NCJ Number
180558
Date Published
1998
Length
49 pages
Annotation
This report presents the methodology and findings of a study that examined the costs and effects of medical insurance plans that provide the same coverage for mental health and substance abuse treatment as for general medical and surgical services, a concept known as "parity."
Abstract
States and the Federal Government have begun to require such parity for health plans. Opinions differ as to the costs and effects of such parity mandates. This study determined the characteristics of State parity laws, conducted case studies of five States with such laws, analyzed previous actuarial estimates of the costs of parity, and provided updated estimates of premium increases due to full and partial parity. The study found that most State parity laws are limited in scope or application; few address substance abuse treatment, and many are limited to treatment for serious mental illnesses; many exempt small employers or only apply to plans for government employees. The study also determined that State parity laws have had a small effect on insurance premiums, with cost increases being the lowest in systems with tightly managed care and generous baseline benefits. Employers have not attempted to avoid parity laws by becoming self-insured, and they do not tend to pass on the costs of parity to employees. Costs have not shifted from the public to the private sector. Previous actuarial predictions of premium increases due to parity ranged from 3.2 percent to 11.4 percent, primarily due to differences in their assumptions. Based on an updated actuarial model, full parity is estimated to increase premiums by 3.6 percent, on average. Premium increases vary by type of plan, and projected premium increases do not reflect potential market responses. Premium increases are greater for plans that are limited to children. 8 tables and 53 references