The NDIS shifts almost $27m a year in mental health costs alone, our new study suggests

The National Disability Insurance Scheme (NDIS) was set up in 2013 to help Australians with disability live more independently, and participate more in work and community life.

The scheme was not meant as a substitute for health care, let alone to save health dollars.

But in certain circumstance, we show it can.

We’ve published the first study with large-scale data to shed light on how the NDIS rollout affected participants’ use of the health system.

As debates continue about the cost and sustainability of the NDIS, here’s what we found.

There’s a blurred line

The NDIS provides personalised funding for people with disability to access non-clinical supports. This can include access to transport, speech therapists or accommodation, for example.

But in practice, the line between non-clinical support and health care can be blurry.

For example, some therapies delivered by a psychologist can be funded through the NDIS or Medicare.

This raises an important issue of whether the NDIS has changed how people with disability use the health system.

If some health care shifts to the NDIS, use of Medicare-funded health services may decrease.

But if access to services improves through the NDIS – for example, by providing transport to medical appointments – this might allow people with disability to address previously unmet health needs, increasing use of the health system.

As national discussions continue about the cost and sustainability of the NDIS, we need to understand whether the scheme reduces or increases pressure on other sectors, in particular the stretched health system.

What we did

Our study used anonymous data from hundreds of thousands of people enrolled in the NDIS. We then linked that data to use of prescriptions on the Pharmaceutical Benefits Scheme and medical services on the Medicare Benefits Schedule.

We examined visits to GPs, specialists, mental health services, allied health services, as well as mental health prescriptions. We did this up to 18 months after entry into the scheme.

We compared NDIS participants living in areas where the NDIS was rolled out early to participants where it was rolled out later. We assumed differences after the rollout were due to the NDIS.

What we found

The NDIS was not expected to influence services that only medical doctors can provide. Our results reflect this. We show use of the NDIS did not significantly affect visits to GPs, specialists, or mental health prescriptions.

However, the NDIS reduced subsidised mental health services (such as those provided by psychologists) by 13% per person per quarter. Another way of expressing this is there were 0.0348 times fewer uses of mental health services per person over the same time period.

For allied health services (such as speech therapists or occupational therapists) there was an 8% reduction or 0.0165 fewer uses per person per quarter.

The reductions in mental health or allied health services may seem small. But the impact becomes clearer when scaled up nationally and in dollar amounts.

For mental health services alone, let’s assume an average cost of A$250 per session, including a Medicare rebate of $98.95. This means an out-of-pocket cost of $151.05 per session.

After the NDIS rollout, we calculated this translates to an estimated $10.6 million decrease in Medicare expenditure and $16.3 million in out-of-pocket costs a year. That’s $26.9 million a year among about 700,000 NDIS participants.

What can explain our findings?

Our findings suggest mental health and allied health supports funded through the NDIS may be replacing some therapies that were previously accessed through Medicare.

The reduction in the mental and allied health services is more likely to suggest a substitution rather than an improvement of health. This is because we would expect changes in health conditions to be associated with changes in the first point of contact in the health system, usually the GP, yet we found no such changes.

One reason for the substitution could be that the NDIS usually provides broader, fully covered services tailored to individual needs.

Previously, individuals relied on mental health treatment plans or chronic disease management plans from Medicare, which offered limited visits and often incurred out-of-pocket costs.

Our findings suggest the expanded coverage and personalised nature of NDIS-funded supports make these a more attractive option for participants.

Read more: 'Thriving Kids' could help secure the future of the NDIS. But what will the program mean for children and families?

We don’t yet know whether these shifts of mental or allied health services to the NDIS benefits participants more so than access via Medicare, or impacts the total government expenses for those services.

We also don’t know whether the total use of mental and allied health services – either funded by the NDIS or Medicare – increases or decreases. That’s because we didn’t have data when we conducted our research on the types of services NDIS participants use.

How can we use our findings?

Some people see the rising costs of the NDIS as a “blowout”. Some see the scheme as an investment, delivering benefits across different sectors. This includes in employment for participants and caregivers, or early interventions for children with developmental concerns to save supports down the track.

Our study offers the first clear evidence of how the NDIS interacts with health care, showing where the social support the NDIS provides may ease pressure on other services.

As governments consider the future of the scheme, understanding these cross-sector effects will be key to building a sustainable NDIS that delivers support where it is needed most.

We’d like to acknowledge Dennis Petrie and Gang Chen, co-authors of the paper mentioned in this article.