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 coverage1. The federal Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 requires parity for copays, coinsurance, and out-of-pocket minimums; care management tools; limits on the covered number of outpatient visits or inpatient days; and criteria for determining what care is medically necessary2; state-based legislation can extend parity even farther3. Legislation that removes limits on coverage of outpatient mental health visits allows visits to occur according to medical necessity, rather than benefit plan specifications4.
What could this strategy improve?
Expected Benefits
Our evidence rating is based on the likelihood of achieving these outcomes:
Increased access to mental health services
Reduced patient costs
Potential Benefits
Our evidence rating is not based on these outcomes, but these benefits may also be possible:
Improved mental health
Reduced suicide
Increased substance use disorder treatment
What does the research say about effectiveness?
There is strong evidence that mental health benefits legislation that includes parity requirements increases access to care for mental health conditions1, 5, 6, 7, 8, 9, 10, 11, 12 and reduces costs to patients1, 8, 13, 14, 15, 16, 17. More comprehensive parity laws yield stronger effects8, 18, 19.
Mental health benefits legislation that includes parity requirements has been shown to modestly increase diagnostic and therapy visits for behavioral health care12, and applying parity requirements to Medicaid can increase use of outpatient and inpatient mental health care and prescription medications for mental health conditions6. Such laws can also increase access to outpatient7, 11 and inpatient care for patients diagnosed with substance use disorder11. A study of the dual impact of the Mental Health Parity and Addiction Equity Act (MHPAEA) and the Affordable Care Act (ACA) suggests they may reduce rates of severe morbidity among birthing people, particularly those with perinatal mood and anxiety disorders5.
Parity laws can reduce suicide rates and prevalence of poor mental health for patients receiving treatment for mental health conditions1, 3, including among college-aged students; reductions in poor mental health days appear to be greater among female students3. Parity laws have also been shown to increase the use of specialty behavioral health care services for children10, including children with autism spectrum disorder20. A study based on national data suggests greater exposure to comprehensive parity laws in childhood and adolescence reduces the need for mental health visits in adulthood, perhaps by ensuring greater access to needed care at an earlier age21.
Parity laws improve financial protection for patients1, 8, 14, 18, including families of children receiving care13. Such laws reduce out-of-pocket spending for patients, including high utilizers of mental health services8, patients with bipolar disorder, major depression, and adjustment disorders15, families whose children have the highest cost for mental health care16, and mental health and substance abuse treatment for adults with severe mental illness17. In some cases, however, individuals diagnosed with substance use disorder may experience a modest increase in out-of-pocket spending11. Children with autism spectrum disorder20 and adults with health insurance through large employers appear to experience no change in total out-of-pocket costs following parity implementation, even with increases in service use12.
Overall, mental health parity requirements do not appear to significantly increase insurers’ annual cost per health plan member1, 22. An Oregon-based study, however, saw insurer spending for patients with severe mental illness increase post-parity17, and a study of children’s access to behavioral health services found increased total per-member-per-month costs10. Studies of one of the largest managed behavioral health organizations in the U.S. indicate cost shifting from patients to plans14 of approximately $1.05 per enrollee12. Parity requirements for substance use disorder services appear to cause a modest increase in health plan spending11, 23.
Experts suggest an ongoing need to monitor insurer compliance with the parity requirements of the federal MHPAEA and other parity laws24, 25 and recommend using clear definitions of mental health conditions based on current diagnosis standards in legislation21. Additional reform is needed to expand access to substance use disorder treatment and ensure coverage amounts are based on evidence-based practices26.
How could this strategy advance health equity? This strategy is rated inconclusive impact on disparities.
It is unclear what impact mental health benefits legislation may have on disparities in access to mental health care and mental health outcomes among diverse groups. Available evidence suggests implementing mental health benefits parity through public insurance (i.e., Medicaid and Medicare) can increase access to mental health care for individuals with low incomes6, 30, but individuals from racially and ethnically minoritized groups may not experience the same benefits30. A national study suggests that when parity laws require private health plans to cover alcohol treatments, treatment rates may increase more for Hispanic patients than white or Black patients31.
