Approximately 1 in 5 people with private health insurance have any mental illness, and 1 in 20 have a serious mental illness. This brief examines inpatient mental health and substance use treatment admissions in 2023 among adults aged 18-64 with large employer-sponsored health insurance plans. Private insurance enrollees constitute roughly a quarter (26%) of mental health and substance use disorder inpatient admissions, while Medicaid represents about 41% and Medicare 22%. Further discussion on mental health utilization can be found for patients with ACA Marketplace coverage and Medicaid.
Using claims data from the 2023 Merative MarketScan Commercial Claims Database, this analysis describes the most common diagnoses for inpatient treatment and total associated costs, including patients’ out-of-pocket share. Inpatient treatment refers to services provided in a hospital or licensed facility that require the patient to stay overnight. Examples include acute inpatient psychiatric care, substance use hospitalization, residential care, rehabilitation, and detoxification. The analysis includes inpatient admissions and does not include admissions to the emergency department that did not result in admission.
Inpatient treatment for mental health and substance use accounted for 10% of total commercial inpatient stays in 2023 (or 32 per 10,000 enrollees). Of these inpatient stays, 54% were for a primary diagnosis of mental health and 46% were for substance use disorder. Most enrollees who received mental health (82%) or substance use (65%) inpatient treatment had only one stay within a calendar year. Other key findings include:
- The average (mean) total inpatient cost (including the share paid by the insurer and the share paid by the patient) for a mental health admission was $15,900 and for a substance use admission was $15,500.
- The most common mental health diagnosis was depression (45% of admissions), with an average total cost of $13,100 per admission.
- The most common substance use diagnosis was alcohol use disorder (74% of admissions) with an average cost of $15,900 per admission.
- Inpatient treatment occurs in a variety of facility types. Mental health inpatient treatment often included patient time in a psychiatric room or unit within a general acute care hospital (89% of visits). Substance use inpatient treatment varied, with 50% of visits including time in a detoxification facility, 32% in a non-psychiatric hospital setting, and 30% in a residential treatment facility.
- 2 in 3 (66%) inpatient mental health admissions and 1 in 3 (32%) inpatient substance use visits include time in the emergency department.
- The average out-of-pocket cost to patients for inpatient treatment was $1,300 for a mental health admission and $1,400 for a substance use admission.
In addition to inpatient services, many individuals utilize outpatient mental health and substance use care including office-based psychiatry, psychotherapy visits, and prescription medication, further accruing costs. A prior KFF analysis found that enrollees with depression had significantly higher annual out-of-pocket costs for any outpatient care compared to enrollees without a mental health diagnosis ($1,501 vs. $863); and that this difference increased with depression severity.
In addition to coverage and cost, patients’ experiences may be shaped by the quality of care received. While quality measures are not a part of this analysis, several evaluation tools exist, such as the Inpatient Psychiatric Facility Quality Reporting. These evaluation tools have a range of indicators, including patient safety, transition protocols, patient experience, and readmissions.
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Overall, spending on treatment for mental health and substance use has grown faster than total medical services, accounting for over 5% of all health care spending; spending on these services is likely to increase in the years ahead, from both public and private payers. Even with growing spending, however, there is unmet need. Four in ten insured adults in fair or poor mental health report not getting needed mental health care. Additionally, this analysis finds that patients with private insurance pay about 9% of the total hospital bill for a covered mental health or substance use hospitalization, greater than the roughly 5% of the total covered hospital bill out-of-pocket, on average, across all inpatient spending. The financial strain imposed by inpatient mental health and substance use services will likely continue to pose a significant challenge for some patients.
Issues of access to mental health services come at a time when policy approaches to mental health and substance use services are shifting. For example, while the Mental Health Parity and Addiction Equity Act (MHPAE) sought to reduce some access burdens, enforcement of MHPAE policies is challenging. Recent efforts to modify enforcement practices have slowed under the second Trump administration. Other policy actions under the Trump administration include de-prescribing practices, a departure from harm reduction services, and narrowing the scope of federal leadership capacity in mental health and substance use services.
This analysis likely underestimates total utilization of and spending on mental health and substance use admissions by privately insured patients because some enrollees may self-pay for inpatient treatment, which would not be captured in employer-sponsored insurance claims. Further, enrollee out-of-pocket costs presented in this analysis may appear lower as enrollees who previously met their annual out-of-pocket maximum, including for any outpatient mental health and substance use services, did not incur additional costs. Additionally, while private insurance covers the majority of adults under age 65 in the U.S., many enrollees face challenges with both the availability and the quality of in-network mental health providers.
