder often doesn't show up as the reason for a claim. Instead it shows up as a readmission, a heart medication prescription that isn't being refilled or an A1C (a three-month average of blood sugar) that won't come down. 

Why So Many Behavioral Health Conditions Go Untreated
About half of U.S. adults with a mental illness get no mental health treatment in a given year.² For substance use, the gap is wider. Of the 52.6 million people who needed substance use treatment in 2024, about 10.2 million received it. That's fewer than one in five.³ We haven’t even touched on whether the care received was evidence-based.

The reasons are familiar to us all: cost, stigma, not knowing where to start and long waits once someone does reach out. We covered the workforce side of that problem in our recent post on what a shrinking behavioral health workforce means for members who are already waiting.

Getting treatment doesn't guarantee getting the right treatment. Take someone with obsessive-compulsive disorder (OCD) who ends up in general talk therapy. The evidence supports exposure and response prevention, a structured therapy where people gradually face what they fear without acting on the compulsion. In the data, that member counts as “served.” In real life, they're no better off. Dr. Frank Webster, a former health plan CMO, made this point when I spoke with him in a recent webinar. Everyone gets seen. Few get well.

What Untreated Behavioral Health Conditions Mean for Health Plans and Employers
For employers, the largest share of the cost never touches a claim. Researchers estimated that for every dollar spent directly treating major depressive disorder, another $2.30 went to indirect costs, mostly lost productivity at work.⁴ That covers absenteeism, presenteeism (being at work but unable to function at full capacity), disability leave and turnover.

For health plans, the cost shows up in total cost of care and medical trend. It also shows up in the things your teams answer for every year: quality measures, network adequacy reviews and member experience scores. A member whose depression goes unaddressed keeps generating medical claims, and rarely surface or name the underlying problem.

When a behavioral health condition goes untreated, the cost doesn't go away. It lands somewhere else in the budget.

Find the Members Who Drive the Cost
Closing this gap starts with knowing who needs what. That's hard when the most expensive members often present without typical behavioral health symptoms. At NovaOne, it comes down to three things.

Assess the whole population. Short, validated questionnaires like the PHQ-9 for depression and the GAD-7 for anxiety identify members who need clinical care. That includes people with primary physical health conditions who would never describe themselves as having a behavioral health need.

Match care to the condition. Members who need treatment are routed to evidence-based, in-network care built for their specific condition. They reach care in under 5 days on average, compared with a national average of more than 50 days.

Measure whether it's working. Repeating those assessments during treatment shows whether people are actually getting better, and when their care needs to change.

If you're pressure-testing your current setup, two questions are a good place to start. What share of your population has completed a validated behavioral health assessment? And are members with high-cost chronic conditions being screened for depression and substance use?

Bringing the Cost Into View
Members with behavioral health conditions drive a large share of total healthcare spend, and most of it is coded as physical care, so it's easy to miss. About half of adults with a mental illness don't get care, most people who need substance use treatment don't get it either, and others access care that doesn't fit their condition. For individuals, this perfect impacts quality of life and their care journey (both physical health and behavioral). For employers, much of the cost shows up as lost productivity. For health plans, it shows up in medical trend and quality performance.

The way forward is practical: assess the whole population, match people to evidence-based care for their condition and measure whether it's working.

If you want to talk through what this looks like for your population, we'd be glad to share what we're seeing. Connect with the NovaOne team here.

Sources: 
1. Milliman, How Do Individuals with Behavioral Health Conditions Contribute to Physical and Total Healthcare Spending? (2020)
2. National Institute of Mental Health, Mental Illness Statistics
3. SAMHSA, Key Substance Use and Mental Health Indicators in the United States: Results from the 2024 National Survey on Drug Use and Health
4. Greenberg PE et al., The Economic Burden of Adults with Major Depressive Disorder in the United States (2010 and 2018), PharmacoEconomics (2021)