Disparities in mental health outcomes exist in the U.S. within racially, ethnically32, gender33, and geographically34 diverse civilian populations, as well as among service members and veterans, compared with those at less risk because of their identity, military service status32, or community type34. Mental health conditions are far more common in groups who have been historically marginalized and minoritized by society; for example, individuals with multi-racial backgrounds or those that are LGBTQ+ are more likely to experience mental illness35, 36. Even with parity legislation to mandate mental health coverage equal to that of physical health coverage, challenges in meeting the mental health needs of populations who have been under-resourced and disenfranchised remain21, 30, 37, 38. Limited cultural competency among health care and mental health care providers can lead to misdiagnosis or underdiagnosis of mental health conditions in diverse populations due to language barriers, different cultural presentations of symptoms, mental illness stigma, and distrust of the health care system35. Additionally, there are not enough mental health providers, and those who are practicing are less likely to be in rural and under-resourced urban areas, and they may choose not to accept patients with Medicare or Medicaid benefits39, 40.
Parity laws alone cannot overcome systemic issues that prevent adequate access to mental health care for people from racially and ethnically minoritized groups, individuals with low incomes, and other socio-economically disadvantaged populations21, 30, 37, 38.
Additionally, insurers may impose limits not addressed by parity, such as setting separate copayments and deductibles, disproportionately burdening families and individuals with lower incomes37. The legal complexity of how parity applies may also prevent those with less education, lower incomes, or less trust in the legal system from identifying wrongful denial of claims and pursuing legal complaints38.
What is the relevant historical background?
Mental health conditions and neurodiversity have long been stigmatized by society, seen as a source of shame for both the individuals who suffer from it and their families41. Mental illness was typically viewed as a moral or spiritual failing42; people with mental health conditions were viewed as a burden and ignored or minimized at best. However, individuals with more severe issues would be locked in asylums and kept from greater society, where treatments were often brutal, and almost always ineffective43. The system could also be exploited, and those who stepped outside the bounds of society could be subjected to cruelty and incarceration in asylums, and later institutions44.
While society’s understanding of and treatments for mental health have evolved over time, stigma around mental health conditions remains common in many communities41. Stigma against mental health and substance use disorders, as well as distrust of the mental health care system, may prevent those who need help from seeking care, even if it is covered by their insurance21, 39. In western cultures, including the U.S., there are often assumptions about individuals with mental health conditions, such as the mistaken belief that they are unpredictable or dangerous, contributing to discrimination and social exclusion41, and reducing options for work, education, housing, and social connections45.
The National Institute of Mental Health was established in 1949 to research the mind, brain, and behavior as a way to reduce mental illness43. Mental health care coverage was still not a standard part of insurance coverage, although following World War II some insurers began covering a limited amount of hospital-based psychiatric care46. In the 1970s and 1980s, some state legislatures passed mandated benefits laws for private insurance, establishing minimum benefits for mental health and/or substance abuse disorders46.
Legislation to establish insurance coverage parity for physical health and mental health conditions began appearing with the 1996 Mental Health Parity Act, though it excluded addiction related treatments47, and many state governments passed additional, stricter mental health parity laws for private insurance in the late 1990s and early 2000s3, 27. The 2008 Mental Health Parity and Addiction Equity Act (MHPAEA) expanded federal parity requirements and the Affordable Care Act (ACA) extended them further, along with the declaration that care for mental health and substance use disorders is an essential health benefit27, 28, 40.
In September 2024, new final rules were released by the U.S. Departments of Health and Human Services, Labor, and the Treasury to further the fundamental purpose of the MHPAEA and ensure full equity in health insurance coverage for mental health conditions and substance abuse disorders28.
Equity Considerations
- Who has access to mental health services in your community and who does not? Are there local efforts or programs that emphasize the importance of mental health care and reducing stigma associated with mental health conditions and substance use disorders?
- Is there guidance available to teach patients about mental health coverage through their insurance? What partnerships (e.g., primary care clinics, employers, community organizations) could be established to increase knowledge?
- How are health care providers, community members, and policymakers engaged in oversight efforts to ensure parity is properly applied by health insurers?
Implementation Examples
As of January 2019, 49 states have mental health insurance parity laws, some more comprehensive than federal parity laws27. 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 coverage28, extending the benefits of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) which required this coverage for large group employers, the Children’s Health Insurance Program (CHIP) and Medicaid managed care organizations (MCOs)2. Large, self-funded non-federal governmental employers that self-insure are exempt from state insurance mandates28.
The U.S. Department of Labor (U.S. DOL), Employee Benefits Security Administration offers tools and resources about using mental health and substance use disorder benefits, why claims may be denied and how to file an appeal, where to access treatment services, and guidance for families and caregivers29.
