This paper addresses the use of health economics in relation to posttraumatic stress disorder (PTSD) in the Armed Forces, with a view to assessing the feasibility of carrying out future evaluative studies. Although psychological and pharmacological interventions can be used to treat PTSD, no economic evaluations are known to exist. There is an economic ‘burden’ associated with PTSD and treatments require the use of scarce resources. Health economics provides tools (including cost-effectiveness, cost-benefit and cost utility analyses) to ascertain the relative efficiency of different treatment options. The paper concludes that the quality of life and resource consequences of PTSD require a better understanding of the economics of the disorder and the alternative ways to treat it.

Cawkill, Paul

Knapp, Martin

McCrone, Paul R.

English

Research Papers in Economics

 
 
 
LSE Research Online 
 
Article (refereed) 
 
 
 
 
Paul R. McCrone, Martin R.J. Knapp and  
Paul Cawkill 
 
Posttraumatic stress disorder (PTSD) in the armed 
forces : health economic considerations 
 
 
Originally published in Journal of traumatic stress, 16 (5). 519 -522 © 
2003 Plenum US on behalf of the International Society for Traumatic 
Stress Studies. 
 
You may cite this version as:  
McCrone, Paul R.; Knapp, Martin R.J. & Cawkill, Paul  (2003). 
Posttraumatic stress disorder (PTSD) in the armed forces : health 
economic considerations [online]. London: LSE Research Online.  
Available at: http://eprints.lse.ac.uk/archive/00000329       
Available online: July 2005 
 
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1
Posttraumatic Stress Disorder (PTSD) in the Armed Forces:  
Health Economic Considerations 
 
[running title: Health Economics of PTSD] 
 
Paul McCrone
1, Martin Knapp
1,2 and Paul Cawkill
3 
 
1 Centre for the Economics of Mental Health, Health Services Research Department, Institute of 
Psychiatry, King’s College London, UK; 
2 LSE Health and Social Care, London School of 
Economics, UK; 
3 Centre for Human Sciences, Defence Evaluation and Research Agency, 
Farnborough, UK (now based at Human Sciences Team, Air Platforms Group, Defence Science 
and Technology Laboratory, DERA Farnborough, UK) 
 
Word Count: 2468 (inclusive) 
 
For correspondence: Dr Paul McCrone, Senior Lecturer in Health Economics, Centre for the 
Economics of Mental Health, Health Services Research Department, Institute of Psychiatry, De 
Crespigny Park, London SE5 8AF, UK. Telephone 44 20 7848 0874. Fax 44 20 7701 7600. E-
mail p.mccrone@iop.kcl.ac.uk 
 
Funding: This work was carried out as part of Technical Group 5 (Human Sciences and Synthetic 
Environments) of the MoD Corporate Research Programme   2
Post-traumatic Stress Disorder (PTSD) in the Armed Forces:  
Health Economic Considerations 
 
 
Abstract 
This paper addresses the use of health economics in relation to posttraumatic stress 
disorder (PTSD) in the Armed Forces, with a view to assessing the feasibility of carrying out 
future evaluative studies. Although psychological and pharmacological interventions can be used 
to treat PTSD, no economic evaluations are known to exist. There is an economic ‘burden’ 
associated with PTSD and treatments require the use of scarce resources. Health economics 
provides tools (including cost-effectiveness, cost-benefit and cost utility analyses) to ascertain the 
relative efficiency of different treatment options.  The paper concludes that the quality of life and 
resource consequences of PTSD require a better understanding of the economics of the disorder 
and the alternative ways to treat it. 
 
Key-words 
stress disorders, post traumatic 
combat disorders 
health economics 
health care costs 
cost-effectiveness analysis 
    
  
 
 
3
Background 
General population studies reveal a current prevalence of PTSD of 3.6% (National 
Institute of Mental Health, 2001) with a lifetime prevalence between 1% (Helzer, Robins, & 
McEvoy, 1987) and 7.8% (Kessler, Sonnega, Bromet, Hughes, & Nelson, 1995). The latter figure 
was reported in the National Comorbidity Survey in which combat exposure was among the four 
most cited causes of PTSD. The lifetime prevalence rates in Vietnam veterans has been reported 
as 31% (Kulka, Schlenger, Fairbank, Hough, Jordan, Marmar, et al., 1990), whilst in the UK 22% 
of a sample of 64 Falklands War veterans were found to have PTSD (O’Brian & Hughes, 1991). 
In another study, Gulf War body handlers showed marked symptoms of PTSD in 50% of the 
sample nine months after the conflict (Deahl, Gillham, Thomas, Searle, & Srinivasan, 1994). 
PTSD is now a recognised problem within the military environment, even though it only affects a 
minority of serving personnel.  
 
