Subsidize a Diagnosis, Get More Diagnoses

This episode of the Cato Podcast examines the dramatic rise in autism diagnoses in the United States over recent decades, arguing that the surge is not due to a true 'epidemic' of autism but rather to shifting diagnostic criteria, financial incentives in public health programs, and systemic overdiagnosis. Ryan Bourne is joined by Geoffrey Singer and Adam Omri, who explain that autism is a genetically driven condition with stable prevalence, and the 400%+ increase in diagnoses since the 1990s is better explained by the broadening of diagnostic standards—especially the 2013 shift to Autism Spectrum Disorder (ASD) in the DSM-5—and the financial rewards tied to diagnosis. Medicaid and the Affordable Care Act’s mental health parity provisions have created powerful incentives for clinicians to diagnose more cases, particularly mild ones, to access funding for Applied Behavior Analysis (ABA) therapy. The discussion reveals that billions in Medicaid spending have grown rapidly, with evidence of fraud and excessive treatment hours, especially in states like Minnesota. The hosts warn this is not an isolated case—similar patterns of overdiagnosis plague conditions like ADHD, diabetes, and CKD, driven by lowered diagnostic thresholds and financial incentives. They caution that medicalizing ordinary behaviors risks demotivating individuals and distorting healthcare priorities. While acknowledging the importance of mental health awareness, they advocate for reforming incentive structures, reducing federal overreach in Medicaid, and rethinking how psychiatric diagnoses are defined and reimbursed to prevent waste and preserve individual autonomy. Key takeaways include: 1) Autism prevalence is genetically stable—diagnostic inflation, not biological change, drives rising numbers; 2) Financial incentives from Medicaid and mental health parity encourage overdiagnosis, especially of mild cases; 3) Diagnostic criteria have broadened significantly since the 1990s, particularly with the DSM-5’s ASD framework; 4) Overdiagnosis extends beyond mental health to physical conditions like diabetes and CKD, driven by lowered thresholds; 5) Excessive therapy hours and improper payments point to systemic fraud and weak oversight; 6) Federal reimbursement disincentivizes state-level accountability; 7) Labeling ordinary behaviors as disorders can harm patient agency and motivation; 8) Reforms should focus on aligning incentives with quality, not volume, of care.