HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Sunday, October 12, 2008

Cost Estimates Vary on Mental Health Parity Law

The Los Angeles Times reports that agencies predict that health insurance costs could increase from 0.2% to 5%, depending on the type of plan.  Tammy Worth writes,

Stethescope2Will the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 increase the cost of health insurance?

Most likely, but estimates vary. According to the Congressional Budget Office, the cost of the legislation could increase group healthcare premiums 0.2% to 0.4% on average.
The (which implemented mental health parity for federal employees' plans back in 2001) estimates the likely average increase as 1.64% for fee-for-service plans (where an insurance company pays the physician or patient directly for each service after a claim has been filed) and 0.3% for HMOs. It estimates that an individual would pay an extra 46 cents per biweekly paycheck and a family would pay $1.02.

Michael Carter, vice president of the benefits consulting firm the Hay Group, predicts increased costs of 2% to 3%, depending upon what type of plan is offered. A 1998 study released by the Substance Abuse and Mental Health Services Administration estimated full parity could increase premiums up to 3.6% and as high as 5% for fee-for-service plans.

Any cost increases would be on the shoulders of the employer, but would likely trickle down to individuals in the form of higher premiums and co-pays for the employees, Carter said. However, studies also show that an increase in what insurance companies pay up front could help them save money over time, he added.

Properly managing mental healthcare can reduce costs overall because people with untreated mental illness are more susceptible to physical illnesses such as heart attacks, said Dr. Nada Stotland, president of the American Psychiatric Assn.

"It is not cost effective" to separate mental and physical healthcare, she said. "We cannot separate the body and the mind."

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