Feature Story
by Bob CurleyRequiring insurers to cover addiction and mental illness on par with other types of diseases raises insurance premiums just 0.2 percent annually, according to a new study of state parity laws.
Ensuring Solutions to Alcohol Problems, a research group based at the George Washington University Medical Center, reviewed 11 previously published studies by states that examined the impact of their own parity laws.
Generally, the state studies found that parity eases pressure on state budgets by cutting health, correctional, and welfare costs, and increases the number of people entering treatment.
The cost of addiction and mental illnesses to individual business also declines sharply when all employers are required to provide parity coverage, state studies said.
Ensuring Solutions looked at parity reports from Alaska, California, Delaware, Hawaii, Maine, New Jersey, New York, North Carolina, Ohio, Oregon, and Vermont to compile its report.
To date, 38 states have passed laws mandating some form of parity coverage for mental illness, and seven states nationally require parity for addiction. Simply having a law in place does not guarantee equal coverage, however. Recently, for example, addiction-treatment advocates in Pennsylvania have been lobbying state legislators and battling insurers in an effort to get Act 106, a state law mandating that insurers cover addiction treatment, fully enforced.
In fact, a second Ensuring Solutions study, of 70 health plans in 36 states, found that at least 10 major health plans in five states -- Florida, Georgia, Nevada, New York, and West Virginia -- have failed to comply with state laws governing insurance coverage for addiction.
"The most common violation we discovered was that they aren't allowing people with [addictions] to remain in treatment -- either inpatient or outpatient -- as long as the laws in their states require," said Eric Goplerud, director of Ensuring Solutions.
Typical violations also included charging higher co-payments for addiction treatment or only covering certain types of treatment, such as detoxification services.
Burden Falls on States
Advocates for parity point to a 2001 study by the National Center on Addiction and Substance Abuse, which estimates that every American pays $227 in state taxes to deal with addiction-related problems. "The brunt of failure to prevent and treat substance abuse and the cost of coping with the wreckage of this problem falls most heavily on the backs of governors and state legislatures across America," the CASA report stated.
Various state studies have concluded that improving access to addiction treatment by mandating parity would result in cost savings to taxpayers. Minnesota, for example, said in its parity report that 80 percent of costs were offset in the first year by decreased use of hospital, emergency-room, and detox services, as well as reduced arrests. California found that treatment resulted in a 66-percent decline in criminal activity and 33 percent fewer hospitalizations.
Ensuring Solutions said that parity laws also reduce financial barriers for individuals seeking addiction treatment. "A state requirement is the only real option that will accomplish the objective of improved mental or nervous coverage at a reasonable premium cost," said Robert E. Bachman of PricewaterhouseCoopers, which conducted analyses of parity in New York and New Jersey in 2002 and 2001, respectively. A New Jersey task force charged with examining parity concluded: "Parity creates a level playing field for all insurers and provides adequate risk-sharing over a large population to minimize any premium increase due to the claims experience of any one group."
Mixed Results in Vermont
A new study on Vermont's 1998 addiction and mental health parity law, conducted by Mathematica Policy Research, Inc., shows mixed results from five years of parity.
The report concluded that "health plans relied on managed care to contain costs, and spending did not rise substantially," according to Mathematica President Charles E. Metcalf. He added that, contrary to popular belief, most employers in Vermont were satisfied with the parity law.
"Employers did not drop coverage or self-insure to avoid the mandate," he noted. Then again, the survey noted, about half of the employers surveyed didn't even know that parity existed in Vermont.
The bad news was that while access to mental-health treatment improved after Vermont's parity law was implemented, access to addiction treatment declined 16 to 29 percent.
Vermont's two major health plans took different approaches to adapt to parity: Blue Cross Blue Shield of Vermont, which had previously provided addiction and mental health services via indemnity contracts, switched to a behavioral managed-care carve-out system. Kaiser/Community Health Plan, which already had a managed-care plan in place, sought to increase use of partial hospitalization and group therapy and decrease the use of inpatient treatment.
"Parity did not result in changes in the availability of employer-sponsored insurance in Vermont, as some had predicted, largely because the costs attributed to parity were small," according to a synopsis by Margo Rosenbach, co-author of the Mathematica study. "But the recent managed-care environment introduces new issues and challenges for the state, employers, and employees that will require continued education and monitoring."
The Mathematica evaluation was funded by the federal Substance Abuse and Mental Health Services Administration.
Ensuring Solutions to Alcohol Problems, 2021 K St., N.W., Suite 800, Washington, DC 20006; 202-296-6922.
Mathematica Policy Research, Inc., P.O. Box 2393, Princeton, NJ 08543; 609-799-3535
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