December 20, 2018

December 20, 2018 | Adviser News

The Cost of Care part II – Mental Health

In analysing common methodologies used across the life insurance advice sector, we were able to identify a missing link that could help advice be more tailored and personalised. The Cost of Care whitepaper is an industry first, bringing together detailed research across the broad spectrum of injury and disease.

Across three articles, we will delve into three of the biggest cost burdens facing Australians today – Cancer, Mental Health and Heart and Artery. The cost of care whitepaper can be downloaded by visiting


Some illnesses can have a significant impact on your clients’ lives. Not only can they stop your client from working, their recovery may require assistance and time, and have negative repercussions for other family members. This is particularly true for those who suffer from mental health conditions; many individuals and employers report prolonged absences from work and poor mental health is associated with the lowest likelihood of being in the labour force.

Despite this, a key finding of the research study was that Australians see themselves as ‘bulletproof' and found that – compared to their peers in other developed economies – Australians also have the most faith in the adequacy of social security to protect them in times of need, and unsurprisingly, the lowest interest in purchasing life insurance. Despite this perceived safety net, the direct and indirect costs of serious illness and injury can create a significant out of pocket burden.

Mental health in Australia

Almost half of the total population (45.5%) experience a mental health condition at some point in their lifetime1, and mental or behavioural conditions account for 17.5% of the total disease burden in Australia2. In 2013-2014, the estimated total health system expenditure on mental health was $12.8 billion, comprising $974 million in healthcare costs and importantly, $11.8 billion in productivity loss3.

Mental health conditions are most common in those aged between 25 and 34 years, affecting nearly one in four and decline with age4. They affect women more than men across all age groups and those living in rural areas1. Anxiety disorders, affective disorders and substance-use disorders are the most common mental health conditions in Australia and they often occur in combination.

Figure one: Three most common mental health conditions

Source: Australian Bureau of Statistics 2008. Survey of Mental Health and Wellbeing: Summary of Results, 2007. October 2008.

Mental health conditions may affect how an individual functions in social, family, educational and vocational roles, therefore the early age of onset may have long-term implications, including relapse. Of six major health conditions, poor mental health is associated with the lowest likelihood of being in the labour force5 and individuals with mental health conditions lose an average of 38 working days annually6. In other words, poor mental health can impact a person’s financial wellbeing.

The cost of mental health in Australia

Although healthcare in Australia is largely publicly funded, there are still significant out-of-pocket costs associated with mental health, estimated at $1,350 per year7.
Informal caregiving often falls onto family members6 and of those:

  • 24% receive carer payments
  • 34% receive any assistance in their caring role
  • 35% do not know the services that are available to support carers

The annual cost of mental health8

Although the dollar cost is lower than many other illnesses, the financial impact on sufferers and carers cannot be ignored. Nationally, carers for people with mental health conditions spend an average of 36 hours per week providing care, which is 208 million hours each year, a figure that cannot help but have a negative financial impact on those carers.

Expert's view, Dr Doron Samuell, Experienced behavioural risk management expert

The current landscape for mental health

Mental health conditions represent one of the greatest challenges facing society. With almost half of us likely to have a mental health condition at some time in our lives, it shares the stage with cancer and heart disease as a group of high-impact medical life disrupters. Mental health conditions are present in all ages and in all socio-economic groups. While severe mental health conditions such as schizophrenia and bipolar disorders are relatively rare, more common mental health conditions such as depression and anxiety are noteworthy for their large contribution to human disability.

When people experience mental health conditions, they often suffer a massive disruption to their work, family life and social functioning. The duration of these disruptions ranges from months to years.

Suicide rates remain disturbingly high despite increased availability of mental health resources and ongoing public awareness campaigns. Adverse economic conditions, alcohol and drug abuse as well as social isolation tend to increase suicide rates.

The cost of mental health conditions

Mental health conditions have large economic and social costs. The conditions are often lengthy, leading to career disruption and instability, loss of skills and social isolation.

Therefore, economic costs are not limited to forgone work, but also to long-term forgone opportunity. Costs incurred through social disruption include increased rates of divorce, domestic violence and substance abuse. Treatment costs, including most medications, are heavily government subsidised, with public subsidies available through general practice mental health care plans, medical consultation rebates and the pharmaceutical benefit scheme.

