Why is therapy so expensive?

If you take some time to ask mental health patients about their experiences with therapists and psychiatrists, a couple of words will find their way into the conversation: Expensive, discouraging, and difficult. The reason why this is the case has nothing to do with the quality of treatment options, but with the way our system is set up. Insurance options play a huge role in why is therapy so expensive. There are a few other very important factors such as therapists’ entry barriers and the sheer amount of paperwork that mental health therapy produces. At Consumer Opinion Guide, we go beyond researching the best online therapists for you to consult with. In this article, we analyze all of these factors that influence the price of therapy and are ready to present you with an answer to the question of why therapy is so expensive.

Why is therapy so expensive?

Dollar bills on a notebook.
Therapy takes time, knowledge, and resources – all of which can sum up to a hefty price tag.

It is not easy factoring in everything that forms the price of just about anything, not only therapy. With that in mind, Consumer Opinion Guide identifies the following factors to be most important:

  • Mental health insurance coverage
  • Barriers of entry for therapists
  • Paperwork

Prior to the advent of the COVID-19 pandemic, an average of one in five people in America suffered from a mental health issue. After the pandemic, however, there has been a huge increase in depression, anxiety, and suicidal intents. To illustrate this point, the rates of depression and anxiety have increased by more than 300% since March 2020. Suicidal ideation has been more than doubled, as well. These are all reports from the CDC (Centers for Disease Control and Prevention).

Another survey, organized by California Health Care Foundation, found that more than half of people that are facing these issues are concerned about the associated therapy costs. The main issue, patients say, is that the amount of “out-of-pocket” money that the therapy requires is simply more than they can handle.

But why is it that these expenses are so high? Are the therapists themselves responsible or is it the system that dictates these prices? The answer is, of course, a bit of both, but the system has a lot to “answer for”. Starting with:

Mental health insurance

The main issue with mental health insurance is that the insurance coverage is really poor compared to its physical counterpart. This is somewhat logical, of course, as it is not as easy to prove that you actually have a mental health issue. Furthermore, the system needs to separate which mental health issues are covered by the insurance and which are not. This is something that individual states were doing prior to the 2010’s Affordable Care Act (ACA).

You can always get an insurance plan, but what does it entail?

The end result was that most patients were left with poor coverage and reimbursement for most health plans. It set the precedent for cash pay practices, instead. While the government does what it can to bring equity to mental and physical health, the issues are not that easily solved. An example of this is the Mental Health Parity and Addiction Equity Act, which stipulates that carriers reimburse mental health at similar rates to that of physical health. Then there’s the ACA’s Essential Care Benefits clause that requires that all insurance plans must cover mental healthcare.

The issue

All of that sounds really good. But the problem is that most health plans offer extremely narrow options when it comes to mental care. This means that you don’t get to choose your therapist, the insurance company basically chooses it for you. Which is something that simply does not work with most people.

The prices can go down as therapists and psychiatrists join the networks, however. But that is the second factor that influences the “why is therapy so expensive” question.

Therapist network entry barriers

This is something that most people do not think about when considering therapy prices. The process for a therapist to get in-network that is covered by insurance is extremely arduous. In some cases, it can take up to six months! The whole process can be so intimidating to the practitioners that there is an actual need for a new industry for managing physician credentialing verification and handling the entire process for individual providers.

But it gets worse. One common practice in the insurance market is for payers to partner with third parties in order to create behavioral health plans. These, sometimes called “carve-out” arrangments offer payers the chance to increase their profit margin by outsourcing behavioral care reimbursement to specialized third-party entities. They do this to try and reduce patient service usage.

This further increases the complexity for the therapists themselves, as they now need to apply and network with separate organizations. All of this further drives the costs up. And we haven’t gotten to the worst part yet!

Why is therapy so expensive? – Paperwork is hard to handle

Woman sitting at a table, with laptop, notes, books, etc.
The overall amount of paperwork that therapy generates does incur a lot of expenses, both in supplies and storage space.

What is something that just about everyone dislikes with a passion? Paperwork. Individual mental health care practitioners need to deal with claims on a daily basis, meaning that they are always shuffling some papers around. The problem is that this paperwork is not simple. When you have to deal with multiple health plans, outdated claim management systems, and a lack of interoperability among insurance portals, it all gets quite tedious (and expensive).

Most practitioners need to hire someone to deal with all of this, meaning that the prices go up. The more your psychiatrist needs to work in a day, outside of your practice sessions, the higher the price.

Things are looking up by going digital

But there is a light at the end of the tunnel, so to speak. As integrated primary care with the co-location of mental health professionals becomes more and more prevalent in the industry, the costs are going down. The current issue is that COVID-19 is absolutely driving the demand for health services. Meaning that these institutions are over capacity.

However, there is something else that coronavirus influenced. More and more providers and patients are finding telemedicine as an excellent treatment modality. The online mental health industry experiences lower “no-show” rates and offers greater convenience to patients and therapists. But, more importantly, certain legal requirements for medical care were temporarily suspended, such as the requirement that clinicians be in the same state as the patient. The influence and benefits of online counseling¬†are steadily growing, and it brings with it lower costs as well as greater convenience and comfort. We are hoping that in the following years, the question of “Why is therapy so expensive?” disappears altogether.

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