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Mental Health Insurance Pays

Program Cut Patients' Out-of-Pocket Expenses Without Spiking Use, Costs
WebMD Health News
Reviewed by Louise Chang, MD

March 29, 2006 -- Mental health insurance that lowers patients' out-of-pocket expenses may be within reach, researchers report.

The finding comes from a study of more than 700,000 federal employees. Starting in 2001, a new policy required federal employees' health insurance programs to treat mental health and substance abuse like any other illness, in terms of benefits.

Not all health insurance plans do that, partly due to concerns that use and costs would rise in such plans, write the researchers, who included Howard Goldman, MD, PhD, a psychiatry professor at the University of Maryland's medical school in Baltimore.

Goldman's team found that the new policy cut federal employees' out-of-pocket expenses for mental health and substance abuse services without creating unusual rises in those services' use or total costs.

The study appears in The New England Journal of Medicine.

Insurance Study

Goldman and colleagues studied seven federal health insurance programs. For comparison, they also tracked seven health insurance plans that weren't part of the federal plan and didn't provide the same benefits for mental health and substance abuse.

The new federal policy was set in 1999 and went into effect in 2001. By studying those plans in 1999-2000 and in 2001-2002, the researchers got before-and-after snapshots of use, total costs, and out-of-pocket expenses for each plan.

The results show that after the federal policy went into effect, federal employees paid less out of their own pockets for mental health and substance abuse services. Use and total costs rose for all of the plans that were studied, but the rises weren't greater for the federal employees' plans.

The Role of Managed Care

"The federal employees' plan did experience a decline in out-of-pocket spending for users of service," Goldman told reporters in a teleconference.

He calls that finding "one of the most important findings because it indicates that insurance protection was improved as intended for federal employees and their dependents."

The federal policy "did not increase either the proportion of users nor did it increase total spending in the federal employees' health benefit plans any more than in a matched comparison plan," Goldman says.

Managed care appeared to be important. Only one plan in the study didn't use managed care, and it was the sole exception to the findings.

"Managed care has figured out how to direct care and sort of prioritize things within budget," Richard Frank, PhD, told reporters in the teleconference. Frank, a health economics professor at Harvard, worked with Goldman on the study.

Slight Increase in Premiums

Any premium increase with the federal policy was "very small," Frank says. He estimates that premiums rose "half a percent or less" with the new plan.

"That historically has been well within the expected amount and the acceptable amount of premium increase," Goldman says.

"It appears that the most important change that occurred was providing increased insurance protection," Goldman says. "The fears that it would overstimulate use and spending didn't occur."

Goldman says the federal approach provided "much needed insurance protection for everyone in the event that they might need treatment for a mental disorder. It's not only designed for people who have an ongoing mental illness. It's for everyone."

The findings might apply beyond the federal system if managed care is used, the researchers note.

A journal editorial calls Goldman's study "compelling evidence" that such insurance programs can work in an "economically feasible and socially desirable" way. Sherry Glied, PhD, and Alison Cuellar, PhD, wrote the editorial. They work in New York at Columbia University's Mailman School of Public Health.

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