The Cost Of Mental Illness Insurance Parity

1. Background Report: Effects of the Mental Health Parity Act 0f 1996 (March 30, 1999)

• Issued by the Substance Abuse and Mental Health Services Administration (SAMHSA), results of this national survey showed that 86 percent of employers who made changes in health plans to comply with the 1996 Federal law did not make any compensatory reductions in other benefits because the cost of compliance was minimal or nonexistent.

2. Parity in Financing Mental Health Services: Managed Care Effects on Cost, Access & Quality ⁱ (July 15, 1998)

• The second in a series of reports to Congress issued by the National Advisory Mental Health Council found that full parity costs less than one percent of annual healthcare costs. When implemented in conjunction with managed care, parity can reduce costs by 30 to 50 percent.

3. Rand Corporation Study ⁱⁱ (November 12, 1997)

• Equalizing annual limits (typically $25,000) - a key provision of the Mental Health Parity Act of 1996 - will increase costs by only about $1 per employee per year under managed care.
• An even more comprehensive change required by some state laws (i.e., removing limits on inpatient days and outpatient visits) will increase costs by less then $7 per enrollee per year.
• The main beneficiaries of parity will be families with children who, under current conditions, are more likely than adult users to exceed their annual benefit limits and go uninsured for the remainder of the year.

4. Mercer Study ⁱⁱⁱ (October 23, 1997)

• 85 percent of American companies are either in compliance or plan to make changes to comply with the Mental Health Parity Act of 1996 by January 1, 1998.
• Seven out of ten of those same employers agree that mental health parity is a reasonable national policy goal and that parity is important to their employees.

5. National Advisory Mental Health Council's Interim Report on Parity Costs ⁱ (April 29, 1997)

• The introduction of parity in combination with managed care results in, at worst, very modest cost increases. In fact, lowered costs and lower premiums were reported within the first year of parity.
• Maryland reported a 0.2 percent decrease after the implementation of full parity at the state level; Rhode Island reported a less than 1 percent (0.33 percent) increase of total plan costs under state parity; Texas experienced a 47.9 percent decrease in costs for state employees enrolled in its managed care plan under parity.

6. Lewin Study ^iv (April 8, 1997)

• In a survey of New Hampshire insurance providers, no cost increases were reported as a result of a state law requiring health insurance parity for severe mental illnesses.

7. Congressional Budget Office (June 4, 1996) - federal cost estimate projected a 0.4 percent increase in premiums and a 0.16 percent increase in employer contributions for parity in annual and lifetime limits.

ⁱⁱ Conducted by the UCLA/RAND Center for Research on Managed Care for Psychiatric Disorders and funded by the National Institute of Mental Health for and the Healthcare Communities Project of the Robert Wood Johnson Foundation.

ⁱⁱⁱ More than 300 businesses polled by William M. Mercer, Inc., one the nation's leading human resources consulting organizations, for the National Alliance for the Mentally Ill (NAMI).

^iv Mercer surveyed for NAMI 11 of the 18 insurance carriers and health plans in New Hampshire representing the majority of covered lives in the state.

The NAMI Family-to-Family Education Program is a free 12-week course for family caregivers of individuals with severe brain disorders (mental illnesses). The course is taught by trained family members. All instruction and course materials are free for class participants.