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Coverage for Childrens Mental Illness Reduces Out-of-Pocket Spending

State regulations requiring equal insurance coverage for mental illness does not increase usage and reduces out-of-pocket expenditures for families who have children with mental illness, a Yale School of Medicine study reports in the journal Health Services Research.

Prior research has left policymakers with the impression that state parity laws will neither break the bank nor confer much benefit, said Colleen Barry, assistant professor in the Department of Epidemiology & Public Health and lead author of the study. But our study indicates that these laws are providing important economic benefits to families of mentally ill children. This information may be important to policymakers considering enacting parity or expanding existing laws.

Barry and Susan Busch, associate professor in the Department of Epidemiology & Public Health, said health plans typically provide less insurance coverage for mental health compared with other medical care. Many states have passed mental health parity laws in an effort to improve equity in private insurance and reduce financial risk for those with mental illness.

At the federal level, Congress is currently considering two competing versions of comprehensive parity legislation. Prior research has demonstrated that mental health benefits can be offered on par with other medical services without significantly increasing total health insurance costs. Studies also indicate that state parity laws have had little effect on the use of mental health services. But prior to the release of this study, Barry and Busch said little has been known about how state policies affect the financial burden of seeking mental health treatment.

Using data from The Centers for Disease Control and Prevention 2000 National Survey of Children with Special Health Care Needs, the researchers examined how state parity laws affect out-of-pocket health care spending and other measures of the financial burden of t reatment costs on families.

Results indicate that living in a parity state significantly reduced the financial burden on families of children with mental health care needs. Specifically, the authors detect significantly lower out-of-pocket health care spending among families with children needing mental health care living in parity states compared with those in states without parity laws. Forty percent fewer families in parity states report their childs health care has caused financial problems.


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