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The Effect of Parity on Expenditures for Individuals with Severe Mental Illness

Keywords: Health economics;health care costs;health care financing/insurance/premiums;mental health;substance abuse: alcohol dependency/tobacco

Objective: To determine whether comprehensive behavioral health parity leads to changes in expenditures for individuals with severe mental illness (SMI), who are likely to be in greatest need for services that could be outside of health plans' traditional limitations on behavioral health care.

Data Sources/Study Setting: We studied the effects of a comprehensive parity law enacted by Oregon in 2007. Using claims data, we compared expenditures for individuals in four Oregon commercial plans from 2005 through 2008 to a group of commercially insured individuals in Oregon who were exempt from parity.

Study Design: We used difference-in-differences and difference-in-difference-in-differences analyses to estimate changes in spending, and quantile regression methods to assess changes in the distribution of expenditures associated with parity.

Principal Findings: Among 2,195 individuals with SMI, parity was associated with increased expenditures for behavioral health services of $333 (95 percent CI $67, $615), without corresponding increases in out-of-pocket spending. The increase in expenditures was primarily attributable to shifts in the right tail of the distribution.

Conclusions: Oregon's parity law led to higher average expenditures for individuals with SMI. Parity may allow individuals with high mental health needs to receive services that may have been limited without parity regulations.

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