Mental Health Parity Studies – A Summary of Findings
Federal Employees Health Benefits Researchers examined results of the elimination of caps on mental health coverage by health plans in the Federal Program/Howard Goldman, M.D., Employees Health Benefits Program (FEHBP) in 2001. The plans used managed care restrictions on mental health University of Maryland School of Medicine coverages. The researchers compared claims data from random samples of 20,000 members in each of seven FEHBP
et. al. (Reported in New England Journal health plans submitted two years before and two years after the elimination of the caps. In addition, researchers
of Medicine, March 2006) examined claims data from a matched comparison group of members in health plans offered by large private employers
that did not eliminate the caps. According to the study, the proportion of participants in FEHBP health plans who used
mental health services increased from 1.35 percent to 2.75 percent of members in the two years after the elimination of
the caps. However, use of mental health services also increased among participants in private health plans. In addition,
the study found that, although spending for mental health services increased among participants in FEHBP health plans,
the increase was similar to that for participants in private plans and "was not attributable to the requirement for parity.”
Researchers attributed the increased spending for mental health services to inflation and increased use of services. The
study also found that out-of-pocket spending for mental health services for participants in all but one of the FEHBP health
plans decreased after the elimination of the caps, with individual savings that ranged from $8.78 to $87.06 annually. The
researchers concluded that the “HMO-like care management ... appeared to be an important element in controlling
spending" and "a reduction in co-payments and other out-of-pocket charges to patients means that insurance premiums
might increase slightly.” Study co-author Richard Frank, a health care economist from Harvard University, estimated the
potential increase in health insurance premiums at less than half of 1%.
Substance Abuse and Mental Health Mathematica Policy Research Institute conducted four analyses for SAMHSA: a comparison of state parity laws; a case Services Administration [SAMHSA], study of analyses in five states with parity laws to determine the early experiences of key stakeholders (representatives
Department of Health and Human from 47 organizations in the study states, including insurers, employers, employer associations, and insurance Services, March 1998 (Study Conducted regulators); a review of actuarial studies conducted in 1995 and 1996 of the costs of federal parity legislation; and
by Mathematica Policy Research development of an updated actuarial model to predict the costs of several full and partial parity benefit options. The
Institute) study concluded that under an HMO-administered plan, parity in cost sharing would increase average premiums
by .3%, parity in service coverages would increase average premiums by .2% and full parity would
increase average premiums by .6%. The study also found that parity laws seemed to have had only a small
impact on premiums, with increases particularly limited in plans using managed care.
Mercer/Foster Higgins, National Survey of A nationwide survey by Mercer/Foster Higgins benefit consultants found that as a result of tighter management of mental
Employer-Sponsored Health Plans (Meta health and substance abuse benefits, mental health and substance abuse spending had dropped to 3 percent of Analysis), 1997 employers' total medical plan outlays in 1997, compared to about 10 percent in 1988.
Congressional Budget Office, 1996 The Congressional Budget Office, which had forecast a 4 percent increase for the original broad Domenici-Wellstone
proposal, estimated that the finally enacted law would result in a cost increase of only four-tenths of 1 percent.
Moreover, it said, after many employers reduce other mental health benefits to compensate for the cost of removing the
dollar ceilings, the law would increase employer costs only sixteen hundredths of 1 percent.
Alan L. Otten, Milbank Memorial Fund, Otten reported on parity findings in three states. A Rhode Island behavioral managed care company claimed its costs
June 1998, Rhode Island, Maryland, increased less than 25 cents per member per month, and state officials estimated mental health costs rising
Minnesota overall only one third of 1 percent. In the first year that Maryland's parity law was in effect, one managed care
company saw a small increase in costs; costs fell back the second year to the pre-parity level; and another
Maryland company reported increased costs of less than 1 percent. When the Massachusetts Group Insurance
Mental Health Parity Studies – A Summary of Findings
1993 put in a managed behavioral health care carve-out for state employees, it removed annual Alan L. Otten, Milbank Memorial Fund, Commission in July
dollar limits on outpatient care and reduced the co-payments required from workers - in the first year, outpatient costs June 1998, Rhode Island, Maryland,
dropped 20 percent. In Minnesota, which mandates parity on co-payments, deductibles, and other insurance elements Minnesota
as well as on lifetime limits and which also covers substance abuse, there were no significant increase in premiums
since parity went into effect. In the year after the parity law went into effect, a major Minnesota health plan said the
parity law would increase premiums only 26 cents per member per month, and the Minnesota Department of
Employee Relations put the cost of the mandate at only a 1 percent to 2 percent increase in premiums for state
employees. Costs of Mental Health Parity, Colleen L. The researchers concluded that newer evidence suggests thatcost control techniques associated with managed care give Barry, Richard G. Frank, and Thomas G. healthplans alternatives to discriminatory coverage for containingcosts. They reviewed various research on mental McGuire, Health Affairs, Vol. 25, No. 3, health insuranceand concluded that comprehensive parity implemented in the contextof managed care would 2006 have little impact on total spending.
Roland Sturm et al, RAND-UCLA The researchers evaluated the 1995-96 experience of 24 managed behavioral health care plans with 140,000 enrollees Research Center on Managed Care for and found that the federal law's removal of dollar ceilings would increase costs only $1 per enrollee per year for a
Psychiatric Disorders, Journal of the plan with a $25,000 annual limit and $4 a year for a plan with a low $10,000 annual limit. Even removing all limits on American Medical Association, Vol. 278, the number of inpatient days and outpatient visits would bring a cost increase of only $7 per enrollee per year in a 1997 managed plan that had no deductible and minimal co-payments.
National Advisory Mental Health Council A 1998 study sponsored by the National Advisory Mental Health Council (NAMHC) Parity Workgroup, a division of the
(NAMHC), National Institute of Mental federal National Institute of Mental Health, estimated that mental health parity would add less than 1 percent to the Health, 1998 cost of a health insurance policy for an HMO. Another analysis requested by the NAMHC Workgroup looked at the
effects of a state mental health parity mandate (in conjunction with carve-out managed care) for a large employer group.
Costs per member were reduced by 39% from pre-parity to the third year of parity, and the portion of the
population receiving mental health services increased. Costs dropped by 9% between Year 1 and Year 4 for
adults, and by 75% for dependent children, mostly because of decreases in pediatric inpatient stays.
Agency for Healthcare Research and Using a managed care "carve-out" arrangement to provide equal coverage for mental health services did not raise costs
Quality, Samuel H. Zuvekas et. al., 2002 for one large employer, according to the findings of a 2002 case study (May/June 2002 issue of Health Affairs).
Researchers, led by Samuel H. Zuvekas, Ph.D., of the Agency for Healthcare Research and Quality, examined the impact
of a state's mental health parity mandate on a large employer group that simultaneously implemented a managed care
"carve-out" for its mental health and substance abuse benefits. Carve-outs are services provided within a standard
health benefit package but delivered and managed by a separate organization. The researchers, who included current
and former researchers at the National Institute of Mental Health, compared plan costs, use patterns, and access in the
year prior to the changes with those in the 3 years following the changes. Due to confidentiality issues, the name of the
large employer group, the state in which it is located, and the specific years of the study could not be provided.
Although the number of people treated for mental health problems increased nearly 50 percent, the costs to the plan for
mental health services declined by almost 40 percent over the 4-year study period. Costs for employees and spouses