Public hospital admissions are reserved for the most serious mental health conditions and are provided free of charge. Moderate mental health conditions, including substance misuse, are treated largely by the private hospital system. Inpatient treatments are often lengthy and moderately expensive, with private health providers offering some subsidies for inpatient care.

What does the future hold?

Social campaigns that aim to reduce drug and alcohol consumption, improve social cohesion and promote physical activity may slowly reduce both the incidence and severity of mental health conditions. The World Health Organisation (WHO) and most governments have increased resources for both research and the treatment of mental health conditions creating the expectation of further improvements in outcomes over the long term.


A snapshot of mental health conditions in Australia

Affective and anxiety orders impact 2.4 million and 4.2 million Australians respectively9. Affective disorders include depression, bipolar and schizophrenia, and affect more people who are widowed, separated or divorced (11.2%), unemployed (14.9%) and who did not complete school (8.1%). Anxiety disorders include panic, agoraphobia, social phobia, generalised anxiety, obsessive-compulsive and post-traumatic stress disorders. Anxiety is the most common mental health condition in Australia affecting one in four people and as with affective disorders, affect more people who are widowed, separated or divorced (19.0%), those not in the labour force (20.9%) and those who did not complete school (18.9%)9.


Figure two: Snapshot of mental health disorders in Australia

Lifetime estimated prevalence (2007)9 2.4 million 4.2 million
Lifetime risk10 Males – 5.3%
Females – 7.1%
Recovery rate Up to 50%, within the first six months11 50-60%12
Relapse rate of those who initially recover 13 50–66% of those who initially recover12
Average individual cost14 $181/year ($115–$262 if combined with another disorder) $190/year ($186–$262 if combined with another disorder)
Average no of days off work9 75.4 days per year 53.5 days per year

Out of all types of mental health conditions (including combinations), anxiety-related disorders contribute to the largest proportion of total treatment costs (37.2%)14.

Most affective disorders tend to be recurrent and the onset of individual episodes can often be related to stressful events or situations. Of concern is that fewer than two in five individuals (35%) with anxiety or depression seek treatment15

The cost of depression is, on average, $17,190 per individual16. Indirect spending for affective disorders includes non-health services and social costs, such as family breakdown and associated legal costs).

If an individual were paying $450/session for psychiatry treatment weekly, they would be $296 out of pocket ($154 Medicare rebate); after the seventh treatment week, the individual would have reached the Medicare Safety Net threshold ($2,093.30 out of pocket)17, 18

A note on suicide

Suicide is the leading cause of death for Australians aged 15 to 44, and the second leading cause of death for Australians aged 45 to 54 years19. There are approximately 63,500 suicide attempts in Australia each year20 and in 2016, there were 2,866 deaths by suicide, or eight deaths per day; men are three times more likely to be represented by these statistics21

Case study: Terry Cornick, Mr Perfect

“The destructive impact of poor mental health on Australians is colossal. From my own experiences of PTSD, depression and anxiety, it has at times hindered my ability to think rationally and be kind to myself.

Since I reached out for clinical help four years ago, ironically, on a professional level it has made me more emotionally intelligent and sensitive to the struggles of others. Financially it can be a strain, such as $300 bills for specialists such as Psychiatrists and other mental health professionals.

However I am now realistic about this and realise I am lucky to be able to access this help and in the long-term it is an investment that will hopefully ensure I stay on track and as mentally healthy as I can".

Terry Cornick Founder & CEO of Mr. Perfect

Mr. Perfect is a grassroots charity that aims to create a judgement-free society for men and their mental health.


In 2015/16 total health expenditure in Australia was $170.4 billion22. While the state and federal government pick up the lion’s share of this burden, individual Australians – and their families and carers – still accounted for around $30 billion of this annual cost23.

Life insurance is a vital part of the ecosystem that helps protect the financial, emotional and physical wellbeing of Australians. But without a better understanding of how each of these systems interact, and a realistic appreciation of the true costs of poor health, we are ill equipped to judge the appropriate types and levels of support to best suit our circumstances, and to navigate a complex network of services and providers. Given that many Australians adopt a ‘she’ll be right mate’ attitude, are your clients financially prepared for the cost burden of experiencing, or caring for someone experiencing, illness or injury?



