Mental health benefits legislation

Mental health benefits legislation regulates health insurance to increase access to mental health services, including treatment for substance use disorders. Parity, a key part of most mental health benefits legislation, stipulates that health insurance plans do not impose greater restrictions for mental health coverage than for physical health coverage (CG-Mental health).

Expected Beneficial Outcomes (Rated)

  • Increased access to mental health services

  • Increased substance use disorder treatment

Other Potential Beneficial Outcomes

  • Improved mental health

  • Reduced suicide

Evidence of Effectiveness

There is strong evidence that mental health benefits legislation that includes parity requirements increases appropriate utilization of mental health services (CG-Mental health) and increases substance use disorder treatment (Friedman 2017, ). Such legislation also increases access to care (CG-Mental health, Sipe 2015, Friedman 2017, ) and diagnosis of mental health conditions, and reduces suicide rates and prevalence of poor mental health (CG-Mental health). More comprehensive parity laws yield stronger effects (Sipe 2015, ).

Mental health benefits legislation that includes parity requirements has been shown to modestly increase diagnostic and therapy visits for behavioral health care (), and increase outpatient and inpatient care for patients diagnosed with substance use disorder (Friedman 2017). Such legislation may also increase access and utilization of mental health services for children with autism spectrum disorder (). Legislation that removes limits on coverage of outpatient mental health visits allows visits to occur according to medical necessity rather than benefit plan specifications ().

Parity laws improve financial protection for patients (CG-Mental health, Sipe 2015, ). Such laws appear to reduce out-of-pocket spending for bipolar disorder, major depression, and adjustment disorders (Busch 2013), families whose children have the highest cost for mental health care (Barry 2013), and mental health and substance abuse treatment for adults with severe mental illness (). In some cases, however, individuals diagnosed with substance use disorder may experience a modest increase in out-of-pocket spending (Friedman 2017). Children with autism spectrum disorder () and adults with health insurance through large employers appear to experience no change in total out-of-pocket costs following parity implementation ().

Overall, mental health parity requirements do not appear to significantly increase insurers’ annual cost per health plan member (Jacob 2015, CG-Mental health). An Oregon-based study, however, indicates insurer spending for patients with severe mental illness increased post-parity (), and studies of one of the largest managed behavioral health organizations in the US indicate cost shifting from patients to plans () of approximately $1.05 per enrollee (). Parity requirements for substance use disorder services appear to cause a modest increase in health plan spending (Friedman 2017, Busch 2014).

Experts suggest an ongoing need to monitor insurer compliance with the parity requirements of the federal Mental Health Parity and Addiction Act of 2008 (MHPAEA) and other parity laws ().

Impact on Disparities

Likely to decrease disparities

Implementation Examples

The 2010 Affordable Care Act (ACA) named coverage of mental health and substance use treatment as one of the ten essential health benefits; all plans in the individual and small employer market must include this treatment coverage (NCSL-ACA 2017).

The federal Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) prohibits insurance plans that offer mental health services from restricting this coverage any more than coverage for physical health services; this includes the Children’s Health Insurance Program (CHIP) and Medicaid managed care organizations (MCOs) (Medicaid-MHPAEA). Plans that cover fewer than 50 employees, or do not offer mental health benefits, are exempt from this act (CMS-CCIIO-MHPAEA).

As of 2015, every state and the District of Columbia had enacted some form of mental health benefits legislation (NCSL-Mental health). Large self-funded non-federal governmental employers that self-insure are exempt from state insurance mandates (CMS-CCIIO-MHPAEA).

Implementation Resources

Medicaid-MHPAEA - Medicaid.gov. Mental Health Parity and Addiction Equity Act (MHPAEA). Parity toolkit, roadmap, and resources.

CMS-CCIIO-MHPAEA - Centers for Medicare & Medicaid Services (CMS), The Center for Consumer Information & Insurance Oversight (CCIIO). The Mental Health Parity and Addiction Equity Act (MHPAEA).