Whilst a large number of mental health economic studies have been conducted (McCrone 
and Weich, 2001) none have been of interventions for combat-related PTSD. This focus is 
important in that PTSD is a major issue facing the military both in terms of the ‘burden’ imposed 
on the forces and also the recognition of care responsibilities to personnel. The aim of this paper 
is to address the role of health economics in evaluating service interventions in this area. 
However, it is realised that combat-related PTSD is not a disorder in itself and PTSD that follows 
other events may be no less serious. Therefore, much of what follows is relevant to PTSD in 
general. 
   4
The importance of economic evaluation 
The cost of combat-related PTSD 
The impact of PTSD is not only felt by those people who suffer the disorder, but also by 
families, employers and the wider society. Some of these impacts are ‘economic’, having effects 
associated with personal income, the ability to work, or the utilisation of treatment and support 
services. When aggregated, these economic impacts are likely to be considerable. 
 
Because of the stigma of mental illness and the avoidance of phenomena associated with 
PTSD, many servicemen and women suffer in silence and fail to seek help or discuss their 
symptoms, taking their problems with them when discharged. There may also be serious 
problems in readjusting to normal life resulting in marital, family, and social relationship 
difficulties, occupational instability and possibly antisocial and criminal behaviour. 
Homelessness is also a problem (Randall & Brown, 1994). To date no economic evaluation has 
taken place examining the financial impact on the National Health Service (NHS) of ex-Service 
personnel who leave the Armed Forces already suffering from the disorder, or who subsequently 
go on to develop PTSD following discharge. 
 
Two approaches could be used for the estimation of the social costs of combat-related 
PTSD. The ‘prevalence approach’ would involve estimating all current cases of PTSD in the 
Armed Forces and to calculate the costs for that particular year. The ‘incidence approach’ would 
involve estimating all new cases of combat-related PTSD and then calculating the costs that 
would arise over the course of the illness.  
    
  
 
 
5
An alternative to cost-of-illness studies is to estimate the impact of PTSD in terms of 
disability-adjusted life years (DALYs), which combine data on the number of life-years lost due 
to an illness with data on the number of years spent with a disability. DALYs are useful in 
making comparisons across illness groups but they do not necessarily reflect resource 
implications. 
 
Economic evaluations of PTSD services 
Economic evaluations can assist policy and practice at two levels. At the macro level, the 
scarcity of available resources relative to the many demands and needs for them necessitates 
careful consideration of the alternative uses to which society’s (or an agency’s) resources may be 
put and the resultant consequences for outcomes. This clearly raises ethical issues as to how 
resources are best allocated. At a micro level the focus is on how treatments and policies impact 
upon the lives of individual people and the activities and resource flows of different 
organisations, for example, assisting the individual clinician or care professional in deciding how 
to spread limited treatment resources across competing uses.  
 
Treatment options for PTSD 
Different interventions have been proposed for the treatment of PTSD and most of these 
can be categorised as psychological or pharmacological. Psychological interventions include eye 
movement desensitisation and reprocessing (EMDR), exposure therapy, cognitive-behavioural 
therapy, hypnotherapy, psychodynamic therapy, anxiety management and psychoeducation. 
Different types of medication have been proposed for the treatment of PTSD including: selective   6
serotonin reuptake inhibitors (SSRIs), tricyclic antidepressants, monoamine oxidase inhibitors, 
benzodiazepines and anticonvulsants.  
 
A number of trials have been conducted to evaluate the clinical efficacy of these 
medications. A meta-analysis of different interventions for PTSD, conducted by van Etten & 
Taylor (1998), included the results of 61 trials (controlled and uncontrolled) published between 
1984 and 1996. SSRIs, behavioural therapies and EMDR tend to produce greater effect sizes. The 
authors did not find that effect sizes were significantly different when treatments were divided 
according to the type of stressor that caused the PTSD. None of the studies reviewed included an 
economic component. Another study (Shepherd and Stein, 1998) did estimate the NHS costs of 
EMDR, but only included the actual therapy costs.  
 
Conducting economic evaluations 
Health economics has developed a number of tools to evaluate services, treatments and 
policies, and these are now usually deployed alongside or as integral parts of clinical studies. 
Excellent accounts of these methods are provided by Gold, Siegel, Russell, and Weinstein (1996) 
and Drummond, O’Brien, Stoddart, and Torrance (1997). Cost-offset and cost-minimisation 
analyses are the simplest of approaches. A cost-offset analysis compares costs incurred with 
(other) costs saved. A cost-minimisation approach often (but not always) proceeds in the 
knowledge that previous research has shown outcomes to be identical in the two or more 
treatment or policy alternatives being evaluated. The aim of each of these two models is to look 
for the lowest cost alternative. 
 
    
  
 
 
7
Other modes of economic analysis are more interesting and informative in that they are 
truly evaluative in measuring both costs and outcomes. The best known (but toughest to do) is 
cost-benefit analysis (CBA). This approach is unique in that it addresses the extent to which a 
treatment or policy is socially worthwhile in the broadest sense, with all costs and benefits valued 
in the same monetary units. If benefits exceed costs, the CBA would recommend providing the 
treatment, and vice versa. With two or more alternatives, the evaluation would recommend the 
one with the greatest net benefit as the most efficient. CBAs are intrinsically attractive, but 
conducting them is problematic in mental health care because of the difficulties associated with 
valuing all outcomes in monetary terms. However, methodologies are being developed which aim 
to obtain direct valuations of health outcomes by patients, relatives or the general public, such as 
‘willingness-to-pay’ techniques, where an individual states the amount they would be prepared to 
pay (hypothetically) to achieve a given health state or health gain. 
 
