ArticleHealth economics review2026
The economic burden of mental health deterioration on Australian households: a longitudinal analysis of out-of-pocket healthcare expenditures.
Article in Health economics review, 2026. The graph could read no effect estimate from its abstract, so it casts no vote on the map. Not yet cited in PubMed.
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Abstract
backgroundMental health conditions impose substantial economic burdens on healthcare systems globally, with growing evidence indicating disproportionate impacts on household-level out-of-pocket (OOP) expenditures. Despite Australia's universal healthcare system, the financial burden of mental health conditions on households remains underexplored.
objectiveTo examine the longitudinal relationship between mental health status and OOP healthcare expenditures among Australian adults, and assess how education and income moderate this relationship.
methodsWe analyzed 17 waves (2006-2022) of the Household, Income and Labour Dynamics in Australia (HILDA) survey, encompassing 57,647 person-year observations from 3,391 unique individuals. Mental health was measured using the Mental Health Inventory-5 (MHI-5) scale and newly proposed expanded MHI-9 scales. We employed fixed-effects panel regression models and instrumental variable analysis to address unobserved heterogeneity.
resultsA one-unit decrease in MHI-5 score is associated with 0.18-0.25% increase in inflation-adjusted OOP healthcare expenditure, equivalent to AU$2.10-$3.00 per unit decline, with a 10-point decline in MHI-5 costing households an additional AU$21-$30. Instrumental variable estimates revealed larger causal effects of 0.80-1.00%. Individuals with good mental health and higher education demonstrated expenditure patterns consistent with Grossman's health capital theory, while those with poor mental health showed disrupted relationships between education and healthcare spending. Urban residents faced 11.00% higher inflation-adjusted OOP costs than the rural residents.
conclusionsMental health deterioration significantly increases household healthcare expenditure burdens in Australia. Traditional health economics theories apply primarily to individuals with good mental health, indicating the need for targeted rather than universal policy approaches.
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