Mental Health Parity Is Not a Panacea: Lessons to Date

Greener Pastures

For many decades, mental health clinicians have looked over the health care parity fence at the medical and surgical providers’ lot and envied their patients’ better health insurance coverage with its greater access, increased number and frequency of visits, lower deductibles, fewer exclusions, and better out-of-network coverage. In practice, as a patient’s expenditures rise, mental health insurance coverage becomes less and less generous, while, conversely, medical/surgical coverage becomes more and more generous, primarily due to stop-loss provisions.

More recently, a series of federal and state laws and regulations have sought to enforce greater equality between medical/surgical insurance coverage and mental health (MH) and substance use disorder (SUD) insurance-covered services. While it is still too early to pass definitive judgment on the longer-term effects of these efforts, a number of trends are becoming apparent.

Can We Legislate Parity?

The wish to improve MH/SUD services relative to the rest of U.S. health care can be traced to the Kennedy Administration,¹ but it has required a series of federal and state laws and regulations starting with the 1996 Mental Health Parity Act (MHPA) and most notably the 2010 Mental Health Parity and Addiction Equality Act (MHPAEA) to make major inroads into the flagrant inequities between medical/surgical and MH/SUD health insurance coverage.

Health insurance parity is typically assessed both quantitatively and qualitatively. Examples of quantitative indices include copays, frequency of treatment, number of visits, days of coverage, deductibles, and out-of-network coverage. Qualitative measures include the need for prior authorization, frequency of medical necessity and utilization reviews, drug formularies, fail-first barriers, and exclusions based on prior treatment, location, or provider specialty.

Primarily utilizing administrative datasets (which, unfortunately, rarely include clinical outcome data), researchers have sought to determine if the various efforts at mandating parity have measurably improved MH and SUD care. Frequently using “difference in difference” methodology, which controls for secular trends over the time period of interest, investigators take advantage of “natural experiments” such as changes in state-run programs, Medicaid and Medicare updates, and private insurers’ compliance with new laws to determine if various regulatory attempts at achieving parity are attaining the desired results.

One widely accepted goal is to determine if MH/SUD parity reduces patients’ out-of-pocket costs. The theory is that the most seriously ill patients are (presumably) the prime users of MH and SUD services and therefore most likely to have higher out-of-pocket costs and thus most likely to benefit from parity. Frequently, parity research outcomes are limited to measures of increased utilization (e.g., more outpatient visits, more psychiatric medication prescriptions filled, more MH clients served) and/or decreased patient out-of-pocket and program costs. In addition, some studies seek to determine whether these benefits are distributed uniformly across the insured population or restricted to subgroups such as the more seriously ill or even specific disorders.

How Well Is Mental Health/Substance Use Disorder Parity Working?

The results are mixed. Virtually all of the studies find that efforts to enforce MH/SUD parity have had their largest effect on reducing patient out-of-pocket costs. Interestingly, several studies find that despite the decrease in consumer copayments and increased mandated services, there is little or no increase in an insurer’s overall costs or decrease in the insurer’s profits. A number of studies find important differences in how and in how much a given parity mandate affects different diagnostic and demographic groups. Analyses of SUD studies, for example, suggest that parity brings additional societal benefits in terms of reductions in crime and fatal traffic accidents (overall average decrease of 4 to 5 percent, improving to 7 to 9 percent on weekends).

Disappointingly, decreased consumer out-of-pocket costs seldom translate into increased utilization of MH or SUD services—as originally theorized. However, based on numbers of visits and medication refills, a few studies do find that seriously ill MH/SUD patients increase their utilization. Of course, other research has found that despite reductions in copays and increased coverage, many seriously ill patients don’t increase their use of mental health services simply because there are none available, they are too difficult to access, or they remain unaffordable.

There is evidence that some health insurers respond to parity mandates by reducing their medical/surgical benefits, thus lowering the bar for MH/SUD parity. Parity laws are also faulted on a number of points: (1) they suffer from significant underenforcement, (2) insurers continue to impose inappropriate administrative qualification barriers on individuals less able to cope with them, and (3) that ex post corrections of individual wrongs fails to address underlying systemic issues.

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In general, enforcement actions require that consumers bring a lawsuit or file a complaint. Thus, enforcement is biased by what consumers choose to challenge. Legal redress also favors the better-connected, healthier, and wealthier complainants. An ill beneficiary must recognize that they have a right to appeal. Indeed, converging lines of evidence indicate that most parity violations are not addressed.

Policymakers are finding that attempts to legislate mandated MH/SUD benefits encounter major systemic problems. First, it is impossible to mandate that any given treatment or service must be covered in all cases. Secondly, universal mandates cannot override an insurer’s discretion as to who is eligible for a covered service. Finally, quantitative measures of increased utilization don’t tell us whether the increased care is more effective care.

A larger, unasked question, remains: Is achieving MH/SUD “parity” with current medical/surgical health insurance coverage even the appropriate goal? Parity, at best, only brings MH/SUD coverage roughly into line with what is widely acknowledged to be the extremely costly, difficult to access and navigate, and notoriously patient-unfriendly world of medical/surgical health insurance.

Surely, we can do better than that for everyone.