Mental Health Parity Might Not Increase Spending

The elimination of special caps on mental health coverage might not lead to increased spending, according to a study published on Thursday in the New England Journal of Medicine, "lending new ammunition to a longstanding push" for mental heath parity legislation, the Wall Street Journal reports.

For the study, researchers led by Howard Goldman, a professor of psychiatry at the University of Maryland School of Medicine, examined the results of the elimination of caps on mental health coverage by health plans in the Federal Employees Health Benefits Program in 2001; the plans at the same time added some managed care restrictions on mental health coverage (Fuhrmans, Wall Street Journal, 3/30). Researchers compared claims data from random samples of 20,000 members in each of seven FEHBP health plans submitted two years before and two years after the elimination of the caps.

In addition, researchers examined claims data from a matched comparison group of members in health plans offered by large private employers that did not eliminate the caps (Fahy, Pittsburgh Post-Gazette, 3/30).

According to the study, the proportion of participants in FEHBP health plans who used mental health services increased by 1.35 percentage points to 2.75 percentage points in the two years after the elimination of the caps (Wall Street Journal, 3/30). However, use of mental health services also increased among participants in private health plans.

In addition, the study finds that, although spending for mental health services increased among participants in FEHBP health plans, the increase was similar to that of participants in private plans and "was not attributable to the requirement for parity," the Times reports (Pear, New York Times, 3/30). Researchers attributed the increased spending for mental health services to inflation and increased use of services.

The study also finds 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 (Wall Street Journal, 3/30). According to the Baltimore Sun, researchers made "two important qualifications" to the results of the study: the "HMO-like care management ... appeared to be an important element in controlling spending" and "a reduction in copayments 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% (Salganik, Baltimore Sun, 3/30).

Goldman said that "these results are important because it means that it is affordable for all of us who have health insurance to have better protection in the event that we might need to use mental health or substance abuse services" (Lee, Washington Post, 3/30).

According to Frank, "The big winners, in terms of reduced out-of-pocket spending, were the sickest patients, including those who needed hospital care" (New York Times, 3/30).

In an editorial that accompanied the study, Sherry Glied and Alison Cuellar, health policy professors at Columbia University, wrote, "The compelling evidence presented suggests that in today's environment, parity in health insurance coverage is both economically feasible and socially desirable" (Baltimore Sun, 3/30).

Ralph Ibson, president of the National Mental Health Association, said, "This study, which is certainly enormous and robust, very decisively puts to rest some of the major myths that opponents have brought to this debate, the principal myth being that to enact and implement parity is to increase health care costs."

However, Edwina Rogers, vice president for health policy at the ERISA Industry Committee, said, "The data can be massaged on either side of this particular debate." She added, "There is a big push in the mental health community to kind of force the government to say they have this right to sort of a steady stream of benefits, to mandate it. What they are asking for is just not appropriate" (Washington Post, 3/30).

Neil Trautwein, assistant vice president of human resources policy for the National Association of Manufacturers, said, "The danger of deciding, 'Let's sweep everyone into just one kind of coverage,' is that it raises the general cost of that coverage for everyone" (Wall Street Journal, 3/30).

The study is available online.