Contingencies Online - July/August 2012

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undiagnosed depression of approximately 4. 5 percent ( 9.5% - 5.0%) for an average employer. Tying all the numbers together, an estimate of the cost of undiagnosed depressed people for this employer could be 4.5% 1,000 $3,386 0.87 = $132,560 over a two-year period on a paid dollar basis.

Approximately 45 percent of this cost is the result of excess health care costs, and the other 55 percent comes from excess days missed from work. Self-fund-ed employers incur the excess health care costs directly, while fully insured employers incur the health care costs indirectly through higher health insurance premiums. This estimate doesn’t include excess costs associated with employees attending work while sick ( presenteeism) or with a disability, the health care costs of undiagnosed depressed adult dependents, or the excess health care costs associated with dependents who might be affected adversely by a depressed family member. Our estimate, accordingly, should be viewed as a lower bound.

For an insurer, our findings represent
a potential opportunity for health care
cost savings. We estimate that an insur-
er with 1,000 covered members incurs
on average $58,373 in excess health care
costs over a two-year period for people
with undiagnosed or untreated depres-
sion. This estimate doesn’t include the
potential costs incurred by dependents
whose family member is depressed. As
a result, our estimate (again) should be
viewed as a lower bound. Absenteeism
will not affect an insurer directly, so po-
tential direct savings would be limited
to excess health care costs. With 4. 5
percent undiagnosed depressed mem-
bers from 1,000 covered insureds, this
represents 4.5% 1,000 $1,491 0.87 =
$58,373 over a two-year period on a paid
dollar basis.

STEVE MELEK, a fellow of the Society
of Actuaries and a member of the
Academy, is a consulting actuary with
Milliman in Denver.
MICHAEL HALFORD, an associate of
the Society of Actuaries and a member
of the Academy, is an associate actuary
with Milliman in Denver.

Research Limitations The methods for this study detect correlations between variables such as depression and certain cost outcomes. Retrospective claims analysis does not allow for random assignment of study members to a treatment cohort and therefore cannot directly measure causation.

The cohort of insureds who were assumed to be depressed based on the presence of an antidepressant prescription may include people who are not actually depressed but were prescribed antidepressants for off-label use to treat other conditions. The extent of off-label use of antidepressants may affect our study’s ability specifically to draw correlations between costs and depression.

The research did not attempt to study the cost of employees attending work while sick. Presenteeism has been found to be a significant portion of the overall costs of undiagnosed depression to an employer. As a result, our results should be viewed as a lower bound of the overall estimated excess costs.

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