Count me among those who thought medical science had shown that poor sleep and insomnia caused poor physical, as opposed to mental, health. In fact, according to research by the NIH (ungated pdf), that’s not what science tells us.
In estimating the  consequences of insomnia, it is difficult to separate the effects of insomnia from the effects of comorbid conditions. For example, a person with joint pain who has problems sleeping may seek health care for the arthritis rather than for sleep problems, assuming that the pain accounts for the sleep difficulty.
Only a few studies have examined the effects of insomnia on functioning in everyday life. These studies suggest that insomnia reduces quality of life and hinders social functioning. Two studies have identified a relationship between chronic insomnia and work days missed. Other studies indicate that insomnia is related to impaired work performance. There is at least some evidence of a relationship between chronic insomnia and impaired memory and cognitive functioning.
Laboratory studies indicate that sleep loss results in impaired psychomotor and cognitive functioning. There is evidence that chronic insomnia or the drugs used to treat it contribute to the increased number of falls in older adults.
Insomnia usually appears in the presence of at least one other disorder. Particularly common comorbidities are major depression, generalized anxiety, substance abuse, attention deficit/hyperactivity in children, dementia, and a variety of physical problems. The research diagnostic criteria for insomnia recently developed by the American Academy of Sleep Medicine indeed share many of the criteria of major depressive disorder. Studies to explain these overlaps require determining how often insomnia precedes the disorders with which it is asso ciated and whether it continues to exist if the other disorders go into remission.
Don’t get me wrong, it is abundantly clear that insomnia is a mental health issue. I can tell you from experience, as can the studies, that lack of sleep makes people feel, well, crappy and crazy. I’m not trivializing that. Mental quality of life is important.
It is also plausible that poor sleep could cause poor physical health. But, according to the 2005 NIH summary quoted above, studies have not shown such a causal link, except, perhaps, with falls in older adults. If there were a causal connection from poor sleep to poor physical health, it would be hard to tease out observationally since poor health (mental and physical) can cause poor sleep. To what extent does poor sleep itself cause poor physical health? We don’t know. Maybe it doesn’t. Anyone interested in enrolling in a long-term (like, multi-year) randomized trial of sleep deprivation? I am sure this would be hard to pull off.