The Mental Health Care Cartel

Mental health care is becoming an ever-more important part of our healthcare system, even more so during and post-COVID as we begin to recognise the effects of our mental health on our overall well being. So, why is it that such an important aspect remains largely unaffordable, especially when one considers the relationship between low incomes and poorer mental health?

Perhaps the most elementary law of economics is supply and demand, which states that in the long run, absent intervening factors, the market supply will move to meet demand, such that there is no “economic rents” left to acquire.

In simple terms, we expect producers to continue to move into the market until the price that can be charged for the good is equal to the marginal cost, the cost of producing the last unit. The key to achieving equilibrium is to allow market forces to allocate resources and in the case of mental health care and health care more generally, there is a great deal of intervention in the market.

Of course, we can not simply ramp up our production of clinicians as we can widgets from a factory, however, we can ask why the number of physicians entering the field is so limited. The intention behind the intervention is none of our concern and in fact, it is best to assume the best of those who defend the status quo have the best intentions.

Let us begin with what is preventing supply from expanding.

There are several avenues through which one can become a mental health care professional (MHP), each of which is regulated by a different board. At its most basic, the process to become a MHP is a several year process whether one aims to become a psychologist, clinical psychologist, therapist or another type of MHP. The process to become a practising psychologist is a six year process, whether with the 4+2 program which is now being retired, which saw students undertake a bachelor degree, honour year and then two years of supervision or the 5+1 pathway which requires a five year degree pathway such as a Bachelor and Masters with a year of supervision. Here we can see three key issues driving up the costs of seeing a MHP.

Firstly, due to the number of qualifications one requires to become a MHP, MHP accumulate significant debt whilst also delaying their earnings. Therefore, practitioners are incentivised to charge a higher price in order to pay off their debts and offset their delayed earnings.

Secondly, the number of practitioners which can enter the field in any period of time is limited by the number of supervisors available. One can assume that supervisors will limit the number of trainees they oversee as a method of regulating the supply as would a cartel and therefore the price they can charge for their own services or to ensure that practitioners meet a consistent standard.

Lastly, these pathways require that MHP do a research thesis, which has no obvious relation to being practising clinicians, increasing the amount of time they must be at university and reducing opportunities to gain experience with dealing with actual mental health symptoms. The requirement of a research thesis also reduces the potential supply of individuals who could be by MPH by selecting for skills which are not necessary to be a clinician but instead an academic psychologist.

The difficulty of entering the field is not the only factor which reduces the supply of MHP and increases the costs of accessing mental health care. The artificial bottlenecks have another poor effect, other than creating long waiting times, it increases burnout as physicians overextend themselves in caring for their clients, further reducing the supply.

Of course,a sustained increase in demand will cause an increase in price, especially because the number of clients can increase at a much greater rate than the number of physicians can in the same amount of time. However, in the long run as the mental health of the client increases and they acquire strategies to help them deal with their negative emotions, one would assume their willingness to pay for therapy will decrease. Once it falls below the price charged, they will seek substitutes to therapy, opening their slot for a new client. Therefore, whilst sudden events such as COVID will cause an increased demand for mental healthcare, in the long run, the turnover rate should be sufficient if the number of mental health care professionals entering the field is approximate to the number of clients entering and physicians leaving. However, as noted, the number of mental health care professionals entering is not controlled by the market, but by the assortment of psychological boards within Australia and so the high price we are seeing currently is no surprise.

To deal with the high cost of mental health care in Australia, the government has offered subsidised mental health care sessions under its rebate system, providing 10 sessions with the rebate down from the 20 which has been offered during COVID.

This is nothing more than a bandaid, papering over the aforementioned issues which are driving the costs of mental health care. Subsidising mental health care provides no real solution for the issues driving up the cost and ultimately driving up the demand for mental health care whilst supply remains unable to catch up.

The issue of how to provide more affordable care is a complex issue and I will revisit it in another post on Conflicting Ideas in the future.