The effects of state mental health parity legislation on perceived quality of insurance coverage, perceived access to care, and use of mental health specialty care

Health Services Research, Oct, 2004 by Yuhua Bao, Roland Sturm

States have in recent years taken a more prominent role in social policy, including health care and welfare programs that were previously administered at the federal level (the so called "new federalism"). In the arena of health care policy, new federalism often takes the form of health insurance mandates. While some applaud the increased activism of states in health policy, others criticize state legislation as creating an impenetrable jungle of regulations that increases health care costs, possibly causing employers (usually of small firms) to drop insurance benefits and therefore increasing the uninsurance rate. Therefore the overall question of policy interest is whether state legislation can make a substantial difference at the population level and serve as a substitute for federal legislation. This study focuses on one area that has been prominent in the past decade: mental health benefits.

Traditionally, insurance benefits for mental health care have been more restrictive than benefits for medical and surgical services. The 1996 federal Mental Health Parity Act (MHPA; see, e.g., http://www.cms.hhs.gov/hipaa/ hipaa1, for a summary of the legislation and the statutory text) was an attempt to address this discrepancy and prohibited differential dollar limits for mental health and medical care in employer-sponsored insurance plans, but allowed differential limits in terms of hospital days and outpatient visits as well as differential cost-sharing features such as copayments, coinsurance, or deductibles. Thus, this legislation resulted in virtually no substantial changes in consumers' health benefits, their access to mental health care, or health care costs related to the parity bill (General Accounting Office 2000). However, the federal legislation may have had an important symbolic value and encouraged many states to follow up with stronger mandates. By 2001, 31 states passed some form of parity legislation (National Advisory Mental Health Council 2001; Gitterman et al. 2001). In this article, we study the question to what extent recent state parity legislation changed perceived health insurance benefits, perceived access to care, and use of mental health specialty care, using survey data from 1998 and 2001.

Preliminary evaluations of early state parity legislation suggested that at least the short-term effects were minimal or nonexistent (Sturm 2000; Pacula and Sturm 2000). The findings were criticized for their focus on individuals of all types of insurance status, not just those in plans that are subject to changes as a consequence of the legislation, the small number of (possibly atypical) states that quickly adopted mental health legislation, and the related argument that legislation may have been a consequence, rather than a cause, of differences in the use of mental health care across states (Zuvekas 2000; Sturm and Pacula 1999). Overall, these limitations cast doubt on the validity of any cross-sectional evaluation and suggest the need for investigating the pre-post changes across states. Since 1998, 15 more states passed new parity laws and other states either expanded initial legislation (for example, Connecticut and Missouri), or enacted statewide parity after a pilot program among state employees (Indiana, Massachusetts, North Carolina, South Carolina, and Texas) (Gitterman et al. 2001; National Advisory Mental Health Council 2001, Appendix E). It is now possible to distinguish between stronger and weaker legislation in terms of comprehensiveness of the mandate. Furthermore, having a larger number of states now subject to parity legislation increases the statistical power and enhances the generalizability of the results (i.e., it reduces the probability that factors particular to an individual state affect the conclusions about the effect of the policy).

DATA

The data analyzed here come from two waves of the Health Care for Communities (HCC) household survey, a component of the Robert Wood Johnson Foundation's Tracking Initiative, which follows up on participants in the Community Tracking Study (CTS). Wave 1 of HCC was fielded in 1997/1998 and reinterviewed 9,585 CTS participants (64 percent response rate). Wave 2 was fielded in 2000/2001 and included two separate components: a longitudinal component that reinterviewed 6,659 respondents from HCC Wave 1 (70 percent response rate), and a second component that reinterviewed 5,499 participants from a new cross-sectional sample of CTS (59 percent response rate). Combining the two waves of data gives a sample size of 21,743 interviews, with interviewed individuals residing in 48 states and the District of Columbia (there were no respondents from Vermont or Hawaii). The study designs of HCC have been described in prior publications (Sturm et al. 1999; Kemper et al. 1996) and detailed documentation and data are available through the Inter-University Consortium for Political and Social Research at the University of Michigan (http://www.icpsr.umich.edu).

Since state mental health parity legislation only applies to private insurance plans (group insurance or individual plans, or both), we restrict all our analyses to the adult population that are covered by either employer-provided insurance or self-bought insurance, but these individuals may have other types of coverage in addition to the two types of private insurance. By only considering privately insured individuals, we address one of the criticisms of the earlier evaluations, namely that the inclusion of individuals with public insurance and the uninsured inappropriately dilutes the effects of parity legislation (Zuvekas 2000). Yet it is not clear that the restriction adopted in the current study provides a "better" estimate of the effects of state legislation because parity legislation may price some small employers out of the market (Jensen and Morrisey 1999; Jensen and Gabel 1992). However, we do not expect these indirect effects to be very important and in preliminary tests did not find any association between change in insurance status and mental health parity legislation. Nevertheless, to the extent that parity mandates cause a shift from private insurance to no-insurance or public insurance coverage that are not affected by parity legislation, our analysis would overstate increases in perceived insurance benefits, perceived access, or utilization associated with parity legislation. A second potential criticism regarding the study sample is that state legislation may not apply to self-insured employer plans and one should therefore only study plans that are subject to state legislation (Zuvekas 2000). Unfortunately, one risks making an evaluation tautological by studying only positive responders: Employer decisions about legal arrangements of the health benefits they offer are directly affected by state mandates and therefore an outcome of legislation. So there is a reason to study all employer-sponsored plans.