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The lifesaving dollar —  how will COVID-19 impact our mental health from a health economics perspective?

The lifesaving dollar — how will COVID-19 impact our mental health from a health economics perspective?

From the frontline to the home, COVID-19 has had a significant impact on the mental health of all Australians. So, what’s happening economically?


For many years, health economics researchers have been investigating how to ensure everyone has access to appropriate and cost-effective care.

Health economists work collaboratively with a wide range of partners, including other health researchers (e.g. clinicians, epidemiologists, and statisticians), policymakers, and consumers to ensure that our healthcare system is the best that it can be for our local context.

This means ensuring that sufficient resources are allocated to health as opposed to other areas of public budgets, and even within health that the right mix of preventive and treatment interventions are delivered to our population.

Now, during this pandemic, health economics is crucial to developing real-word solutions as ever.

Greater investment in the right support measures is key, say Deakin University researchers.

A collaborative method

Director of Deakin Health Economics – which sits in the Institute of Health Transformation and the School of Health and Social Development – Professor Cathy Mihalopoulos says a holistic perspective is vital for our economic understanding of how to optimally tackle the challenges which COVID-19 is presenting us with.

“To me, it seems mental health, health impacts and the economy have all been considered during COVID-19 – but separately and not within one economic exercise.”

There are many impacts that can be attributed to both the pandemic itself, as well as the consequences of addressing the spread of the pandemic.

More vulnerable people may avoid going to the doctor for health concerns, for instance, that may end up being acute cardiovascular events or other diagnoses such as cancer because they’re afraid of infection.

“We are starting to see doctors reporting a reduction in cancer diagnoses, not because they no longer exist but rather because people are not being screened.

“This means that when these cases do present to care they will probably be more advanced and harder to treat.

“Of particular importance is the fact that the added burden of mental health problems will continue beyond the amelioration of COVID-19 itself.

Image of man looking sad and tired

“The impact on the economy will likely last for quite a while and we are already in a recession.

“We know from prior research that mental health problems and suicide rates increase during economic downturns.

“So there is not only the mental health impacts of living through a pandemic itself (including increased rates of post-traumatic stress disorder) but also mental health impacts due to the economic impacts of addressing the pandemic.

“The extra problem for mental health is that its curve will continue to rise, even as the COVID-19 curve flattens,” Professor Mihalopoulos says.

“It is likely the case that ill-health associated with mental health impacts due to the pandemic and the associated economic impacts will last a lot longer.

“If we don’t consider all these impacts together – which we can do using the economic health outcomes like quality-adjusted life years – we can’t really compare the ‘size’ of each health impact.

“These calculations are yet to be done, as they will take a bit of time and funding to do properly.”

Flattening the mental health curve

Amid messages to stay home and flatten the curve, there is also the challenge of lessening the predicted rise in mental health issues.

What approach would work best?

Do we focus on increasing the capacity of our mental health care system workforce and develop new methods of pandemic training? Or even provide subsided support services for public and frontline health workers?

Perhaps it means extending support for pre-existing mental health clients to prevent an escalation in poor health.

Well, Professor Mihalopoulos says there’s no one solution.

“We need greater investment in all interventions and approaches, certainly the ones that we know are effective and cost-effective.

Image of coins in a plant pot

“But just as importantly, we need a dynamic system that invests in research for new approaches, because we know that we don’t yet have all the answers as to how to address all mental health issues.”

Recent interventions have even seen a boost for telehealth.

Broadly defined, telehealth often involves virtual consultations where patients can dial in via mobile phone or computer to speak with their doctor, or interact with them through a screen from the comfort of their home.

While this is certainly welcome, Professor Mihalopoulos urges that such interventions also need to be evaluated to ensure they are reaching the people that need them and are having the desired impacts.

“While greater investment in telehealth is needed, we know that this is only one approach that will help, and for so many people it is simply not enough.”

So, what is our current funding?

From the mental health plan modelling of the National Cabinet, experts predict an extra 370,000 Victorians alone will experience mental health issues as a result of the pandemic in the next two years.

Mental health services have secured an extra $74 million as part of the Federal government’s $1.1 billion coronavirus health and domestic violence package. With a further $48 million for research and awareness more recently. But are these lifesaving dollars?

“$74 million really as well as the more recently announced $48M isn’t very much and a lot of it has gone to telehealth and ehealth types of interventions,” Professor Mihalopoulos says.

“From a COVID-19 perspective this has made sense, as we need to consider social/physical distancing guidelines.

“However, this amount is probably nowhere near the sum needed as recent evidence highlighted by both the Victorian Royal Commission in Mental Health and the Productivity Commission, has shown there is already quite a lot of unmet and under-serviced needs to begin with.”


Ready to learn more? Tune in to Professor Cathy Mihalopoulos’s webinar ‘The economic case for promoting mental wellbeing and preventing mental ill-health in the aftermath of COVID19”, with Prevention United.

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