Measuring the population-level relationship between compromised mental health and diabetes care remains an important goal for clinicians and health care decision-makers. We evaluated the impact of self-reported unmet psychological need on health care resource utilization and total health care expenditure in people with type 2 diabetes. Patients who reported unmet psychological needs were more likely than those who did not to incur a higher annual medical expenditure, have greater resource utilization, and have a higher risk of all-cause mortality.