Mental health coverage not costly for employers

The Mental Health Parity and Addiction Equity Act is not expected to largely impact the growth rate of employer health care expenditures, according to two new studies from the health care business of Thomson Reuters in partnership with the Substance Abuse and Mental Health Services Administration.

Both studies find the law will not have much of a financial impact on employers because of the small amount of total spending as well as a little use of inpatient and outpatient services. In fact, substance abuse spending has remained a low portion of all costs as it accounts for just 0.4 percent of all health spending in 2009.  

Mental health and substance abuse spending also is low, only amounting to 5.2 percent of all health expenditures from 2001 through 2009 or 2.2 percent if psychiatric drug spending is excluded. Of that spending, just 0.3 percent contributed to the growth in total health expenditures with prescription drugs included. That figure drops to 0.1 percent when prescriptions are excluded. 

"Employers need not be alarmed by the new coverage mandates of the MHPAEA," says Tami L. Mark, Ph.D., the paper's lead author and senior director of Thomson Reuters. "It seems clear, given the relatively low spending on and low intensity of use of mental health and substance abuse services, that the additional cost incurred by employers because of the mandate is likely to be negligible."

The first study, Spending Trends on Substance Abuse Treatment Under Private Employer-Sponsored Insurance 2001–2009, looks at patterns in substance abuse treatment spending as well as use between 2001 and 2009 to define a baseline for evaluating the impacts of recent health policy changes. The second study, Mental Health Spending by Private Insurance: Implications for the Mental Health Parity and Addiction Equity Act, estimates the possible cost implications for employers under the MHPAEA, which requires group health plans cover the same level of benefits of both general and mental health and substance abuse.  

 

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