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Christopher Fleming

Health Benefits For Substance Abuse Treatment Still Lag Far Behind Coverage For General Medical Care

In Separate Article, Researchers Say That Exemptions Limit Reach Of State Mental Health Parity Laws

Bethesda, MD -- Employer-sponsored coverage for substance abuse treatment continues to have annual limits and lifetime caps on treatment visits and inpatient days and also requires higher cost sharing than coverage for general medical care, according to a new analysis published today as a Health Affairs Web Exclusive.

In 2006, 88 percent of insured workers had some coverage for substance abuse services, but only 19 percent were enrolled in a plan without limits on the number of office visits or hospital stays. Such limitations are virtually unknown in general medical care, where nearly all covered workers had unlimited medical-surgical hospital days and office visits, according to Jon Gabel, a senior fellow at NORC, and coauthors. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.4.w474

A second Health Affairs Web Exclusive published today reports that many workers are exempt from state mental health “parity” laws aimed at bringing private-sector mental health benefits more in line with coverage for other types of disorders. As a result, as of 2003, only one-fifth of U.S. workers with employer-sponsored health insurance were covered by “strong” parity laws that mandate mental health benefits, prohibit limits on outpatient visits and inpatient days, and limit the extent to which enrollees can face higher cost sharing for mental health services.

Researchers led by Thomas Buchmueller, a professor at the University of Michigan’s Ross School of Business, say that nearly every state has enacted mental health parity laws since the passage of the federal Mental Health Parity Act (MHPA) in 1996. However, the MHPA is limited in scope; for instance, it does not mandate mental health benefits, it exempts small firms, and it allows caps on outpatient visits and inpatient days. Many state initiatives are stronger, but their impact has been blunted by exemptions. Most notably, the federal Employee Retirement Income Security Act (ERISA) exempts self-insured firms from state regulation.

Workers Face Higher Cost Sharing
For Substance Abuse Treatment

In their study, Gabel and coauthors found that in 2006, workers with substance abuse benefits faced deductibles for those services that were, on average, 46 percent higher than deductibles for medical and surgical benefits. Forty percent of employees were enrolled in a plan requiring coinsurance for substance abuse services, whereas only 12 percent of workers had coinsurance requirements when using medical benefits. In 2003, 44 percent of workers had plans that did not limit out-of-pocket costs for substance abuse treatment, in contrast to their benefits for medical-surgical services.

“People who try to get care for substance abuse but aren’t successful most often say that cost is the reason,” said Gabel. “Substance abuse is a treatable chronic medical condition, similar to diabetes or heart disease, and the economic costs of not treating substance abuse can be many times the costs of treatment. Yet the higher cost sharing for substance abuse problems that many workers face can discourage them from seeking treatment. In addition, limitations on inpatient days and outpatient visits, as well the failure to limit out-of-pocket costs, can discourage the long-term treatment and follow-up that substance abuse, like any chronic disease, often demands.”

Gabel and his colleagues analyzed historical data and the results from a new supplement to the national Kaiser/Health Research and Educational Trust Employer Health Benefits Survey, a random sample of more than 2,000 private and public firms with three or more workers. The study, supported by the federal Substance Abuse and Mental Health Services Administration, was intended to gain a better understanding of declining spending by private insurance on substance abuse treatment, relative to spending for other conditions, as measured by the estimates published every two years by SAMHSA. In addition to Gabel, study authors include Heidi Whitmore and Jeremy Pickreign of NORC, Katharine Levit and Rosanna Coffey of Thomson Medstat, and Rita Vandivort-Warren of the Center for Substance Abuse Treatment at SAMHSA.

Only 3 Percent Of Workers Are Covered
By Strong Parity Laws Reaching All Mental Illnesses

Using data from the 2003 Medical Expenditure Panel Survey, Buchmueller and coauthors found that 45 percent of insured private-sector workers were potentially covered by strong state parity laws, but two types of exemptions reduced the proportion of covered workers actually subject to the laws by more than half, to one-fifth. The ERISA exemption for workers at self-insured firms accounted for the vast bulk, 87 percent, of the difference between the potential and actual reaches of strong state parity laws. Exemptions for small employers, typically defined as those with fewer than fifty workers, accounted for the remaining 13 percent of the gap.

The researchers say that even the one-fifth figure may overstate the actual reach of strong parity laws, because many of these laws do not apply to all mental illnesses. In 2003, only 3 percent of all insured workers were covered by strong parity laws that applied to all mental illnesses. The proportions of workers covered by strong parity laws that applied to treatment for alcohol and drug abuse were only slightly higher: 3.6 percent and 5.2 percent, respectively.

“States can improve the reach of their parity laws somewhat by extending them to small firms and all mental illnesses, as well as alcohol and drug abuse,” said Buchmueller. “But the major limitation on these statutes is ERISA, and that’s a federal law that states are powerless to change. So if parity requirements are going to be extended in a significant way, Congress and the president will have to step up and change the law.”

Strengthening federal law likely will not raise employers’ costs significantly, say Buchmueller and his coauthors, Philip Cooper and Samuel Zuvekas of the Agency for Healthcare Research and Quality and Mireille Jacobson of the University of California, Irvine. “By replacing demand-side cost sharing with supply-side controls such as utilization review, prior authorization, and restricted networks, plans that use managed behavioral health care organizations (MBHOs) can offset reduced consumer cost sharing under parity. A new consensus, reflected in the peer-reviewed literature and in more recent projections by the Congressional Budget Office, suggests that parity would increase premiums by less than 1 percent,” the researchers write.


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at www.healthaffairs.org.


©2007 Project HOPE–The People-to-People Health Foundation, Inc.