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Cost Sharing and the Demand for Ambulatory Mental Health Services

by Kenneth B. Wells, Willard G. Manning, Naihua Duan, John E. Ware, Joseph P. Newhouse

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This report presents interim results on the demand for ambulatory mental health services, using data from the RAND Health Insurance Study. Major empirical findings of this study that bear on the cost sharing policy questions include: Reducing the level of cost sharing in the HIS plans increases the demand for mental health services; small deductibles have a statistically insignificant effect on expenses as compared with free care; with the exception of the $150 per person annual deductible plan, expenses for ambulatory mental health services exhibit roughly the same percentage response to changes in insurance as do ambulatory medical expenses; the level of expenditures on ambulatory mental health care is low; and those with different incomes and mental health statuses respond similarly to changes in insurance coverage. Also included are findings related to the mix of providers for mental health services.

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