Revisiting Offsets of Psychotherapy Coverage

Benjamin Ly Serena
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Benjamin Ly Serena: University of Copenhagen

No 21-05, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

Abstract: Mental illness is a leading cause of disability worldwide with vast costs to society. Yet, insurance coverage for effective treatments remains limited. This paper revisits the Offset Hypothesis, which claims insurance coverage for psychotherapy is self-financing through reductions in the use of other health care services and improved labor market outcomes. I study a 2008 reform of the Danish public health care system that introduced 60 percent coverage of the cost of psychotherapy for depression and anxiety patients below age 38. Using Regression Discontinuity and Difference-in-Difference designs, I show that psychotherapy coverage reduces the use of other mental health services, physical health care and suicide attempts, but does not impact employment, sick leave or disability pension receipt. Still, the reduction in health care costs is sufficiently large to finance the policy. This suggests mental health coverage is both welfare improving and cost reducing.

Keywords: mental health; health insurance; health care; offset; labor market (search for similar items in EconPapers)
JEL-codes: H51 H55 I13 I18 I38 (search for similar items in EconPapers)
Pages: 70
Date: 2021-03-04
New Economics Papers: this item is included in nep-hea, nep-ias and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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