March 30, 2006

Insurance coverage for Mentally Ill - Not very expensive

The New York Times reported today that a new study published in the New England Journal of Medicine found that parity in insurance coverage for mental illnesses (that is, brain disorders like schizophrenia, bipolar disorder and depression) does not drive up the cost as insurance providers have feared. Traditionally in the US the insurance coverage for mental illness treatments is poor - with the result that many of the people who develop schizophrenia don't get adequate medical attention and instead end up in the country's prisons (at a much higher cost to the tax payer).

The story reported:

President Bill Clinton ordered such equal coverage for federal workers in 1999, and the changes took effect in 2001. Under the policy, known as parity, insurers were forbidden to charge higher co-payments or impose stricter limits on psychiatric care or treatment for alcohol and drug abuse.

The new study of those changes, being published Thursday in The New England Journal of Medicine, concludes that if mental health care is properly managed, expanding the coverage of it "can improve insurance protection without increasing total costs" beyond those paid by insurers that do not offer parity.

Providing equal coverage for treatment of mental disorders did not increase the use of mental health services under the federal employee program, the researchers said. But it did lead to "significant reductions in out-of-pocket spending" for many government workers and retirees.

A co-author of the study, Richard G. Frank, professor of health economics at Harvard, said, "The big winners, in terms of reduced out-of-pocket spending, were the sickest patients, including those who needed hospital care."

Read the New England Journal of Medicine summary: Behavioral Health Insurance Parity for Federal Employees

See the Full New York Times article: Study Backs Equal Coverage for Mental Ills (free registration required)


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