Mental health and substance abuse insurance parity for federal employees: How did health plans respond?

Colleen L. Barry and M. Susan Ridgely
Additional contact information
Colleen L. Barry: Yale University School, Medicine, Postal: Yale University School, Medicine
M. Susan Ridgely: Senior Policy Analyst, the RAND Corporation, Postal: Senior Policy Analyst, the RAND Corporation

Journal of Policy Analysis and Management, 2008, vol. 27, issue 1, 155-170

Abstract: A fundamental concern with competitive health insurance markets is that they will not supply efficient levels of coverage for treatment of costly, chronic, and predictable illnesses, such as mental illness. Since the inception of employer-based health insurance, coverage for mental health services has been offered on a more limited basis than coverage for general medical services. While mental health advocates view insurance limits as evidence of discrimination, adverse selection and moral hazard can also explain these differences in coverage. The intent of parity regulation is to equalize private insurance coverage for mental and physical illness (an equity concern) and to eliminate wasteful forms of competition due to adverse selection (an efficiency concern). In 2001, a presidential directive requiring comprehensive parity was implemented in the Federal Employees Health Benefits (FEHB) Program. In this study, we examine how health plans responded to the parity directive. Results show that in comparison with a set of unaffected health plans, federal employee plans were significantly more likely to augment managed care through contracts with managed behavioral health “carve-out” firms after parity. This finding helps to explain the absence of an effect of the FEHB Program directive on total spending, and is relevant to the policy debate in Congress over federal parity. © 2008 by the Association for Public Policy Analysis and Management

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hdl.handle.net/10.1002/pam.20311 Link to full text; subscription required (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:jpamgt:v:27:y:2008:i:1:p:155-170

DOI: 10.1002/pam.20311

Access Statistics for this article

More articles in Journal of Policy Analysis and Management from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().