The Effects of Insurance Generosity on the Psychological Distress and Well-Being of a General Population

Reductions in the generosity of fee-for-service insurance lower the use of general medical and mental health services, but do they lead to lower mental health for the covered population? The authors addressed this question using data from the RAND Health Insurance Experiment. Families in six U.S. sites were randomly assigned to one of 14 insurance plans for three- or five-year periods. On average, there were no significant adverse effects of cost-sharing plans, relative to a free-care plan, on either psychological well-being or psychological distress, when the cost-sharing plans included full catastrophic coverage. Those with high mental health status but low income at baseline had significantly more favorable mental health outcomes on the cost-sharing plans than on the free-care plan. The authors cannot definitively comment on the effects of insurance generosity for the sick poor. Their findings apply in the context of mandated comprehensive mental and general health coverage for a general nonelderly, nondisabled household population.