Autism isn’t the problem. The system is.

The multi-billion-dollar autism bill is not the disease, but a symptom of a system that rewards diagnosis over disability and expansion over recovery.

Autism costs the Australian National Disability Insurance Scheme (NDIS) more than $10 billion annually. A record 62,500 people diagnosed with autism were added to the scheme last year. Autism now accounts for 43% of NDIS participants. Those are staggering figures for a condition once considered rare. They also raise an uncomfortable question: how did a compassionate scheme designed to support people with severe and permanent disabilities come to be dominated by a single diagnostic category?

The standard explanation is greater awareness. Doctors are better at recognising autism. Families are more willing to seek assessment. Society is more open about psychiatric conditions. This may sound reasonable, but it does not explain the pattern.

If awareness were the principal driver, growth would be distributed across all psychiatric categories. Instead, my recent analysis of Australia’s mental health system (Drowning in a Sea of Diagnoses) found that the incidence of serious conditions (psychoses, profound intellectual disability) is stable or declining. Expansion is concentrated precisely where diagnostic thresholds are most ambiguous: high-functioning autism, developmental delay, and attention disorders.

Environmental toxins, vaccines, and prenatal pain medications have been blamed, but research does not support these claims. The most persuasive explanation is diagnostic inflation.

In the 1960s, autism was estimated to affect roughly one in 2,500 children and a diagnosis required early onset and severe cognitive and emotional impairment. In 1994, Asperger’s syndrome, a milder version, was added. In 2013, Asperger’s and autism were merged into autism spectrum disorder, further broadening the category.

Allen Frances, the psychiatrist who wo led the development of the autism spectrum disorder, has since acknowledged that the criteria have become ‘exceedingly broad’, capturing children whose behaviours would once have been described as shy, awkward or eccentric.

The policy consequences are significant. Non-verbal children requiring lifelong supervision now share a diagnostic label with those almost certain to live independently. The result is highly inequitable. As the Lancet Commission on Autism observed, when all autism is treated as equivalent, resources are spread thinly and ‘those with the most severe impairments’ go without adequate support.

Explosive growth is not unique to autism. Prescriptions for attention-deficit hyperactivity disorder (ADHD) have risen from roughly 500,000 annually to 4.5 million in little more than a decade. Around one in five Australians now meets the criteria for some or another mental disorder. Each condition follows the same trajectory: diagnostic boundaries expand, numbers rise, resources flow to those able to navigate the system rather than those with the greatest functional impairment.

Why does this continue? Because diagnosis has become the gateway to incentives.

Clinicians are paid to assess and certify. Diagnoses unlock lucrative NDIS packages. These often include a support worker to accompany recipients to shops, the barber or the cinema. Schools whose pupils are diagnosed with ADHD receive disability funding, and governments get to appear responsive and compassionate.

The system rewards diagnosis and dependence, not recovery or independence. A provider whose client becomes self-sufficient loses revenue. A family whose child learns to go shopping alone leaves an average of $70,000 per year behind.

For those with mild conditions, the system is not only expensive but also corrosive. Labelled individuals come to see themselves as permanently impaired rather than capable of growth. Individual agency gives way to identity.

The Australian Productivity Commission found that roughly half of publicly funded care, including accompanied social activities, flows to people with mild or moderate symptoms, while those with severe, life-threatening conditions receive fragmented support or none at all.

Current reform efforts do not address this structural issue. The government has created a new program for children under nine called Thriving Kids and funded it with billions of dollars. Details are sketchy, but even if successful, children over nine who make up more than 80 per cent of those with psychiatric diagnoses will remain within the current mental health system, competing for the same pool of resources. Tightening eligibility criteria alone will not solve the problem. Without altering incentives, it simply produces more elaborate diagnostic justifications.

The NDIS was a well-intentioned scheme created to provide support for people with severe disabilities. Restoring that purpose requires redesign, not administrative reform. Support should be allocated according to functional impairment, whether a person can manage daily living, communicate effectively or sustain employment. This is the method NDIS uses for physical disabilities, and it should apply to psychological ones as well.

Interventions should be limited to those proven to work. Providers should be rewarded for achieving measurable improvement and independence. Assistance for milder presentations should be time-limited and regularly reviewed. As functioning improves, support should step down, freeing resources for people with profound and enduring disabilities.

The $10 billion autism bill is not the disease, but a symptom of a system that rewards diagnosis over disability and expansion over recovery. Until funding is severed from psychiatric diagnoses, the NDIS will continue to expand while those it was designed to protect compete for resources in an increasingly crowded scheme. That is not a design flaw. It is the system working exactly as built.

An earlier version of this article appeared in the Australian Financial Review.

Link to full Report: Drowning in a Sea of Diagnoses