Parity in mental health coverage poses little extra cost, study finds

Limits set in federal law drive recurring debate

March 30, 2006|By M. WILLIAM SALGANIK | M. WILLIAM SALGANIK,SUN REPORTER

For years, mental health professionals and support groups have pushed insurers to provide the same benefit dollars, access to doctors and hospitalization coverage for mental health as they do for physical illness. And for years, opponents of behavioral-health parity have argued that loosening the often-stricter limits on mental health coverage would be too costly.

A study published today in the New England Journal of Medicine attempts to measure what that added cost would be - and estimates it at close to zero.

"The bottom line is that we found it was possible to achieve parity without any adverse impacts on cost and quality," said the study's lead author, Dr. Howard H. Goldman, a professor of psychiatry and director of mental health policy studies at the University of Maryland School of Medicine.

There were, however, two important qualifications to the no-cost conclusion. One is that HMO-like care management, added at the same time as parity, appeared to be an important element in controlling spending. The other is that while overall costs were steady, a reduction in co-payments and other out-of-pocket charges to patients means that insurance premiums might increase slightly.

The results add more fuel to a long-running debate in Congress and in state legislatures about how much mental health coverage should be required.

The national Mental Health Parity Act, passed in 1996, was set to expire in 2001 but has received four extensions, the most recent taking it through the end of this year. The law has substantial limitations, touching off debate each year, said Mila Kofman, who helped administer it as a Department of Labor official and now is a health policy researcher at Georgetown University.

For example, she said, it exempts small employers, allows employers to opt out if mental health coverage would increase costs by more than 1 percent and allows insurers to limit the number of visits to a therapist as long as there isn't a dollar value attached.

The study published today tracked health plans in the federal employee benefit program, which imposed parity rules in 2001.

Costs and use of mental health care went up in the plans after parity was imposed, but no more than in a group of commercial plans that continued to operate without parity rules. By comparing not just before-and-after costs, but looking at a matched set of plans that didn't require parity, the study was designed to control for changes over time that aren't related to parity, such as the surge in mental health service usage that occurred after the Sept. 11, 2001, terrorist attacks.

`Compelling evidence'

"The compelling evidence presented suggests that in today's environment, parity in health insurance coverage is both economically feasible and socially desirable," says an accompanying editorial in the New England Journal of Medicine written by Sherry Glied and Alison Cuellar, health policy professors at Columbia University.

Most of the health plans studied switched mental-health benefits management to a form of health maintenance organization, called behavioral health care managers, when they began requiring parity. These managers seek to control costs by negotiating discounted rates with a network of therapists and hospitals, by reviewing treatment plans for medical necessity and efficiency and sometimes by steering patients from higher-cost to lower-cost therapies.

Of the seven plans studied, only one didn't contract with a mental health benefits manager - and that was the only one where use of services went up significantly more than the matched commercial plan.

While overall costs went up somewhat, out-of-pocket costs to patients dropped. That's because parity rules forced the insurers to reduce the costs they had imposed on mental health clients. For instance, before parity began, the seven insurers required patients to shoulder a 30 percent or 40 percent share of the costs for mental health hospitalizations, far more than the out-of-pocket costs charged for hospital stays for a matter of physical health, such as heart surgery.

Co-payments cut

Also, before parity, the plans limited the number of outpatient visits, generally to 25 a year, and asked patients for co-payments, typically $25, for visits to therapists.

Under parity, the insurers cut co-payments to $15 for outpatient visits, and dropped the hefty out-of-pocket charges for hospitalizations, limits on the number of therapist visits and caps on the number of days of hospitalization that were covered.

With insurers picking up more of the costs that patients had paid, premiums might increase a little, but probably less than half of 1 percent, estimated Richard Frank, a health economist from Harvard who was a co-author of the study. That shift of cost represents "a good deal," he said, because it's better for everyone to pay a little than for a few people who get sick to have to pay thousands of dollars each. Under parity, Frank said, "The big winners are those who are hospitalized."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.