The Enormous Cost of Failing to Treat Schizophrenia

A newly released study on schizophrenia exposes a hard truth: The greatest cost of this illness is not treatment, it is neglect. Schizophrenia affects roughly 1.2 percent of the adult population, (3.7 million), yet its annual economic burden has reached a staggering $366.8 billion. Most of this cost is not driven by medical care, but by poor, delayed, or entirely absent treatment.

The dominant narrative suggests that serious mental illness is simply expensive. The data tell a different story: Neglect is what is expensive. When schizophrenia is untreated or inadequately treated, costs explode across every public system — health care, housing, law enforcement, courts, jails, and social services — while families quietly absorb the largest share of the burden.

The consequences of untreated psychosis are visible in headlines and hidden in communities. Recent cases such as Nick Reiner, who admitted to fatally stabbing both of his parents, and DeCarlos Brown, who allegedly stabbed Iryna Zarutska to death on a Charlotte, North Carolina, train underscore the tragic outcomes that can occur when severe mental illness goes untreated. 

While most individuals with schizophrenia are not violent, untreated psychosis is associated with 5–25 percent of homicides and mass murders, 10–20 percent of homeless, nearly half of those with the illness experiencing arrest, and approximately 4 percent of the prison population. These outcomes are not inevitable. They are the predictable result of a system that consistently fails to deliver care.

Schizophrenia is a brain-based, severe mental illness, part of a group of psychotic disorders characterized by delusions, hallucinations, impaired motivation, lack of insight, cognitive deficits, and flattened emotional expression. Symptoms typically emerge in late adolescence or early adulthood. However, many individuals exhibit warning signs in childhood (known as prodromal symptoms) including social withdrawal, learning difficulties, problems with attention and memory, anxiety, depression, irritability, sleep disturbances, and declining personal hygiene. These early signs are frequently misdiagnosed as attention-deficit disorder or depression, delaying appropriate intervention during the window when treatment is can be more effective.

Inadequate treatment is directly responsible for the grim outcomes associated with schizophrenia. With early, sustained, and effective care, approximately 15–20 percent of individuals can achieve substantial functional recovery. Many others can maintain adequate social and occupational functioning with appropriate medical, housing, and psychosocial supports. About one-third will experience lifelong impairment but the prognosis is strongly tied to the quality and continuity of care. Despite this, more than 60 percent of individuals with schizophrenia receive no treatment at all.

Public policy failures drive these outcomes. Policymakers consistently underestimate the true cost of schizophrenia by focusing narrowly on direct psychiatric expenditures. This approach is fundamentally flawed. The largest expenses arise not from treatment, but from the cascading consequences of neglect: homelessness, incarceration, lost productivity, family burden, medical comorbidities, and premature death. Ignoring these costs leads to bad policy and higher overall spending.

Families shoulder an enormous, largely invisible burden. Many parents reduce work hours or leave the workforce entirely to care for an adult child with severe mental illness. This unpaid labor — often equivalent to a full-time job — comes with lost income, depleted retirement savings, and increased personal health risks. Families frequently cover housing, transportation, medical care, and legal expenses. Medical costs are higher because 75 percent of individuals with schizophrenia have at least one chronic medical condition, and three-quarters have two or more. Caregivers often require counseling themselves and experience higher rates of illness and injury due to chronic stress.

The study reported the following annual costs associated with schizophrenia:

· $104.6 billion in unpaid caregiver labor

· $60.4 billion in caregiver out-of-pocket expenses, health care costs, and lost productivity

· $88.9 billion from reduced quality of life and shortened life expectancy

· $36.7 billion in health care costs

· $55.4 billion from unemployment and reduced wages

· $5.1 billion in Supplemental Security Income

· $2.8 billion in justice system interactions

· $9.2 billion for incarceration (often without adequate psychiatric care)

· $35.2 billion for supportive housing and homelessness

These figures still underestimate the true burden. Excluded are costs for local and private social supports, food assistance, special education (considerably more than standard education), public transportation, and long-term government support for caregivers who exhaust their own resources. Nor do they capture the lifelong emotional and financial toll on siblings and children. Many states do not track schizophrenia-specific expenditures, meaning actual costs are almost certainly higher.

The consequences of inadequate care are so massive that it is health care’s version of the Pentagon’s infamous $600 toilet seat cover.

Many of these costs are preventable. Yet outdated federal policies create formidable barriers to care. Medicaid regulations, dating back to the 1960s, limit psychiatric hospitals to 16 beds and restrict lifetime inpatient coverage to 190 days. These constraints force premature discharges, often before medication can be stabilized, housing secured, or follow-up care arranged. The result is a revolving door of crisis care, frequently discharging individuals directly to the streets.

When large psychiatric institutions were closed decades ago, patients did not disappear. Instead, many with the most severe unmet needs became homeless or incarcerated. Today, the largest psychiatric facilities in the United States are county jails, including Cook County Jail, Rikers Island, and Los Angeles County’s Twin Towers. A person with severe mental illness is now more likely to be in jail than in a hospital. Incarceration, particularly solitary confinement, worsens psychiatric symptoms, increases victim assaults, and dramatically increases suicide risk. Jail is no more appropriate for schizophrenia than it is for Alzheimer’s disease.

The economic irrationality is striking. Effective psychiatric and medical care may cost $15,000–$50,000 per person annually, depending on need. Under the current fragmented system, the average societal cost balloons to $119,436 per person per year according to this new study.

What Must Be Done

1. Congress must eliminate outdated limits on psychiatric beds and inpatient stays, allowing care to be based on medical need rather than arbitrary caps.

2. States and counties must collect accurate data on schizophrenia prevalence, spending, and outcomes to guide evidence-based policy.

3. Hold states accountable for timely, and effective use of funds to treat psychosis.

4. Train physicians and schools to recognize early signs of psychosis in children and adolescents and intervene with proper care.

5. Dedicate cannabis tax revenues to psychosis and schizophrenia treatment, reflecting the well-documented increased risk associated with use.

6. Caregivers must be recognized and supported, as they provide essential labor at enormous personal cost.

7. Federal funding for schizophrenia research must increase substantially; current NIMH funding levels are grossly inadequate at $200 million, like bailing out a sinking boat with a spoon. 

8. States must ensure access to comprehensive care, including mandatory treatment with due process when lack of insight prevents voluntary participation.

9. The workforce must expand, including loan forgiveness incentives for clinicians specializing in schizophrenia.

The high cost of schizophrenia is not driven by treatment. It is driven by the failure to intervene early, the failure to provide sustained care, and the failure to recognize that neglect is the most expensive option of all both in dollars and human lives.

Tim Murphy, Ph.D., is a psychologist, board chairman of the Schizophrenia Policy Action Network and the author of three books, including The Christ Cure: 10 Biblical Ways to Heal from Trauma, Tragedy and PTSD (2023). He served in the U.S. Navy Medical Service Corps, was elected eight times to the U.S. House of Representatives, and authored major mental health reform legislation receiving wide bipartisan support.  DrTimMurphy.com and LinkedIn.