FOR IMMEDIATE RELEASE: March 29, 2006
Contact: Becky Ceraul rceraul@som.umaryland.edu 410-706-7590
Karen Warmkessel kwarmkessel@umm.edu 410-328-8919
Leah Gourley public_affairs@hms.harvard.edu  617-432-0442

PROVIDING COMPREHENSIVE MENTAL HEALTH BENEFITS IDENTICAL TO COVERAGE FOR PHYSICAL ILLNESS DOES NOT INCREASE COSTS

Study shows that parity can be achieved while keeping costs in check

Mental health and substance abuse insurance benefits for federal employees have been expanded without increasing costs, contrary to the concerns of some policy makers and legislators. That is the conclusion of the most comprehensive study ever conducted of employer-based health insurance benefits. The study, led by a researcher at the University of Maryland School of Medicine in Baltimore, is published in the March 30 issue of the New England Journal of Medicine.

The study evaluated the Federal Employees Health Benefit (FEHB) Program, which has provided insurance parity since 2001. Parity means that coverage for mental health and substance abuse services is comparable to coverage for other health problems.

The researchers found that when the care was managed, the cost of coverage for mental health problems attributable to parity did not increase and the quality of care remained constant.

With parity, insurance coverage for behavioral disorders such as depression, schizophrenia and bipolar disorder is equal to coverage for all other medical conditions in terms of limits on services, deductibles, co-pays and other costs that patients might be expected to pay out-of-pocket.

“The main argument against parity has been a concern that more generous coverage of mental health services would result in large increases in spending,” says Howard H. Goldman, M.D., Ph.D., a professor of psychiatry at the University of Maryland School of Medicine, who led the multidisciplinary team of researchers. Dr. Goldman adds, “We found, however, that when coupled with managed care, parity between insurance benefits for mental health care and general medical care can be accomplished with improved insurance protection and without increasing total costs.”

Dr. Goldman calls parity in insurance coverage for mental health services the “Holy Grail of mental health policy for decades.” Historically, insurance coverage for behavioral health conditions has imposed special limitations on the number of office visits, days in the hospitals or on the maximum amount of treatment that would be reimbursed.

The Federal Health Employees Benefit Program has 8.5 million enrollees; approximately 25 percent are current federal employees, another 25 percent are retirees and 50 percent are spouses and dependents of current or retired employees. Enrollees select from over 350 health insurance products. The program is a model for private health insurance.

In June 1999, President Bill Clinton directed the federal Office of Personnel Management to ensure parity in mental health and substance abuse benefits for the FEHB Program. To improve insurance coverage of those services, beginning in January 2001 the FEHB Program offered these benefits at the same coverage level as general medical benefits. Participating insurance plans were encouraged to manage patient care in order to control utilization and cost.

Following the suggestion of President Clinton that the policy be evaluated, the Department of Health and Human Services, working with the Office of Personnel Management, contracted with Northrop Grumman Information Technologies to conduct the first national study of comprehensive parity in order to guide federal policy. Northrop Grumman tapped Dr. Goldman to lead the team. Dr. Goldman, a leading expert in mental health policy research, gathered researchers from Harvard Medical School, the University of California-Los Angeles, the RAND Corporation and Westat, Inc. The newly formed Parity Evaluation Research Team began the study in 2000.

“Our study compared seven FEHB plans from 1999 to 2002 with a matched set of plans that did not have parity for mental health and substance abuse benefits,” says Richard Frank, Ph.D., the Margaret T. Morris Professor of Health Economics in the Department of Health Care Policy at Harvard Medical School. “In the analysis, the study team compared the insurance claims experience of matched pairs of FEBH and control plans, examining frequency of use, and total and out-of-pocket spending among users of mental health and substance abuse services.”

The analysis found an increased rate in the usage of mental health and substance abuse services following the introduction of the parity policy but determined that this was almost entirely due to a general trend in increased usage also seen in the comparison plans. The same was true for total spending. Out-of-pocket spending attributable to parity declined in five of the seven plans evaluated. One measure of quality for the treatment of depression showed a small improvement.

“Opposition to legislating parity has been strong, but the recent success of managed care in controlling spending on mental health and substance abuse services provides a counterweight to cost considerations. Managed care, however, still raises concerns about access and quality,” says Dr. Goldman. “Our study is expected to influence decisions on mental health parity legislation in state legislatures across the country and in Congress.”

Funding for the study was provided by several federal agencies and the office of the Assistant Secretary for Planning and Evaluation in the U.S. Department of Health and Human Services. It was coordinated with the federal Office of Personnel Management. The John D. and Catherine T. MacArthur Foundation Network on Mental Health Policy Research provided support for preparation of the published study results.

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