Two Studies Evaluate Mental Health Parity in California

In 1999, California passed a law requiring private health insurance plans to provide equal coverage for physical health and selected mental health conditions. The law sought to improve access to and the quality of mental health services for consumers. It also sought to decrease the financial burden on California's public sector, end discriminatory practices in health insurance, and reduce the stigma associated with mental illness. Furthermore, the law requires coverage of prescription drugs for specific disorders, for health plans that offer pharmacy benefits.

Mathematica is evaluating the effects of this law in two separate studies. One study looks at the first year of implementation. The second study is evaluating effects on access, costs, and utilization.

For the first study, conducted for the California HealthCare Foundation, researchers interviewed more than 60 individuals from more than three dozen stakeholders in the state. They found that benefits for mental health services expanded with no apparent effects on the purchase of health insurance. They also noted that premiums did not increase substantially in the first year, and employers did not drop coverage or switch to self-insured plans to avoid the law's mandate. Nevertheless, they identified the following challenges:

• Some consumers experienced disruption in care as a result of their health plans' transition to managed behavioral health organizations. 
  
• The implementation of parity for selected conditions, rather than all mental health diagnoses, created administrative challenges and confusion for some stakeholders.
  
• Stakeholders remained uncertain about the extent to which the law would enable people who have traditionally received treatment from the public sector—such as children with serious emotional disturbances—to obtain care from private providers.
  
• Consumers were not well informed about the changes, despite communication and education efforts on the part of health plans, providers, state agencies, and others.

The second study involves analyzing claims/encounter data to measure cost and utilization patterns for enrollees of two private insurers over a four-year, pre-post period. Researchers are also conducting case studies to better understand how parity is being implemented at the local level, as well as focus groups with providers and consumers to assess how well they understand parity and how implementation has affected them. This study is funded by the Substance Abuse and Mental Health Services Administration.

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