The economic burden of mental health deterioration on Australian households: a longitudinal analysis of out-of-pocket healthcare expenditures

Md Ehsanul Haque Tamal; Kamrul Hassan PhD (Curtin, WA), AFHEA; Domenico Gasbarro; Khurshid Alam

doi:10.1186/s13561-026-00725-z

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The economic burden of mental health deterioration on Australian households: a longitudinal analysis of out-of-pocket healthcare expenditures

Journal article

Open access

Peer reviewed

The economic burden of mental health deterioration on Australian households: a longitudinal analysis of out-of-pocket healthcare expenditures

Md Ehsanul Haque Tamal, Kamrul Hassan PhD (Curtin, WA), AFHEA, Domenico Gasbarro and Khurshid Alam

Health economics review, Vol.16(1), In Press

2026

DOI: https://doi.org/10.1186/s13561-026-00725-z

PMID: 41569445

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Abstract

HILDA survey

Health economics

Mental health

Health capital theory

Longitudinal analysis

Out-of-pocket expenditure

Household surveys

Australia

Universal health coverage

Mental 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. To examine the longitudinal relationship between mental health status and OOP healthcare expenditures among Australian adults, and assess how education and income moderate this relationship. We 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. A 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. Mental 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.

Details

Title: The economic burden of mental health deterioration on Australian households: a longitudinal analysis of out-of-pocket healthcare expenditures
Authors/Creators: Md Ehsanul Haque Tamal (Author) - Murdoch Business School, Murdoch University, Perth, Western Australia, Australia. ehsan.tamal@murdoch.edu.au
Kamrul Hassan PhD (Curtin, WA), AFHEA (Author) - Murdoch University
Domenico Gasbarro (Author) - Murdoch University
Khurshid Alam (Author) - Murdoch University
Publication Details: Health economics review, Vol.16(1), In Press
Publisher: Springer Nature
Number of pages: 16
Identifiers: 991005855088007891
Murdoch Affiliation: Murdoch Business School; Ngangk Yira Institute for Change; Centre for Healthy Ageing; Personalised Medicine Centre; College of Business
Language: English
Resource Type: Journal article

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