February 2008

Grant Results

National Program

Changes in Health Care Financing and Organization

SUMMARY

Researchers at Yale University examined the financial impact on children and their families of state laws mandating that insurers provide parity in coverage for mental and physical illness.

The researchers studied families with children who required mental health care. They compared out-of-pocket spending and other measures of financial burden among families living in states that have laws mandating parity in mental health coverage with those of families living in states without such mandates.

This project was part of the Robert Wood Johnson Foundation (RWJF) national program Changes in Health Care Financing and Organization (HCFO) (for more information see Grant Results). HCFO supports policy analysis, research, evaluation and demonstration projects designed to provide public and private decision leaders with usable and timely information on health care policy and financing issues.

A Findings Brief on the project is available at the HCFO Web site.

Key Findings

  • The researchers estimated that in states with parity laws, 21 percent of families spend more than $1,000 out-of-pocket on health care for their child, compared with 28 percent of families in states without such laws.
  • Families in states with parity laws were less likely to report that their child's health care caused financial problems than were families in states without such laws (25 percent in parity states versus 35 percent in non-parity states).
  • Family members of children needing mental health care were significantly more likely to cut their work hours to care for a child and to stop working because of a child's health than were parents of children with other special health care needs.

Key Conclusions

  • Findings from this study indicate that parity laws are beneficial to children in need of mental health care. Policies aimed at eliminating the restrictions on mental health care under private insurance policies could be helpful in lowering the financial burden of caring for a mentally ill child.

Funding
RWJF provided a $64,588 grant for the project from February 2006 to July 2007.

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The Problem

Historically, health insurers have offered mental health benefits at a lower level than benefits for other health care. To help overcome this disparity in coverage, Congress passed the Mental Health Parity Act in 1996. This law barred health insurers from imposing annual or lifetime dollar caps on coverage for mental health care, but it did not address other disparities in mental health benefits, including caps on numbers of days or visits covered and higher cost sharing provisions.

Although efforts to expand parity stalled in Congress over the intervening decade, 37 states passed their own mental health parity laws. These state initiatives range from mimicking the federal law to broad reform efforts that mandate comprehensive mental health parity.

Previous studies investigated the effects of state mental health parity laws, but they focused on the adult population. Children with mental health care needs have significantly different needs and characteristics than their adult counterparts.

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The Project

Researchers at Yale University led by Susan H. Busch, Ph.D., examined the financial impact on children and their families of state laws mandating that insurers provide full parity in coverage for mental and physical illness.

The researchers studied families with children who required mental health care, comparing out-of-pocket spending and other measures of financial burden on families living in states mandating parity in mental health coverage with those of families living in states without such mandates.

The researchers used a number of measures of financial burden, as reported by the family, including whether:

  • Out-of-pocket spending on the child's health care exceeded $1,000.
  • The child's health care caused financial problems.
  • The family required additional income to cover the child's medical expenses.
  • The family considered out-of-pocket spending for care reasonable or unreasonable.

The researchers also examined whether a family member:

  • Quit work or reduced work hours to care for a special-needs child.
  • Spent more than four hours a week providing or arranging for care for that child.

The researchers used data from the National Survey of Children with Special Health Care Needs conducted by the National Center for Health Statistics in 2000–2002.

The survey included a large nationally representative sample of children whose parents reported that their children had more health care needs or disability than other children and that the condition was expected to last for at least 12 months. The sample was limited to children with private insurance coverage, since Medicaid programs are not affected by parity laws.

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Findings

The researchers reported these findings in the journals Health Services Research and Health Affairs. In addition, the national program office produced an HCFO Findings Brief on the findings (see the Bibliography):

  • State mental health parity laws reduce the financial burden on families with children in need of mental health services. The researchers estimated that:
    • In states with parity laws, 21 percent of families spend more than $1,000 out-of-pocket on health care for their child, compared with 28 percent of families in states without such laws.
    • In states with parity laws, 30 percent of families report their out-of-pocket spending is not reasonable, compared with 41 percent of families in non-parity states.
  • Children with mental health needs put a greater economic burden on families living in states without parity laws.
    • Families in states with parity laws were less likely to report that their child's health care caused financial problems than were families in states without such laws (25 percent in parity states versus 35 percent in non-parity states).
    • Families in states with parity laws were less likely to report needing additional income to care for their child (23 percent in parity states versus 26 percent in non-parity states).
  • Family members of children needing mental health care were significantly more likely to cut their work hours to care for a child and to stop working because of a child's health than were parents of children with other special health care needs.
  • Parents with children with mental health conditions were significantly more likely than others to spend more than four hours a week arranging their child's care.

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Conclusions

The researchers concluded that:

  • Evidence from this study indicates that parity laws are beneficial to children in need of mental health care. Mental health parity policies aimed at eliminating the restrictions on mental health care under private insurance policies could be helpful in lowering the financial burden of caring for a mentally ill child.

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Afterward

The research team wrote two additional articles and submitted them for publication. The articles address the federal Employee Retirement Income Security Act (which exempts self-insured organizations from state parity mandates) and how the exemption affects adults versus children.

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GRANT DETAILS & CONTACT INFORMATION

Project

Effect of State Parity Laws on Children With Mental Health Care Needs

Grantee

Yale University School of Public Health (New Haven,  CT)

  • Amount: $ 64,588
    Dates: February 2006 to July 2007
    ID#:  056465

Contact

Susan H. Busch, Ph.D.
(203) 785-2927
susan.busch@yale.edu

Web Site

http://www.hcfo.org

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Articles

Barry CL, Frank RG and McGuire TG. "The Costs of Mental Health Parity: Still an Impediment?" Health Affairs, 25(3): 623–634, 2006.

Busch SH and Barry CL. "Mental Health Disorders in Childhood: Assessing the Burden on Families." Health Affairs, 26(4): 1088–1095, 2007.

Barry CL and Busch SH. "Do State Parity Laws Reduce the Financial Burden on Families of Children With Mental Health Care Needs?" Health Services Research, 42(3): 1061–1084, 2007.

Reports

Demchak C. Financial Relief: The Effect of State Mental Health Parity Laws on Families of Children With Mental Health Care Needs. Washington: AcademyHealth, 2007. Also available online.

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Report prepared by: Barbara Matacera Barr
Reviewed by: Richard Camer
Reviewed by: Molly McKaughan
Program Officer: Nancy L. Barrand

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