I've been experimenting with different ways to visualise the economic impact of mental health claims in Australia. We know these claims are the most expensive per claim, and we know they're growing fast. But to understand the total economic burden, you need to account for both the cost per claim and the number of claims being paid out each year.
Each bubble in the figure below represents an injury type, plotted by the number of claims (x-axis) and the median compensation paid per claim (y-axis). The size and colour of each bubble reflects the total economic cost (the claims multiplied by median compensation*). The left panel shows 2015, the right shows 2023.
Top 3 by total economic cost in 2015:
- Traumatic joint/ligament and muscle/tendon injury — $493M
- Musculoskeletal and connective tissue diseases — $288M
- Mental health conditions — $212M
Top 3 by total economic cost in 2023:
- Mental health conditions — $1,035M (+388%)
- Traumatic joint/ligament and muscle/tendon injury — $811M (+65%)
- Musculoskeletal and connective tissue diseases — $527M (+83%)
In 2015, mental health conditions were a mid-sized bubble sitting in the upper left. High cost per claim, but relatively low volume. Between then and 2023, that bubble moved sharply to the right and upward. It's now the single most expensive injury category overall at over $1 billion in total estimated cost.
Traumatic joint and ligament injuries still lead in volume, but the cost per claim is comparatively low. So even though these types of claims are almost 3x more common than mental health claims, mental health claims are still more costly overall.
It's this combination of high cost per claim and rapidly growing volume that makes mental health claims really important to pay attention to.
*Total economic cost is ideally computed using the average cost per claim rather than the median, but the median is actually a conservative estimate here. Compensation costs are always positive, so the distribution is very likely positively skewed. This means the average cost per claim will be higher than the median, making the true total economic cost even larger than what's shown.