Who is getting treated for mental health and substance use?
Enrollees receiving inpatient treatment for mental health are more likely to be younger compared to enrollees receiving substance use treatment.
Within the non-institutionalized adult population in the U.S., 32% experience symptoms of depression or anxiety. The U.S. adult prevalence of depression is higher among females, who are also more likely to seek mental health treatment.
Among enrollees with employer-sponsored insurance, mental health inpatient treatment was also slightly more likely to be among female enrollees than males (56% vs. 44%). By age, mental health inpatient treatment was most common among the youngest adults, 18–24-year-olds, who make up 36% of enrollees with mental health treatment, much higher than the 14% of all enrollees with employer-sponsored insurance who are 18–24 years old.
Nationally, men made up most inpatient substance use admissions, which matches finding from this analysis. Among enrollees receiving inpatient treatment for substance use, 68% were male and 32% were female, compared to a roughly equal proportion in the general population. Inpatient treatment for substance use was more common among 35–44-year-olds (26%), which was similar but slightly higher than the proportion of 35–44-year-olds with employer sponsored insurance (23%).
What are the most common mental health and substance use diagnoses?
Nearly half (45%) of mental health treatment stays are for depressive disorders. Most substance use stays are for alcohol disorders (74%).
The most common mental health inpatient diagnoses were depressive disorders (45%) and bipolar and related disorders (24%), followed by schizophrenia and other psychotic disorders (17%), trauma- and stressor-related disorders (5%), and anxiety and fear-related disorders (2%) disorders. National data find that there is a similar pattern of diagnoses among adults; Data from the National Survey on Drug Use and Health show that in 2024, the most common mental illness among adults in the United States was depression (8.2% of adults) followed by anxiety (7.8%).
Among substance use treatment, this analysis finds that most episodes were for alcohol-related disorders (74%). About one in seven were for opioid-related disorders (14%), followed by stimulant-related disorders (6%). National data again show a similar pattern, with alcohol use disorder being most common with a prevalence of about one in ten adults 26 or older, followed by cannabis (6%) and opioid use disorders (2%).
What was the average total cost for mental health and substance use inpatient treatment?
The cost of mental health and substance use treatment differs by diagnosis, with eating disorders being the most expensive.
Overall, the mean total cost (this includes the plan and enrollee share) of a single mental health inpatient stay was $15,900. Costs can vary significantly, with 25% of mental health admissions costing more than $17,300. Costs also vary by diagnosis. Stays for feeding and eating disorders were significantly more costly than all other disorders, while stays for anxiety or depressive disorders were less costly than all other disorders. Some of the differences in cost are due to the intensity of the treatment and the length of stay required for treatment. Treatment for feeding and eating disorders is known to be expensive, and this analysis found that they were among the most expensive inpatient treatment episodes with an average cost of $44,300. For diseases with shorter stays or lower intensity, treatment was often less expensive, such as for depressive disorders ($13,100 on average).
Substance use inpatient treatment had a mean cost of $15,500 across all diagnoses, but again some treatment stays were much more expensive, with 25% of admissions costing $19,200 or more. There is less variation in cost of treatment across different diagnoses for substance use. For example, alcohol-related treatment ($15,900) was only slightly more costly than treatment for stimulant ($14,300) or opioid ($14,000) disorders.
According to the Healthcare Cost and Utilization Project from AHRQ, the average inpatient stay across all hospitalization types and payers cost around $12,500 in 2022 (inflation-adjusted), and an average mental health or substance use hospitalization cost $7,400 across all payers.
How does cost differ by treatment setting?
Mental health treatment most often occurred in an inpatient psychiatric facility in a general acute care hospital, which was more expensive, on average, per day, than a psychiatric facility.
There are different facilities that patients may end up staying at during inpatient treatment for mental health or substance use. National trends in substance use inpatient treatment indicate that fewer stays (just under one in five) include detoxification services. For inpatient mental health treatment, nine out of ten involve some stay in a hospital psychiatric unit. Half of inpatient stays for substance use disorder include at least some time in a detoxification bed. Patients are also likely to experience multiple treatment settings during the same hospitalization episode.
There are treatment cost differences by facility type and diagnosis, which may reflect variations in medical management across facilities. Facility types also differ in the availability of different services or providers available for treating mental health and substance use disorders, which all may impact the total cost of a hospitalization. This analysis finds that the overall cost of an admission occurring at least partly within a psychiatric room in a general acute care hospital, which was most common, was $14,900. Treatment in a specialized inpatient psychiatric facility cost slightly less, averaging $13,400 in total.