Cost-effectiveness analysis (CEA) is usually employed to help decision makers choose 
between alternative interventions aimed at specific patient groups. For instance, if two care 
options are of equal cost, which provides the greater effectiveness? Or if two options have been 
found to be equally effective in terms of reduced symptoms, improved functioning or enhanced 
quality of life, which is less costly? In the strict sense, a CEA looks at a single effectiveness 
dimension and the treatment with the greatest effectiveness per pound or dollar spent is then 
deemed the most cost-effective. 
 
A generalisation of CEA to multiple outcomes is cost-consequences analysis, which looks 
at costs alongside a number of outcomes rather than one single measure. This has the ability to   8
evaluate policies and practices in a way which comes much closer to everyday reality. The 
decision calculus may be more complicated than when using cost-effectiveness ratios or 
monetary measures of cost-benefit differences, but decision-makers in health care systems - from 
strategic policy-makers to individual professionals - face these kinds of decisions every day. 
 
Cost-utility analysis (CUA) is similar to CEA but it measures and then values the impact 
of an intervention in terms of improvements in health-related quality of life. The value of the 
quality of life improvement is measured in units of ‘utility’, expressed by a combined index of 
the mortality and quality of life effects of an intervention (the Quality Adjusted Life Year - 
QALY - is the best known index). CUAs avoid the potential ambiguities that arise with multi-
dimensional outcomes but are obviously more general than the single-outcome CEA. The 
transparency of the methods used to derive utility scores is a particular strength, but the currently 
available measures (which are intended for use across the widest range of illnesses) may not be 
sensitive enough to the kinds of changes usually found in mental health care to provide the sole 
indicator of impact (Chisholm, Healey, & Knapp, 1997). 
 
Discussion 
PTSD affects people in a variety of ways and can be chronic or acute. Some individuals 
will eventually experience a natural reduction in symptoms but most will require specialist 
interventions. Studies have revealed that some drug therapies, CBT and EMDR all appear to be 
effective in reducing some of the symptoms of PTSD. However, patients with combat-related 
PTSD may require a more intensive level of input than patients whose PTSD arises within the 
wider community. No study has yet looked at the wider resource consequences – either 
    
  
 
 
9
concurrently with the treatment or in the longer term - of these treatment options. SSRIs may not 
be fully effective in treating combat related PTSD, and an intensive form of CBT - or even 
EMDR - could be required. 
 
The impacts of PTSD are wide-ranging, often long lasting, and sometimes profound. To 
date, no studies have estimated the cost of PTSD, either combat-related or from a wider 
community perspective. However, if an estimation of the cost of combat-related PTSD were to be 
undertaken there are a number of important factors that would need to be considered, including: 
the prevalence/incidence of combat-related PTSD; the range of services used by people with 
combat-related PTSD; the training of staff in the specific area of PTSD in terms of treatment and 
education; the presence of comorbid psychiatric and physical disorders, including depression and 
substance misuse; the occurrence of replacement costs, i.e. replacement of mental health workers 
and their training; the possibility of litigation brought against the MoD by Service personnel; 
individual and family costs, e.g. deterioration in standard of living, guilt, fear, isolation; and the 
impact on the wider society. 
 
Cost measures and so called ‘burden-of-illness’ calculations do not though provide an 
adequate basis for decision-making. Economic evaluations - such as CEA or CUA - are clearly 
needed, for these examine cost impacts and differences in the context of outcome differences. 
Looking specifically at PTSD, its often considerable quality of life and resource consequences 
make it imperative that a better understanding is obtained of the economics of the disorder and 
the alternative treatment options.   10
References 
 
Chisholm, D., Healey, A., & Knapp M.R.J. (1997) QALYs and mental health care. Social 
Psychiatry and Psychiatric Epidemiology, 32, 68-75. 
 
Deahl, M. P., Gillham, A. B., Thomas, J., Searle, M. M., & Srinivasan, M. (1994). Psychological 
sequelae following the Gulf War: Factors associated with subsequent morbidity and the 
effectiveness of psychological debriefing. British Journal of Psychiatry, 165, 60-65. 
 
Drummond, M. F., O’Brien, B., Stoddart, G. L., & Torrance, G. W. (1997). Methods for the 
economic evaluation of health care programmes (2
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Press. 
 
Gold, M. R., Siegel, J. E., Russell, L. B., & Weinstein, M. C. (1996). Cost-effectiveness in health 
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Helzer, J.E., Robins, L.N., & McEvoy, L. (1987). Post-traumatic stress disorder in the general 
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Posttraumatic stress disorder (PTSD) in the armed forces : health economic considerations.

Posttraumatic stress disorder (PTSD) in the armed forces : health economic considerations.

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