1Australian Bureau of Statistics 2008. Survey of Mental Health and Wellbeing: Summary of Results, 2007. October 2008.
2 Australian Bureau of Statistics 2015. 4364.0.55.001 – National Health Survey: First Results, 2014–15. December 2015
3 Australian Institute of Health and Welfare (2018). Mental health services in Australia. Canberra: AIHW..
4 Slade T, et al. The Mental Health of Australians 2: Report on the 2007 National Survey of Mental Health and Wellbeing. May 2009.
5Australian Government, Department of Health. The magnitude of the problem. Available from: publications/publishing.nsf/Content/mental-pubs-f-plan09-toc~mental-pubs-f-plan09-con~mental-pubs-f-plan09-conmag[Accessed May 2018]
6Lee Y, et al. Cost of high prevalence mental disorders: Findings from the 2007 Australian National Survey of Mental Health and Wellbeing. Australian New Zealand Journal Psychiatry. 2017;51(12):1198–211.
7Condon M (2017). Big problem with mental illness and suicide in rural and remote areas. Available from: [Accessed May 2018].
8Jackson S (2017). How much do mental health conditions cost? Available from: health-brief/health-insights/how-much-do-mental-health-conditions-cost/ [Accessed May 2018].
9Slade T, et al. The Mental Health of Australians 2: Report on the 2007 National Survey of Mental Health and Wellbeing. May 2009
10The Mental Health of Australians A24556C814804A99CA257BF0001CAC45/$File/mha24.pdf [Accessed May 2018]
11Manicavasagar V. A review of depression diagnosis and management. InPsych 2012;34(1).
12Mandos LA. Achieving Remission in Generalized Anxiety Disorder. Psychiatric Times 2009;26(2)
13Australian Institute of Health and Welfare. Profile of depression in Australia. Canberra: AIHW
14Lee Y, et al. Cost of high prevalence mental disorders: Findings from the 2007 Australian National Survey of Mental Health and Wellbeing. Australian New Zealand Journal Psychiatry. 2017;51(12):1198–211
15Australian Bureau of Statistics 2008. Survey of Mental Health and Wellbeing: Summary of Results, 2007. October 2008
16Doran CM. The evidence on the costs and impacts on the economy and productivity due to mental ill health: a rapid review. 2013
17Consumers Health Forum of Australia. Out of pocket pain: Research report. April 2018
18Australian Government, Department of Health. 2018 table of Medicare Safety Net thresholds. Available from: [Accessed May 2018]
19Black Dog Institute. Facts about suicide in Australia. Available from: [Accessed June 2018]
20Lifeline. Statistics on suicide in Australia. Available from: [Accessed June 2018]
21Australian Bureau of Statistics. (2017). Causes of Death, Australia, 2016. Catalogue No. 3303.0. Belconnen, ACT: Commonwealth of Australia. Accessed September 27, 2017 from: allprimarymainfeatures/47E19CA15036B04BCA2577570014668B?opendocument.
22Australian Institute of Health and Welfare 2013. Health expenditure Australia 2011–12. Health and welfare expenditure series no. 50. Cat. no. HWE 59. Canberra: AIHW, p. 117
23Australian Institute of Health and Welfare 2017. Health expenditure Australia 2015–16. Available from: health-expenditureaustralia-2015-16/contents/ data-visualisations

December 20, 2018

What a year! Thank you to our partners.

2018 was a memorable year for many reasons. In a challenging environment that has seen so much disruption and distraction, it is incredibly heartening to continue to see and hear so much positivity and willingness to adapt and thrive within a shifting advice landscape.

December 20, 2018

Tech beyond the FANGs

High growth technology companies have become very popular in investment portfolios over the last few years and, notwithstanding some cooling in investor appetite in recent months, they have generally performed very well. The challenge is that this can lead to a concentration developing in markets that can increase the amount of risk for investors.

December 20, 2018

Closing off new quote functionality on the ZXpress platform on 1 January 2019

After the successful release of the Zurich Adviser Portal which includes the new, online life quotes platform, we will be closing off the functionality to submit new quotes in ZXpress on 1 January 2019.

December 20, 2018

Economic and market outlook 2019: Choppy Waters

2019 is likely to be the ebb tide of the economic cycle rather than its demise, with slowing global growth, benign inflation and low bond yields. However, the year will host a number of unpredictable but critical political and geopolitical events, creating choppy waters for investors and policymakers to navigate.