Behavioral Health Insurance Parity for Federal Employees

Published in: The New England Journal of Medicine, v. 354, no. 13, Mar. 2006, p. 1378-1386

by Howard H. Goldman, Richard G. Frank, M. Audrey Burnam, Haiden A. Huskamp, M. Susan Ridgely, Sharon-Lise T. Normand, Alexander Young, Colleen L. Barry, Vanessa Azzone, Alisa B. Busch, et al.

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BACKGROUND: To improve insurance coverage of mental health and substance-abuse services, the Federal Employees Health Benefits (FEHB) Program offered mental health and substance-abuse benefits on a par with general medical benefits beginning in January 2001. The plans were encouraged to manage care. METHODS: The authors compared seven FEHB plans from 1999 through 2002 with a matched set of health plans that did not have benefits on a par with mental health and substance abuse benefits (parity of mental health and substance-abuse benefits). Using a difference-in-differences analysis, the authors compared the claims patterns of matched pairs of FEHB and control plans by examining the rate of use, total spending, and out-of pocket spending among users of mental health and substance-abuse services. RESULTS: The difference-in-differences analysis indicated that the observed increase in the rate of use of mental health and substance-abuse services after the implementation of the parity policy was due almost entirely to a general trend in increased use that was observed in comparison health plans as well as FEHB plans. The implementation of parity was associated with a statistically significant increase in use in one plan (+0.78 percent, P<0.05) a significant decrease in use in one plan (-0.96 percent, P<0.05), and no significant difference in use in the other five plans (range, -0.38 percent to +0.23 percent; P>0.05 for each comparison). For beneficiaries who used mental health and substance-abuse services, spending attributable to the implementation of parity decreased significantly for three plans (range, -$201.99 to -$68.97; P<0.05 for each comparison) and did not change significantly for four plans (range, -$42.13 to +$27.11; P>0.05 for each comparison). The implementation of parity was associated with significant reductions in out-of-pocket spending in five of seven plans. CONCLUSIONS: When coupled with management of care, implementation of parity in insurance benefits for behavioral health care can improve insurance protection without increasing total costs.

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