Mental Health Coverage Affordable, Study Finds
Thursday, March 30, 2006
A new study involving federal employees has found that providing better mental health coverage does not lead to an explosion in insurance costs, a potentially important development in an old national debate over what insurance plans should cover.
The study, published today in the New England Journal of Medicine, examined seven federal health plans in the years after 1999, when President Bill Clinton ordered companies in the Federal Employees Health Benefits Program to provide coverage for mental health and substance abuse that is comparable to that for other health conditions.
Researchers found that, contrary to the predictions of some policymakers and analysts, the use and cost of such services did not increase, compared with the experience of private health plans with less generous mental health benefits -- provided that new benefits were offered under managed-care plans. The changes did, however, mean lower out-of-pocket expenses for people who used the services under the federal plans.
"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," said Howard H. Goldman, the lead researcher and professor of psychiatry at the University of Maryland School of Medicine.
The findings provide ammunition for advocates of mental health "parity" in the long-running battle in Congress and state legislatures over whether health insurance companies should be required to offer mental health coverage that is equivalent to the coverage they offer for physical diseases such as cancer or diabetes.
Such expanded coverage is ardently supported by mental health professionals and patients' groups, who say it would eliminate long-standing discrimination against people who are mentally ill. Just as passionately, leading business groups almost unanimously oppose such a requirement, saying it would increase insurance premiums and force some employers to scale back coverage for physical diseases or drop health benefits altogether.
In general, mental health and substance abuse coverage has come with higher out-of-pocket costs to patients and greater restrictions on office visits and days in the hospital.
Ralph Ibson, a vice president with the nonprofit National Mental Health Association, said the study shows that requiring mental health parity in employer-provided insurance plans is a good idea that will not break the bank.
"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," Ibson said.
Edwina Rogers, vice president for health policy at the ERISA Industry Committee, an association of major employers, said a single study does not settle the argument and that costs are still a concern.
"The data can be massaged on either side of this particular debate," Rogers said. "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."
Rogers said many large employers already offer generous mental health coverage.
Goldman and other researchers, working under contract to the federal government, looked at seven FEHB plans from 1999 to 2002, comparing them to similar plans in the private sector that did not offer enhanced mental health and substance abuse coverage. More than 300,000 people were continuously enrolled in each set of plans.
The research team found that the rates of spending on, and use of, mental health and substance abuse services rose in both groups over the study period, but no more so in the federal group than in the other one. At the same time, enrollees in five of the seven federal plans saw average reductions in out-of-pocket spending ranging from $14 to $87 a year. The plans were managed-care plans.
"Managed care has figured out how to direct care and prioritize things within budgets," said Richard G. Frank, a professor of health economics at Harvard Medical School. "What our results suggest is that if you are going to do parity and you are concerned about cost growth, then parity is a good idea if it's done along with managed care."