Implementation Resources
‡ Resources with a focus on equity.
US DOL-Parity - Employee Benefits Security Administration. Mental health and substance use disorder parity: Protection of mental health and substance use disorder benefits. U.S. Department of Labor (U.S. DOL).
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).
Footnotes
* Journal subscription may be required for access.
1 CG-Mental health - The Guide to Community Preventive Services (The Community Guide). Mental health.
2 Medicaid-MHPAEA - Medicaid.gov. Mental Health Parity and Addiction Equity Act (MHPAEA). Parity toolkit, roadmap, and resources.
3 Solomon 2022 - Solomon, K. T., & Dasgupta, K. (2022). State mental health insurance parity laws and college educational outcomes. Journal of Health Economics, 86, 102675.
4 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.
5 Hall 2023b - Hall, S. V., Zivin, K., Dalton, V. K., Bell, S., Kolenic, G. E., & Admon, L. K. (2023). Association of the Mental Health Parity and Addiction Equity Act and the Affordable Care Act on severe maternal morbidity. General Hospital Psychiatry, 85, 126–132.
6 Burns 2020 - Burns, M. E., Dague, L., Saloner, B., Voskuil, K., Kim, N. H., Serna Borrero, N., & Look, K. (2020). Implementing parity for mental health and substance use treatment in Medicaid. Health Services Research, 55(4), 604–614.
7 Mulvaney-Day 2019 - Mulvaney-Day, N., Gibbons, B. J., Alikhan, S., & Karakus, M. (2019). Mental Health Parity and Addiction Equity Act and the use of outpatient behavioral health services in the United States, 2005–2016. American Journal of Public Health, 109(S3), S190–S196.
8 Haffajee 2019 - Haffajee, R. L., Mello, M. M., Zhang, F., Busch, A. B., Zaslavsky, A. M., & Wharam, J. F. (2019). Association of federal mental health parity legislation with health care use and spending among high utilizers of services. Medical Care, 57(4), 245–255.
9 Li 2020d - Li, X., & Ma, J. (2020). Does mental health parity encourage mental health utilization among children and adolescents? Evidence from the 2008 Mental Health Parity and Addiction Equity Act (MHPAEA). The Journal of Behavioral Health Services & Research, 47(1), 38–53.
10 Block 2020 - Block, E. P., Xu, H., Azocar, F., & Ettner, S. L. (2020). The mental health parity and addiction equity act evaluation study: Child and adolescent behavioral health service expenditures and utilization. Health Economics, 29(12), 1533–1548.
11 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.
12 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.
13 Kennedy-Hendricks 2018 - Kennedy-Hendricks, A., Epstein, A. J., Stuart, E. A., Haffajee, R. L., McGinty, E. E., Busch, A. B., Huskamp, H. A., & Barry, C. L. (2018). Federal parity and spending for mental illness. Pediatrics, 142(2), e20172618.
14 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.
15 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):180-187.
16 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.
17 McConnell 2013 - McConnell KJ. The effect of parity on expenditures for individuals with severe mental illness. Health Services Research. 2013;48(5):1634-1652.
18 CG-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.
19 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):1355-1362.
20 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.
21 Heboyan 2021 - Heboyan, V., Douglas, M. D., McGregor, B., & Benevides, T. W. (2021). Impact of mental health insurance legislation on mental health treatment in a longitudinal sample of adolescents. Medical Care, 59(10), 939–946.
22 CG-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.
23 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.
24 Knopf 2022 - Knopf, A. (2022). Parity for MH/SUD still falling short. Alcoholism & Drug Abuse Weekly, 34(5), 5–6.
25 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.
26 Dickson-Gomez 2022 - Dickson-Gomez, J., Weeks, M., Green, D., Boutouis, S., Galletly, C., & Christenson, E. (2022). Insurance barriers to substance use disorder treatment after passage of mental health and addiction parity laws and the affordable care act: A qualitative analysis. Drug and Alcohol Dependence Reports, 3, 100051.
27 Douglas 2024 - Douglas, M. D., Corallo, K. L., Moore, M. A., DeWolf, M. H., Tyus, D., & Gaglioti, A. H. (2024). Changes in state laws related to coverage for substance use disorder treatment across insurance sectors, 2006–2020. Psychiatric Services, 75(6), 543–548.
