Mental Health and Insurance - Understanding. Validating. Contributing

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How do you see yours and others mental health impacted in your line of work? This article outlines the prevalence of mental health conditions, government spending, and the role of insurance in improving services in this important area.

What is mental health? We all have mental health and our mental health changes over time. It impacts how we act, feel and think. It also helps determine how we handle stress; relate to others; and make choices. 

According to the World Health Organisation (WHO):

“…good mental health is a state of wellbeing in which an individual realises their own potential, can cope with the normal stresses of life, can work productively and fruitfully, and is able to contribute to their community” - WHO, 2014.

In the lead up to the General Insurance Seminar (GIS) 2018, which will cover Mental Health in more detail, let’s understand the past, be aware of present and explore the future, including the role of actuaries and insurance, in mental health services.

Past – Understanding the work done so far

In 2017, the Actuaries Institute released a Green Paper titled “Mental Health and Insurance”

The paper highlighted that mental health problems are very common in the community - one in five Australians will be affected with a mental health condition in any 12-month period. Due to increasing awareness of this, and heightened community understanding, societal attitudes towards insurance needs are also changing.

“Insurance is part of the infrastructure of society and not really noticed until it doesn’t work but problems raised by mental health conditions in the insurance sector are complex and multi-faceted.”  - Mental Health and Insurance Green Paper

 

Challenges for insurers, identified in the paper include:

  • Data - What can we do to improve relevant and appropriate data?
  • Diagnosis and Prognosis – With the reliance on subjective information how is this used for understanding the impact on a person’s ability to work?
  • Co –morbidities – How does insurance deal with the high prevalence of co-morbidities including potential substance abuse?
  • Potential harm - Given the claims process and potential for financial compensation can lead to ‘secondary mental harm’, how can the insurance industry improve?
  • Regulatory framework- What is the right way to go about regulation and dispute resolution given specific nature of mental health conditions?

When launching the paper and in a subsequent podcast, Lucy Brogden, our National Mental Health Commission Co-chair said:

“I’ve been involved in the mental health insurance conversation for at least 12 years, and for me this [paper] is a significant sign of progress and collaboration with the mental health sector and insurance"

There is also much other research and an objective at GIS is grounding our knowledge of the work done so far to give context to our discussions.

The Present – Validating the facts on prevalence and spending

How common are mental health issues? 

The Royal College of Psychiatrists in the UK estimates:

  • Anxiety - which involves feelings of unease, worry and fear - will affect 5% of the population at any one time
  • Bipolar disorder - which causes people to have manic and depressive episodes - will affect one in every 100 people
  • About 20% of people will become depressed at some point in their lives
  • Anorexia will affect one in every 150 15-year-old girls, and one in every 1,000 15-year-old boys
  • Schizophrenia - which can cause people to have hallucinations, delusions and paranoia - affects about one person in 100 people

Statistics published by the Australian Institute of Health and Welfare (AIHW) indicate a growth in the prevalence of mental health disorders since 1997:

Spending on mental health is significant at about $9 billion, or $373 per person for mental health-related services in Australia during 2015–16. This represents 7.7% of total government health expenditure. The total expenditure in 2015–16 includes:

  • about $5.4 billion, or $227 per person, spent on state and territory specialised mental health services (including $2.4 billion on public hospital services for admitted patients and $2.0 billion on community mental health care)
  • about $1.1 billion, or $47 per person, spent on Medicare-subsidised services.
  • about $564 million, or $24 per person, spent on mental health-related prescriptions subsidised under the Pharmaceutical Benefits Scheme and Repatriation Pharmaceutical Benefits Scheme, mostly to subsidise antipsychotic (50%) and antidepressant (37%) drugs

Mental ill-health is not a rare occurrence felt only by a few; it is a widespread phenomenon and given that insurance plays an important role in society it is an issue of relevance for actuaries.

Future– Contributing towards improvement.

Insurance has an important role to play in managing and mitigating poor mental health. It can be merely another business process to endure for those suffering mental health issues, or it can play a positive role.  For example, there is evidence that for a person suffering mental health issues the insurance and claims process itself can make the situation worse.

There is still much to learn about how insurance can contribute to enhancing mental health services and help bridge the gaps in current services.  There are technical, ethical and social issues in emerging treatments, data collection and technologies such as smart phones, wearables and date analytics. 

Our different segments such as life insurance, health insurance and the different forms of general insurance will all face challenges in these areas:

  • Analytics – What data can, and should we use to better price this type of insurance? - With more consumers using wearables does this offer opportunities?  Advancements, for example in interactive devices, may offer further opportunities in this area.
  • Private Health Insurance – Is a significant redesign needed to make a voluntary, community rated private health insurance work?
  • Workers Compensation – How do we create mentally healthy workplaces and an insurance process that improves return to work outcomes?


Collaboration

What should collaboration and information-sharing across stakeholders (including consumers, health professionals, crisis support workers, investors, government and community) in insurance look like?

New systems and technologies, such as the National Broadband Network, may give rise to new functionality which will make other interventions for mental health care possible. This could include new treatments, communication tools and processes for acknowledging, validating and assisting people’s mental health.

At GIS 2018 our conversations will appreciate the work done; imagine future solutions and identify actions that will help create conditions for improving the insurance contribution to mental health. 

Send in the questions you’d like addressed to Andrew Matthews or Cindy Cheung, Curators of the Mental Health section for GIS 2018. Our themes are:
  • understanding the research done;
  • validating the importance of the issue; and
  • exploring possibilities for actuaries and insurance to make a positive contribution in the area of mental health.
The speakers, yet to be announced, are expected to bring a diverse background to sharing their views on this topic .

CPD Actuaries Institute Members can claim two CPD points for every hour of reading articles on Actuaries Digital.

About the author

Andrew Matthews

Andrew is the Chief Actuary for Medibank Private. His team’s work is to bring together technical and human endeavor that creates conditions for informed opinion, exploring options and supporting performance.

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