How Does Managed Care Affect the Cost of Mental Health Services?
Jan 1, 1998
Published in: Journal of Health Care Finance, v. 24, no. 3, Spring 1998, p. 82-92
Posted on RAND.org on January 01, 1998
Legislation passed in the fall of 1996 required employers and insurers offering mental health benefits to raise dollar coverage limits on mental health services to the level of medical services. The authors analyze the benefit designs of 4,000 current behavioral health carve-out plans and contrast them to medical benefits. They find that almost 90 percent of all plans are inconsistent with the current legislation and need to be rewritten in the coming year. The restructuring of designs required by the Parity Act provides a unique opportunity because plans often are inconsistent and unnecessarily complex, a legacy of past attempts by employers to contain costs and control adverse selection and moral hazard in an unmanaged fee-for-service environment. Under managed care, the need for deductibles, limits, or other demand-side cost-sharing mechanisms may have diminished and restructuring outdated designs could benefit both enrollees and employers.
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