Considering Health Insurance Parity: The Federal Experience

The APA offers commentary on parity:

The parity policy in the Federal Employees Health Benefits program began on Jan. 1, 2001, and offers comprehensive insurance coverage for mental disorders, including substance use disorders, on terms that are identical to the coverage of general medical conditions when the treatment is provided by in-network providers.

We compared seven Federal Employees Health Benefits plans with a matched set of plans that did not change benefits or management and did not have parity. We compared use and spending by enrollees in these plans for the 2 years before parity (1999 and 2000) and for the 2 years after parity began (2001 and 2002)….

We concluded that “parity of coverage of mental health and substance abuse services, when coupled with management of care, is feasible and can accomplish its objectives of greater fairness and improved insurance protection without adverse consequences for health care costs” (1, p. 1386).

The parity policy performed just as insurance should: it reduced costs from out-of-pocket payments with a small increase in plan payments (3). This could result in very small increases in insurance premiums without leading to an increase in the use of services. The Congressional Budget Office estimates a premium impact for group plans of a 0.4 percentage point increase (4), a figure that is identical to our estimate based on the Federal Employees Health Benefits experience.

We also looked at indirect measures of quality of behavioral health care in the Federal Employees Health Benefits plans during this same period. Parity was accomplished without increases in the hospitalization of patients and without a decline in the measures of quality of care that we studied, such as the likelihood of receiving follow-up care for depression or being referred for substance abuse treatment.

There was no use of or spending for (oft-parodied) trivial behavioral conditions under managed care plans. It is worth noting that the ICD contains a wide range of general medical conditions, such as scrapes and bruises, rashes, sprains, and the common cold, just as it includes sleep disorders, mild phobias, and mild learning problems. Managed care arrangements and “medical necessity” criteria control unnecessary use and spending for trivial cases of general medical conditions and mental disorders alike.