Clinically reviewed by Chris Mosunic, PhD, RD, MBA, Chief Clinical Officer, Calm
Amid soaring healthcare costs, consultants are strategizing with employers about how to support employee health and wellbeing while reining in spending. Those conversations are likely dominated by a handful of highly visible cost pressures, including GLP-1s; high-cost specialty medications; and complex care for cancer, musculoskeletal conditions, and cardiovascular disease.
But some of the most impactful healthcare costs don’t always generate the most attention. Mental health is one of them. Although employees continue to struggle with stress, burnout, anxiety, depression, and other emotional and mental health challenges, negatively affecting healthcare spend, mental health as a category has faded from the spotlight.
Unlike catastrophic claims or specialty drugs, mental health costs rarely show up as dramatic events. Instead, they accumulate gradually as employees utilize healthcare, making them easier to overlook in benefits strategy.
A cost that’s easy to overlook
Indeed, mental health can be significantly underestimated as a direct healthcare cost driver despite its widespread influence on employee populations. When employers and consultants analyze budgets, they naturally focus on costs that are highly visible, increasing rapidly, and easy to isolate, such as specialty pharmacy or musculoskeletal spending. By contrast, mental health costs often show up across multiple categories, making their financial impact harder to identify.
Mental health challenges influence direct healthcare costs, including in these categories:
- Behavioral health claims. Untreated depression, anxiety, and substance use disorders are associated with higher outpatient therapy, psychiatry, and inpatient behavioral health costs.
- Medical claims from comorbid conditions. One study found 7x higher medical costs for individuals with untreated behavioral health conditions.
- Short-term and long-term disability. Depression is a leading cause of disability, and untreated conditions increase both frequency and duration of STD/LTD claims.
- Increased emergency-room utilization. Crisis episodes, panic attacks, substance-use emergencies, and complications from untreated depression increase use of the emergency department at an estimated cost of $2,700 per day.
Mental health challenges also contribute to indirect costs, including absenteeism, presenteeism, and turnover. In fact, research suggests that an employee with untreated depression can incur around $15,000 of costs per year. That amount comprises the following:
- Absenteeism. $2,000 to $3,500 per year per employee
- Presenteeism. $5,000 to $7,000 in productivity loss per year per employee
- Turnover. $4,000 to $6,000 when averaged across affected employees
When costs are dispersed across multiple direct and indirect categories, they’re much more likely to be overlooked entirely. Highly visible, high-dollar expenses rise to the top of employer priorities, while those hidden in blind spots are much less likely to receive meaningful attention. It’s clear that mental health may be influencing healthcare costs more significantly than traditional reporting suggests.
Despite its influence on costs, mental health has taken a back seat
Consultant conversations have shifted to GLP-1s, specialty pharmacy, family-forming benefits, navigation, and cost containment due to their visibility and immediate budget impact.
But the reality is that employee mental health needs remain high. More than 18% of U.S. adults today report having depression or being treated for it, and nearly half (49%) of employees report feeling stressed in their everyday life, for example. It’s not surprising that benefits buyers continue to rank mental health as a top priority. In interviews with Calm, 20 HR leaders ranked mental health as a primary focus due to recent crises, retention issues, or specific employee demands.
Reduced discussion about mental health in consultant conversations signals not reduced importance but distraction.
The cost often shows up in ongoing utilization
Mental health spend is often evaluated through the lens of catastrophic claims or severe diagnoses. But the greater financial impact often comes from recurring engagement with care across large employee populations, including ongoing therapy, primary care visits related to mental health symptoms, and outpatient behavioral health services.
This isn’t episodic or crisis-driven care; it’s continuous utilization that results in high costs over time. A single high-cost claimant may generate a large spike in spend, but hundreds or thousands of employees engaging in behavioral health care every month can create a larger cumulative impact.
Consultants can help employers by looking beyond individual claims and examining broader utilization patterns, e.g., frequency, duration, and comorbidity, when evaluating workforce health and benefits costs.
Many employers recognize the need but hesitate to act on it
Most organizations already know that employees are struggling with emotional and mental health challenges, whether stress, anxiety, depression, or burnout. The signals are everywhere, including employee feedback, absenteeism trends, leave activity, and claims data.
But awareness doesn’t always translate into action. Employers may hesitate to act because they lack
- A clear framework for intervention,
- Confidence in ROI, and/or
- Insight into which solutions address which needs.
In response, they’re increasingly asking pointed questions:
- Are employees using available resources?
- How can we support employees earlier, before their symptoms escalate?
- What impact are our investments having?
Consultants play a strategic role in helping employers move from insight to action, especially when mental health needs influence direct and indirect costs.
Where existing approaches can fall short
The challenge of episodic support
Traditional EAPs and other traditional mental health resources are primarily used in moments of acute need. Employees typically engage only when challenges become difficult to manage independently. This scenario creates an engagement gap between episodes of acute need, leaving unaddressed everyday stressors, early symptoms, and lower-acuity concerns that the majority of employees experience.
Not every employee needs therapy
Research shows that only about 24% of employees need counseling or psychotherapy, and only 1% need intense mental health treatment. The majority, 75%, need access to everyday mental health tools that support them in building resilience and coping with stress, anxiousness, sleep problems, or other challenges before they escalate into more serious conditions. In a moment of panic, for instance, scheduling a therapy appointment likely won’t provide immediate relief, but a simple breathing exercise might.
A therapy-first approach can leave lower-acuity needs insufficiently addressed, driving avoidable escalation into higher-cost care.
Supporting employees earlier and more consistently
Providing access to mental wellness resources can help employees address challenges before they become more disruptive or costly. For example, digital mental wellness programs, available 24 x 7, can support a wide range of low-acuity needs, such as stress, anxiousness, poor sleep, loneliness, and feeling overwhelmed. And because employees can use these resources anywhere, anytime, and without fear of judgment, they’re more likely to take advantage of them.
Personalization boosts engagement even more. By personalizing the experience, a digital mental wellness app can help employees identify early symptoms and understand the programs available for their particular needs, and it can efficiently guide them to these resources.
Calm Health, a digital mental wellness solution, is designed to help employees engage earlier in their mental health by
- Offering proactive mental health screenings, which employees can take anytime and complete in a minute or two;
- Providing personalized recommendations for programs that address their specific challenges, e.g., coping with a chronic condition or a difficult life experience; and
- Connecting employees to additional resources appropriate for their needs; e.g., an employee assistance program, condition management, onsite therapy, or crisis line. Rather than replace these programs, Calm Health helps boost their utilization by guiding employees to them.
Rethinking the role of mental health in benefits strategy
Mental health isn’t just a wellbeing issue. It’s a workforce performance and healthcare utilization issue.
Under-supported mental health issues
- Increase primary care, urgent care, and emergency department visits,
- Drive up medical care costs,
- Contribute to missed work-days and leaves of absence, and
- Affect overall workforce productivity and performance.
Organizations benefit from an approach to mental wellbeing that combines proactive engagement, personalized recommendations, 24 x 7 access, and guidance to appropriate resources.
Solutions like Calm Health help employers support employees earlier, improve utilization of benefits and resources, and take a proactive approach to both mental wellbeing and healthcare utilization.
A longitudinal study of Calm Health utilization conducted by a large national payer found an 11.6% reduction in total claims costs among nearly 12,000 members with co-occurring behavioral health and medical conditions. The reduction was driven by a reduction in behavioral health inpatient costs (-5%), medical inpatient costs (-4%), and costs associated with ER visits (-2.6%).
Mental health remains one of the most important healthcare conversations that employers can have, even if it’s not the loudest.
