In Senate Report No.105-300, the Senate Appropriations Committee observed, "The Committee has recently received from the National Advisory Mental Health Council [NAMHC] the report requested in its fiscal year 1998 appropriations report and notes the impact of managed care on keeping costs of parity at a low level." The Committee requested from the NAMHC an additional report on its findings from emerging health services research data that would, where possible "...address both employer direct costs, and the impact of indirect cost savings from successful treatment of employees." The NAMHC was also asked to "consider the costs and quality of coverage for children, and the development of outcome measures of quality for all mental health coverage." This report was developed in response to the Committee's request.

Building upon a body of knowledge developed in the course of three prior NAMHC reports on parity to the Senate Appropriations Committee, an analysis of recent studies reveals the following major findings:

• What is the current status of parity legislation in the US? Thirty-one of the 50 States have now passed some form of parity legislation, with benefits that range from limited to comprehensive. The 1996 Mental Health Parity Act (which is now being considered for reauthorization) appears to have accelerated the passage of State-level parity legislation. And in mid-1999, President Clinton announced that a parity-level benefit would be implemented for 8.7 million beneficiaries of the Federal Employees Health Benefit Program (FEHB) beginning in calendar year 2001.
• Does implementing parity increase the total cost of health benefits? Recent research supports and expands earlier findings that implementing parity benefits results in minimal if any increase in total health care costs. A recently updated simulation model estimates an approximately 1.4 percent increase in total health insurance premium costs when parity is implemented. In addition, data from a large State show that total health care costs decreased after the implementation of parity.
• Does implementing parity cause cost shifting between different health system sectors? The issue is complex. Data are not available under parity, but recent research indicates that high-cost consumers may not shift completely to coverage under the public system; rather, some may be covered by both the private and public systems. The implications of this finding remain unclear.
• How does parity affect access and quality? A recent study with a large State database shows that when parity mental health benefits are introduced with managed care, an increased proportion of adults and children used some outpatient mental health services. However, the intensity of services (number of visits) did not increase and inpatient use declined. Although the reduction in inpatient use was most pronounced for children, there was evidence that their access to specialty mental health services increased. What is unknown is the quality of care and impact of these changes.
• How can the quality of mental health services be measured and improved? Although research in this area offers the promise of new and feasible measures, no currently available quality measures provide all the answers that consumers, providers, employers and policy makers want. Even with appropriate measures of quality and the ability to put them into place, interventions need to be developed that actually improve the quality of mental health care. Some recent evidence suggests that even small-scale interventions can ensure the delivery of appropriate services.
• How does parity or managed care affect disability and productivity in the workforce? Data are not yet available to assess the impact of parity in these areas. However, studies under non-parity conditions suggest that mental health services can decrease the amount of lost wages and reduce lost days from work and the number of disability claims.

In summary, mental health parity is now the law in the majority of States. The cost of parity in combination with managed care is less than initially anticipated, and it has some beneficial effects on access. Yet, it is still unclear what impact parity has on the quality of mental health services and the well-being of people with mental illnesses. As Mechanic and McAlpine note in a recent issue of Health Affairs:

"The challenge for the coming decade is to develop clear standards based on the best evidence and clinical judgment so that parity has substance in implementation as well as in concept. Parity is not simply some match in service limits to what a medical or surgical patient experiences. It should be a configuration of management strategies fitted to careful assessment of patients' needs and a response that is consistent with our best scientific knowledge." (Mechanic and McAlpine1999)

It remains to be seen how the balance will be struck over the next few years between State legislation, large employer initiatives (public and private), and federal legislative expansions of the 1996 Mental Health Parity Act.

¹ NOTE: This report does not necessarily reflect the views of the Department of Health and Human Services.

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This page was last updated: November 1, 2000.

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