Study finds Parity Act can be economical
Study finds Parity Act can be economical
New law effective as of Jan. 1
The Mental Health Parity Act became effective Jan. 1. When President Clinton signed the bill last year, employers feared the act would cause their health care benefits costs to soar. However, a recent study by the RAND group in Santa Monica, CA, finds that implementation will cost less than half of 1% of the annual cost per enrollee of an average managed care plan, if employers turn to managed care "carve out" plans.
The Mental Health Parity Act prohibits employers who offer mental health benefits from providing lower dollar limits for mental health coverage than for other medical benefits unless they demonstrate that their health plan costs would increase by 1% or more. The study examined claims data for 1995 and 1996 from 24 managed care behavioral health carve out plans. These plans provide mental health care through a subsidiary or independent vendor.
"Even substituting unlimited mental health coverage for the least generous plans would result in less than $7 per enrollee per year cost increase in a plan with minimal copayments and no deducti-bles," says Roland Sturm, PhD, an economist at RAND, who conducted the study published in a recent issue of the Journal of the American Medical Association.1 He defined least generous plans as plans that pay for only 30 inpatient days and 20 outpatient sessions annually. He also found that the main beneficiaries of equalizing mental health and medical benefits would be the families of children with mental illness. Before the Mental Health Parity Act, children were more likely than adult users to exceed the typical $25,000 annual benefit limits for mental health and go uninsured the rest of the year, he says. "It’s important to note that my cost projections depend on employers using mental health managed care carve out plans."
Costs are lower in theses plans than in traditional indemnity plans even though the rate of access to care is higher, he says. "however, we need to monitor how the act is implemented," he cautions. "it’s easier to contain costs than to provide consistently high quality care."
Reference
1. Rand Corporation. How expensive is unlimited mental health care coverage under managed care? JAMA 1997; 278:1,533-1,537.
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