Parity and out-of-pocket spending for children with high mental health or substance abuse expenditures

OBJECTIVE: The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act required health plans to provide mental health and substance use disorder (MH/SUD) benefits on par with medical benefits beginning in 2010. Previous research found that parity significantly lowered average out-of-pocket (OOP) spending on MH/SUD treatment of children. No evidence is available on how parity affects OOP spending by families of children with the highest MH/SUD treatment expenditures. METHODS: We used a difference-in- differences study design to examine whether parity reduced families' (1) share of total MH/SUD treatment expenditures paid OOP or (2) average OOP spending among children whose total MH/SUD expenditures met or exceeded the 90th percentile. By using claims data, we compared changes 2 years before (1999-2000) and 2 years after (2001-2002) the Federal Employees Health Benefits Program implemented parity to a contemporaneous group of health plans that did not implement parity over the same 4-year period. We examined those enrolled in the Federal Employees Health Benefits Program because their parity directive is similar to and served as a model for the new federal parity law. RESULTS: Parity led to statistically significant annual declines in the share of total MH/SUD treatment expenditures paid OOP (25%, 95% confidence interval: -6% to -4%) and average OOP spending on MH/SUD treatment (-$178, 95% confidence interval: -257 to -97). CONCLUSIONS: This study provides the first empirical evidence that parity reduces the share and level of OOP spending by families of children with the highest MH/SUD treatment expenditures; however, these spending reductions were smaller than anticipated and unlikely to meaningfully improve families' financial protection.