The cost for substance use stays also differed by treatment facility, with an average cost of $15,500 across facilities. Stays in detoxification facilities cost an average of $14,900 overall, while residential treatment facility stays cost an average of $21,900.
Many of the inpatient stays also included time in an emergency room (66% of inpatient mental health admissions, 32% of inpatient substance use admissions), and this can have an impact on the overall cost of treatment. Inpatient treatment for all diagnoses was more expensive when the episode included time in the emergency department.
The median length of treatment in 2023 was 6 days for both mental health and substance use inpatient treatment but differed by treatment location. For example, inpatient substance use treatment lasted, on average, 19 days when part of the stay included residential treatment, and 6 days for stays that included inpatient detoxification. Inpatient mental health treatment in a psychiatric facility, or psychiatric accommodation within a hospital, lasted 6 days, on average. Mental health treatment that included time in a residential treatment facility had a median admission length of 21 days.
National data on all inpatient treatment for substance use finds similar trends across payers. The median length of stay for rehabilitation/residential treatment within a hospital is 6 days, and within a hospital detoxification unit is 4 days.
Length of stay differences seen in for the different facilities are also likely influenced by the diagnosis and treatment required for the enrollees, as well as the comorbidities that patients may require treatment for.
What are the costs to the enrollee for inpatient treatment?
Mental health treatment most often occurred in an inpatient psychiatric facility in a general acute care hospital, which is more expensive, on average, per day, than a psychiatric facility.
Enrollees pay a portion of inpatient treatment through copays, deductibles, and coinsurance. Overall, 9% of the total treatment costs were paid out-of-pocket by patients, with the other 91% paid for by insurance companies.
The average out-of-pocket cost for inpatient treatment was $1,300 for a mental health admission, and $1,400 for a substance use admission. One in 4 inpatient treatment stays for mental health, however, had cost sharing of $1,900 or more, and likewise 1 in 4 substance use admissions cost patients over $1,900 out-of-pocket.
Costs to the patient are also impacted by the structure of their health insurance. This may include the individual or family deductibles and out-of-pocket maximums, and whether their employer-sponsored health plan uses Center of Excellence programs. These programs provide specialized care to enrollees for certain mental health and substance use services. Employer plans may structure their Center of Excellence program to include low or no cost-sharing for enrollees who use a provider within the program.
Research has found that adults who use outpatient mental health treatment were likely to spend significant amounts of money out-of-pocket, even among those with private insurance. Further, a prior KFF analysis found that enrollees with depression had significantly higher annual out-of-pocket costs for any outpatient care compared to enrollees without a mental health diagnosis ($1,501 vs. $863). This difference increased with depression severity – enrollees with severe depression spent $1,930 out-of-pocket on outpatient care while enrollees with mild depression spent $1,382.
Methods
This analysis uses claims from the Merative Health Analytics MarketScan Commercial Claims and Encounters Database, which contains claims information from employer sponsored health plans. To make MarketScan data more representative of those with employer sponsored health insurance, weights were applied to match counts by state, sex, and age in the Current Population Survey. The data file contains records on 13 million adults between 18 and 65, 8% percent of the 165 million people with employer coverage in 2023.
Mental health and substance use inpatient treatment included inpatient admissions in which the patient was admitted beginning in 2023 with a non-surgical mental health Diagnosis Related Group (880-887) or substance use Diagnosis Related Group (894-897). Diagnosis categories are based on primary diagnosis on the inpatient claim, which were then categorized into groups based on the Agency for Healthcare Research and Quality’s Clinical Classification Software Refined. DRGs that include surgical cases are not included in this analysis, so if a patient has a mental health or substance use episode alongside major physical maladies, the DRG will likely capture only the physical illness or surgery and will not be included here. Copayments, coinsurance, and deductibles paid for laboratory and testing services provided while the patient was in inpatient treatment may not be included in the out-of-pocket costs tallied if the service was paid in a bundled payment. Treatment that occurred in multiple settings will be captured in each setting.
Place of service data was defined using the following revenue and place of service codes. Emergency department was defined as a revenue code starting with 45 or a place of service 23. Hospital psychiatric accommodations, have a revenue service of any of the following: 114, 124, 134, 144, 154, or 204 along with a place of service of 21. Hospital non-psychiatric accommodations included any codes starting with 01 or 02 except for those listed. Residential facilities include revenue codes 1000, 1001, 1002, and detoxification accommodations include any of revenue codes 116, 126, 136, 146, 156. Inpatient psychiatric facilities have a place of service 51.
The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.
