Study finds no cost increase for mental health parity in federal employee health benefit program

A new study finds that mental health parity in insurance actually lowers consumers' out-of-pocket expenses, as well as increasing access to mental health care services

by Government Relations and Communications staff

April 19, 2006 — Offering mental health parity in health insurance coverage does not have a negative impact on cost, according to a study published last month in the New England Journal of Medicine. The study, “Behavioral Health Insurance Parity for Federal Employees,” found that not only is parity affordable, but it benefits consumers by decreasing their out-of-pocket expenses. These findings contradict a chief contention advanced by parity’s critics that enacting and implementing parity would lead to higher health care costs.

The study, commissioned by the U.S. Department of Health and Human Services, examined the effect of eliminating caps on mental health coverage and giving workers access to the same level of mental health and substance abuse treatment services that they received for medical services. The study examined claims from thousands of workers covered by the Federal Employees Health Benefits Program (FEHBP) who were offered parity in behavioral health care. In addition to eliminating caps, the plans were encouraged to use some managed care techniques for mental health coverage, such as requiring use of an in-network physician or therapist.

The study compared claims data from FEHBP employees two years before and two years after caps on mental health coverage were eliminated against claims data from workers in private health plans that did not eliminate caps on mental health coverage.

During the two years after the elimination of the caps, the use of mental health services by the FEHBP participants increased by 1.35 to 2.75 percentage points, according to the Wall Street Journal. However, the increase was similar to increases in the private health plans. During the same period, the study also found that eliminating caps on mental health coverage reduced the majority of consumers’ out-of-pocket spending for mental health and substance abuse services, with individual savings that ranged from $8.78 to $87.06, the Wall Street Journal reports.

Enacting full mental health parity legislation is a key legislative priority for the APA Practice Organization. The Practice Organization seeks to close loopholes in the federal parity law enacted in 1996 and end discriminatory insurance coverage of mental health treatment services.

Legislation to give parity to group health plans in the private sector (H.R. 1402), sponsored by Reps. Patrick Kennedy (D-RI) and Jim Ramstad (R-MN), has gained a majority of U.S. House members as co-sponsors. A similar bill will soon be introduced in the U.S. Senate by Sens. Pete Domenici (R-MN) and Edward Kennedy (D-MA).

The study is available from the New England Journal of Medicine.


Goldman, H., Frank, R., Burnam, M., Huskamp, H., Ridgely, M., Normand, S., Young, A., Barry, C., Azzone, V., Busch, A., Azrin, S., Moran, G., Lichtenstein, L., & Blasinsky, M. (2006). Behavioral Health Insurance Parity for Federal Employees. The New England Journal of Medicine, 354, 1378-86.