Without Parity, We Waste Money.
- The combined indirect
and related costs of mental illness, including costs of lost productivity,
lost earnings due to illness, and social costs are estimated to total
at least $113 billion annually.[1]
- Clinical depression
alone costs the U.S. $43.7 billion annually, including workplace
costs for absenteeism and lost productivity ($23.8 billion), direct
cots for treatment and rehabilitation ($12.4 billion), and lost earning
due to depression-induced suicides ($7.5 billion).[2]
- Health plans with
the highest financial barriers to mental health services
have higher rates of psychiatric Long Term Disability (LTD) claims,
and
companies
with easier access to mental health services see a reduced
incidence of LTD claims.[3]
- Cutting
dollars for mental health care can increase overall medical
costs. A
30 percent cost reduction in mental health services at
a large Connecticut corporation triggered a 37 percent increase
in
medical care use
and
sick leave by employees using mental health services,
thus costing the corporation more money rather than less.[4]
- Healthcare
costs of untreated persons who suffer from alcoholic and
drug addiction
are 100 percent higher than those who receive treatment. Of
all hospital admissions, at least 25 percent of those admitted
suffer
from alcoholism-related complications, and 65 percent of
emergency room visits are alcohol or other drug related.[5]
Parity is Affordable.
- Introducing mental
health parity in conjunction with managed care results in a 30 to
50 percent decrease in total mental health costs. In systems that
are already using managed care, implementing parity results in
a less
than one percent increase in health care costs.[6]
- It is estimated
that parity would increase premiums by only 1.4 to 1.6 percent,
and warned that this estimate may still be too high.[7]
- “Employers have
not attempted to avoid parity laws by becoming self-insured, and
they do not tend to pass on the costs of parity to employees. The
low cost of adopting parity allows employers to keep employee health
care contributions at the same level they were before parity.”[8]
- SAMHSA estimates
that severe mental illnesses (biologically based illnesses) account
for 90 percent of any cost increases from parity. They further
estimate that adding children to federal legislation would result
in a cost
increase of approximately 0.8 percent in managed care settings.[9]
- In Minnesota,
Blue Cross/Blue Shield reduced its insurance premiums by five to
six percent after one year’s experience under the state’s comprehensive
parity law.[10]
- In North Carolina,
mental health expenses have decreased every year since comprehensive
parity for state and local employees was passed in 1992. Mental
health costs, as a percentage of total health benefits, have decreased
from 6.4 percent in 1992 to 3.1 percent in 1998. Since 1992, hospital
days paid by the plan have been reduced by 70 percent.[11]
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Parity
Improves Access to Services and Saves Money.
- While the estimated
annual cost to the nation of providing mental health coverage commensurate
to physical health coverage for all children and adults is $6.5 billion,
it is also estimated that this mental health coverage would result
in savings for general medical services and indirect costs in the
amount of $8.7 billion - a net annual savings of $2.2 billion.[12]
- Studies have found
that overall medical care costs decrease for those using behavioral
healthcare services, when such costs were generally increasing.[13]
- Employment Assistance
Programs (EAPs) have proven to be cost-effective. Chevron, Corp.
saved seven dollars for every dollar it spent on their EAP; Campbell
Soup
Company had a 28 percent reduction in mental healthcare costs; and
Virginia Power realized a 23 percent drop in medical claims over
a four-year period for individuals who accessed the EAP compared
with
those who accessed behavioral health benefits on their own.[14]
- At McDonnell Douglas,
absenteeism dropped 44 percent for employees treated for substance
abuse issues, and they set the three-year value of employee assistance
services at $4.4 million in medical claims. When the Kennecott Copper
Corporation provided mental health counseling for employees, its
hospital, medical, and surgical costs decreased 48.9 percent.[15]
For additional information,
please contact the Healthcare
Reform Advocacy Resource Center at
1-800-969-NMHA (6642), option 6.
[3] Salkever D.S.; Goldman H.; Purushothaman M.; Shinogle J. (April
2000). Disability Management, Employee Health and Fringe Benefits,
and Long-Term-Disability Claims for Mental Disorders: An Empirical
Exploration. The Milbank Quarterly.vol. 78, no. 1, pp. 79-114(35).
[4] Rosenheck, Robert et al. (September 1999). Effect Of Declining
Mental Health Service Use On Employees Of A Large Corporation: General
health costs and sick days wentup when mental health spending was cutback
at one large self-insured company. Journal of Health Affairs:
18(5).
[5] Hazelden Foundation (1999). Testimony before the House Committee
on Government Reform. Minnesota: Hazeldon Foundation.
[6] Varmus, H. E. (April 1998). Parity in Financing Mental Health
Services: Managed Care’s Effects on Cost, Access, and Quality, An Interim
Report to Congress, 1998 by the National Advisory Mental Health Council.
Rockville, MD: Department of Health and Human Services.
[7] Kirschstein, R. L., MD (June 2000). Insurance Parity for Mental
Health: Cost, Access, and Quality, Final Report to Congress by the
National Advisory Mental Health Council. Rockville, MD: Department
of Health and Human Services.
[8] Varmus, 1998.
[9] Sing, M., Hill, S., Smolkin, S., and Heiser, N.
(1998). The Costs and Effects of Parity for Mental Health and Substance
Abuse Insurance Benefits. Rockville, MD: Department of Health
and Human Services, Substance Abuse and Mental Health Services Administration.
[10] Levin et al. “Mental Health Parity: 1998 National
and State Perspectives,” The Louis de la Parte Florida Mental Health
Institute (March 25, 1998).
[11] Bachman, Ronald E. (2000). Mental Health Parity: "Just
the Facts" -- Actual Data and Experience Reports. Prepared
for the American Psychological Association, 2000 State Leadership
Conference (Atlanta, GA: PriceWaterHouseCoopers).
[12] National Advisory Mental Health Council (October
1993). Healthcare reform for Americans with severe mental illnesses: Report
of the National Advisory Mental Health Council. American Journal
of Psychiatry, 150 (10), 1447-1465.
[13] Cuffel, BJ, Goldman, W., and Schlesinger, H.
(1999). Does managing behavioral health care services increase the
cost of providing medical care? The Journal of Behavioral Health
Services and Research, 26 (4), 372-380.
[14] Magellan Behavioral Health (no date). EAPs:
Saving Money, Saving Employees. Columbia, MD: Magellan Behavioral
Health.
[15] GWCMHPC, Inc. (2000). Good Mental Health
Coverage Brings Big Returns to the Workplace. Marland: Greater
Washington Coalition of Mental Health Professionals & Consumers,
Inc. and the Washington School of Psychiatry.
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