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The Costs and Effects of Parity for Mental Health
and Substance Abuse Insurance Benefits
CONCLUSION
Our study attempts to answer several key questions concerning the provision of full or partial parity in MH/SA benefits. By conducting an analysis of state MH/SA parity laws and case studies in five states, we found the following:
- Most state parity laws are limited in scope or application.
- State parity laws have had a small effect on premiums.
- Employers have not attempted to avoid parity laws by becoming self-insured, and they do not tend to pass on the costs of parity to employees.
- Costs for MH/SA services have not shifted from the public to the private sector.
Previous actuarial predictions of premium increases due to MH/SA parity varied widely, primarily due to differences in their assumptions. We determined that some of these assumptions may have limited support. For example, some estimates have assumed a cost shift from the public to the private sector as a result of a parity mandate. Our study did not find support for this assumption, however.
Finally, using an updated model and actuarial assumptions, we estimate that full parity for mental health and substance abuse services will increase premiums by 3.6 percent, on average. Premium increases are lower for plans that more tightly manage care, and they are greater for plans that are limited to children.
For more information on the individual studies that comprise this summary report, see the four background reports we produced: Parity Study Background Report #1: State Parity Laws (Heiser, et al., 1998); Parity Study Background Report #2: Case Studies (Hill, et al., 1998); Parity Study Background Report #3: Actuarial Assumptions (Sing and Hill, 1998b); and Parity Study Background Report #4: Cost Estimates (Sing and Hill, 1998a).
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