Cost Containment Focus: How to Control Behavioral and Mental Health Costs in a Self-Insured Plan


Note: Behavioral Health and Mental Health are often used interchangeably. While these terms are closely related, there are slight differences.
Mental health relates to individuals’ thoughts, feelings, and general psychological state. This includes mental health conditions like depression and anxiety.


Behavioral health is slightly broader and goes on to encompass behavioral disorders that are not necessarily driven by mental illness. Behavioral health issues include substance use disorders, gambling addiction, and eating disorders. Behavioral Health also includes some developmental issues like autism spectrum disorder and attention-deficit/hyperactivity disorder (ADHD). The lines between these terms can be blurry. Most behavioral health issues, for example, are related to some underlying mental illness. Behavioral health will be used as more of an umbrella term here to include mental health.

What is the impact of behavioral health issues on society?


Behavioral and mental health conditions are not uncommon. According to the Centers for Disease Control and Prevention (CDC), more than 50% of Americans will be diagnosed with a mental health disorder at some point in their lifetimes. 1 in 5 Americans experience a mental illness in any given year. While these issues often go unseen, their impacts on employees and their families are wide-reaching.


Individuals struggling with behavioral and mental health issues may have difficulties managing interpersonal and professional relationships. Treatment for mental health issues can be expensive, and that financial burden is compounded by workplace challenges like absenteeism and lost productivity. Behavioral and mental health also intersects with physical health and well-being.


In a self-funded insurance plan, these costs can be controlled and reduced, resulting in substantial savings. But in a traditional, fully insured plan, you have no data on these costs or any means of controlling them. The costs are simply rolled over into your plan, leading to substantial premium increases on your next renewal.

How Are Employers Addressing Behavioral Health Issues as Part of Their Self-Funded Insurance Plan?


Many employers have recognized the impact that behavioral and mental health issues have on their workplaces and the costs to their insurance plans. Just like physical health conditions, behavioral and mental health conditions can impact anyone.


Understanding the costs associated with behavioral and mental health issues is crucial to understanding broader mental health trends in the employer benefits space. This allows you to proactively address these risks to reduce cost and create better care outcomes for your employees.

Financial Costs Related to Untreated Behavioral and Mental Health Issues


Left untreated, conditions like major depressive disorder, schizophrenia, and bipolar disorder may worsen and lead to hospitalization. For example, Roundstone’s CSI Team reports that inpatient treatment for an individual with a major depressive episode can cost an employer’s health plan a significant amount, with the individual paying thousands out of pocket.
Substance use disorder (SUD) often flies under the radar but can also be a financial hit for any health plan, including employer self-funded insurance plans. Opioid addiction can cost hundreds of thousands of dollars. Even a single Emergency Room visit and treatment for alcohol withdrawal can become a high cost.
These numbers will be no surprise to healthcare economists. A 2021 study published in JAMA found that emergency department visits and hospital stays associated with substance use disorder cost $13 billion in 2017 alone.


Impact on Physical Health


Employer costs associated with behavioral and mental health conditions are not limited to direct treatment. Behavioral and mental health conditions tend to be associated with physical comorbidities. For example, adults diagnosed with Attention Deficit and Hyperactivity Disorders are at a higher risk for conditions like liver disease, obesity, and pulmonary disease. Behavioral and mental health issues are often associated with chronic conditions like heart disease, hypertension, gastrointestinal disorders, and diabetes. An analysis performed by Milliman examined a cohort of 21 million people. 10% of individuals in that population drove 70% of all healthcare spending. 57% of the individuals in that high-cost population had at least one diagnosis associated with behavioral and mental health.

Impact on the Workplace


Behavioral and mental health issues can also have far-reaching impacts on the workplace. Left untreated, behavioral and mental health conditions can negatively impact employee productivity. For example, according to research cited by the CDC, depression tends to interfere with individuals’ abilities to complete physical tasks. It can also reduce individuals’ cognitive functions.


A 2021 analysis published by NORC at the University of Chicago found that absenteeism and turnover associated with behavioral and mental health issues can cost employees thousands of dollars per employee per year. That same study goes on to estimate that organizations who invest in mental health resources for their employees can expect to see returns of $4 for every $1 invested.

Solutions to Control Behavioral and Mental Health Costs in a Self-Funded Insurance Plan


Employers who self-fund their employee health insurance have the flexibility to implement solutions that will help protect their employees and the bottom line.
When it comes to preventing catastrophic behavioral and mental health claims, accessibility is key. Self-insured employers can implement the following strategies to remove barriers to preventive care:


  • Make preventative care affordable: Limiting or eliminating member cost-sharing for therapy removes financial barriers to care. Lack of affordability leads members to defer needed preventative care. According to research published by McKinsey, individuals who report having a mental health condition but have not sought treatment are 60% more likely to view mental health services as unaffordable.


  • Invest in a good Employee Assistance Program (EAP): EAPs are designed to help employees address any challenges they may face. Most EAPs cover a set number of therapy sessions for employees facing issues like marital problems, depression, and stress. These services can also help employees access discounted childcare, elder care, financial counseling, legal counseling, and other services.


A good EAP should hit a number of key criteria. It should provide resources to help publicize its services and drive member engagement. The program should include a wide network of providers and be able to coordinate with your health plan’s network. This is especially critical for when your employees need long-term therapy beyond the number of covered sessions. A high-quality EAP will also provide multiple avenues to care. Access to in-person, telephonic, and video counseling are table stakes.





Gaps in treatment for behavioral and mental health issues can have drastic consequences for employers, employees, and the workplace as a whole. These consequences can be as direct as an inpatient hospital stay stemming from untreated bipolar disorder or as indirect as an individual leaving their position due to burnout.
Fortunately, employers who use self-funded insurance have options.


Providing employees and their dependents with convenient and affordable access to high-quality behavioral healthcare today can help prevent tomorrow’s high-cost claims in a self-funded insurance plan. Analyses published by institutions like JAMA and Deloitte estimate positive returns for every dollar employers invest in behavioral health benefits for their employees.


Beyond dollars and cents, offering robust behavioral health benefits to your employees sends an important message – that you care about your employees’ physical, emotional, and mental well-being.
Roundstone’s CSI Team is here to help. If you have any questions about items discussed here or other ways to reduce spend in a self-funded insurance plan, please reach out to your Roundstone Relationship Manager.




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