Citations - Evidence

* Journal subscription may be required for access.

CG-Mental health - The Guide to Community Preventive Services (The Community Guide). Mental health.

Wen 2013* - Wen H, Cummings JR, Hockenberry JM, Gaydos LM, Druss BG. State parity laws and access to treatment for substance use disorder in the United States: Implications for federal parity legislation. JAMA Psychiatry. 2013;70(12):1355-62.

McConnell 2013* - McConnell KJ. The effect of parity on expenditures for individuals with severe mental illness. Health Services Research. 2013;48(5):1634-52.

Busch 2014 - Busch SH, Epstein AJ, Harhay MO, et al. The effects of federal parity on substance use disorder treatment. The American Journal of Managed Care. 2014;20(1):76-82.

Busch 2013 - Busch AB, Yoon F, Barry CL, et al. The effects of mental health parity on spending and utilization for bipolar, major depression, and adjustment disorders. The American Journal of Psychiatry. 2013;170(2):180-7.

Barry 2013 - Barry CL, Chien AT, Normand S-LT, et al. Parity and out-of-pocket spending for children with high mental health or substance abuse expenditures. Pediatrics. 2013;131(3):e903-e911.

Sipe 2015 - Sipe TA, Finnie RKC, Knopf JA, et al. Effects of mental health benefits legislation: A community guide systematic review. American Journal of Preventive Medicine. 2015;48(6):755-766.

Jacob 2015 - Jacob V, Qu S, Chattopadhyay S, et al. Economic effects of legislations and policies to expand mental health and substance abuse benefits in health insurance plans: A community guide systematic review. The Journal of Mental Health Policy and Economics. 2015;18(1):39-48.

Grazier 2016* - Grazier KL, Eisenberg D, Jedele JM, Smiley ML. Effects of mental health parity on high utilizers of services: Pre-post evidence from a large, self-insured employer. Psychiatric Services. 2016;67(4):448-451.

Ettner 2016* - Ettner SL, Harwood JM, Thalmayer A, et al. The Mental Health Parity and Addiction Equity Act evaluation study: Impact on specialty behavioral health utilization and expenditures among “carve-out” enrollees. Journal of Health Economics. 2016;50:131-143.

Harwood 2017* - Harwood JM, Azocar F, Thalmayer A, et al. The Mental Health Parity and Addiction Equity Act evaluation study: Impact on specialty behavioral health care utilization and spending among carve-in enrollees. Medical Care. 2017;55(2):164-172.

Stuart 2017* - Stuart EA, McGinty EE, Kalb L, et al. Increased service use among children with autism spectrum disorder associated with mental health parity law. Health Affairs. 2017;36(2):337-345.

Friedman 2017 - Friedman S, Xu H, Harwood JM, et al. The Mental Health Parity and Addiction Equity Act evaluation study: Impact on specialty behavioral healthcare utilization and spending among enrollees with substance use disorders. Journal of Substance Abuse Treatment. 2017;80:67-78.

Berry 2017* - Berry KN, Huskamp HA, Goldman HH, Rutkow L, Barry CL. Litigation provides clues to ongoing challenges in implementing insurance parity. Journal of Health Politics, Policy and Law. 2017;42(6):1065-1098.

Citations - Implementation Examples

* Journal subscription may be required for access.

NCSL-Mental health - National Conference of State Legislatures (NCSL). State laws mandating or regulating mental health benefits.

NCSL-ACA 2017 - National Conference of State Legislatures (NCSL). State insurance mandates and the ACA essential benefits provisions. 2017.

Medicaid-MHPAEA - Medicaid.gov. Mental Health Parity and Addiction Equity Act (MHPAEA). Parity toolkit, roadmap, and resources.

CMS-CCIIO-MHPAEA - Centers for Medicare & Medicaid Services (CMS), The Center for Consumer Information & Insurance Oversight (CCIIO). The Mental Health Parity and Addiction Equity Act (MHPAEA).

Date Last Updated

Apr 5, 2018