Cover: How Expensive are Unlimited Substance Abuse Benefits Under Managed Care?

How Expensive are Unlimited Substance Abuse Benefits Under Managed Care?

Published 2000

by Roland Sturm, Weiying Zhang, Michael Schoenbaum

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Substance abuse (SA) care has been excluded from recent federal and state legislation mandating equal benefits for mental health and medical care ("parity"), largely because of cost concerns. This article studies how many patients are affected by SA coverage limits and the likely implications of limits on insurance payments, using 1996-97 claims from 25 managed care plans with unlimited SA benefits. Changing even stringent limits on annual SA benefits has a small absolute effect on overall insurance costs under managed care, even though a large percentage of SA patients are affected. Removing an annual limit of $10,000 per year on SA care is estimated to increase insurance payments by about 6 cents per member per year, removing a limit of $1,000 increases payments by about $3.40. As long as care is comprehensively managed, "parity" for SA in employer-sponsored health plans is not very costly.

Originally published in: Journal of Behavioral Health Services and Research, v. 26, no. 2, May 1999, pp. 203-210.

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