28 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).
29 US DOL-Parity - Employee Benefits Security Administration. Mental health and substance use disorder parity: Protection of mental health and substance use disorder benefits. U.S. Department of Labor (U.S. DOL).
30 Fung 2023 - Fung, V., Price, M., McDowell, A., Nierenberg, A. A., Hsu, J., Newhouse, J. P., & Cook, B. L. (2023). Coverage parity and racial and ethnic disparities in mental health and substance use care among Medicare Beneficiaries: Study examines coverage parity for outpatient mental health and substance use care among Black, Hispanic, Asian, and American Indian/Alaska Native versus White Medicare beneficiaries. Health Affairs, 42(1), 83–93.
31 Mulia 2019 - Mulia, N., Lui, C. K., Ye, Y., Subbaraman, M. S., Kerr, W. C., & Greenfield, T. K. (2019). U.S. alcohol treatment admissions after the Mental Health Parity and Addiction Equity Act: Do state parity laws and race/ethnicity make a difference? Journal of Substance Abuse Treatment, 106, 113–121.
32 Sharifian 2024 - Sharifian N, Kolaja C, LeardMann CA, et al. Racial and ethnic mental health disparities in U.S. military veterans: Results from the National Health and Resilience in Veterans Study. American Journal of Epidemiology. 2024;193(3):500-515.
33 Mongelli 2024 - Mongelli, F., Georgakopoulos, P., & Pato, M. T. (2020). Challenges and opportunities to meet the mental health needs of underserved and disenfranchised populations in the United States. Focus (American Psychiatric Publishing), 18(1), 16–24.
34 McCarthy 2024 - McCarthy MJ, Wicker A, Roddy J, et al. Feasibility and utility of mobile health interventions for depression and anxiety in rural populations: A scoping review. Internet Interventions. 2024;35(January):100724.
35 APA-MH Disparities fact sheet - American Psychiatric Association. (2017). Mental health disparities: Diverse populations [Factsheet].
36 APA-MH LGBTQ fact sheet - American Psychiatric Association. (2017). Mental health disparities: LGBTQ [Factsheet].
37 Maxwell 2020 - Maxwell, J., Bourgoin, A., & Lindenfeld, Z. (2020, February 10). Battling the mental health crisis among the underserved through state Medicaid reforms. Health Affairs Forefront.
38 Lawrence 2020 - Lawrence, M. B. (2020). Parity is not enough!: Mental health, managed care, and Medicaid. Journal of Law, Medicine & Ethics, 48(3), 480–484.
39 Carlo 2020 - Carlo, A. D., Barnett, B. S., & Frank, R. G. (2020). Behavioral health parity efforts in the U.S. JAMA, 324(5), 447.
40 Peterson 2018a - Peterson, E., & Busch, S. (2018). Achieving mental health and substance use disorder treatment parity: A quarter century of policy making and research. Annual Review of Public Health, 39, 421–435.
41 Ahad 2023 - Ahad, A. A., Sanchez-Gonzalez, M., & Junquera, P. (2023). Understanding and addressing mental health stigma across cultures for improving psychiatric care: A narrative review. Cureus, 15(5), e39549
42 NLM-Psychiatric timeline - National Library of Medicine (NLM). Timeline of early psychiatric hospitals & asylums. Early American psychiatry: Diseases of the mind. National Institutes of Health.
43 PBS American Experience-Mental illness - American Experience. A brilliant madness timeline: Treatments for mental illness. PBS Wisconsin.
44 CSP-Mental illness - Concordia University St. Paul (CSP). (2020, July 13). A history of mental illness treatment: Obsolete practices.
45 APA-Stigma - American Psychiatric Association. (2024). Stigma, prejudice and discrimination against people with mental illness.
46 Barry 2010 - Barry, C. L., Huskamp, H. A., & Goldman, H. H. (2010). A political history of federal mental health and addiction insurance parity. The Milbank Quarterly, 88(3), 404–433.
47 Druss 2018 - Druss, B. G., & Goldman, H. H. (2018). Integrating health and mental health services: A past and future history. American Journal of Psychiatry, 175(12), 1199–1204.
Related What Works for Health Strategies
To see citations and implementation resources for this strategy, visit:
countyhealthrankings.org/strategies-and-solutions/what-works-for-health/strategies/mental-health-benefits-legislation
To see all strategies:
countyhealthrankings.org/whatworks