The Myth of Medical Cost Offset

Published in: Psychiatric Services, v. 52, no. 6, June 2001, p. 738-740

Posted on RAND.org on December 31, 2000

by Roland Sturm

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Many mental health advocates seem to believe that increased access to or use of behavioral health services can substantially reduce expenditures in other medical care services--an idea generally known as the medical cost offset hypothesis. Cost-offset claims are often used to buttress proposals for increased funding for mental health treatment or more generous insurance. A recent example of such efforts is parity'' legislation, which requires equal insurance coverage for behavioral and medical services. In this context, cost offset claims present two problems, one conceptual or philosophical and the other empirical. The conceptual problem is that cost-offset considerations are not a sound basis for social policy, because requiring evidence that services at least partially pay for themselves, regardless of the benefits to patients, invites discrimination across health conditions and population subgroups. Services that pay for themselves--for example, increased intensive outpatient care as a substitute for some inpatient services and better medication management--should be delivered, of course. What puts us on thin ice is reversing the justification for health care from patients' benefits to cost savings. This is not an original observation; Goldman (1) and others have made similar arguments.

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