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CBO's Estimates of the Impact on Employers of the Mental Health Parity Amendment in H.R. 3103 1 (May 1996)

handle is hein.congrec/cbo9195 and id is 1 raw text is: May 13, 1996 CBO'S ESTIMATES OF THE IMPACT ON EMPLOYERS OF THE MENTAL HEALTH PARITY AMENDMENT IN H.R. 3103 CBO estimated that the mental health parity amendment in H.R. 3103, as passed by the Senate, would impose direct costs on the private sector of 4 percent of private health insurance premiums. Most employers currently provide for mental health coverage, but with significantly less generous benefits than for other medical services. The provision intends to place mental health services on an equal footing with these other medical services. Employers could respond to the mandate in a variety of ways to reduce the impact of that increase. Possible responses include dropping mental health coverage, reducing the generosity of their health insurance benefits, or ceasing to offer health insurance altogether. Any remaining increases in premiums would most likely be passed on to workers in the form of lower wages or reductions in other fringe benefits. This memorandum describes the definitions of covered mental health services and mental health parity that CBO assumed in its estimates, and discusses the estimated increase in private sector costs, potential responses by employers to higher premiums, and the implications of state benefit mandates. Covered MetlHealServic The Congressional Research Service (CRS) provided CBO with an estimate of the increase in private health insurance premums that would result from the mental health parity requirement Consistent with the provisions of H.R. 3103, CRS did not restrict coverage to severe mental illness only. The estimate assumed that treatment for all mental health conditions, including alcoholism and substance abuse, would be covered under the parity amendment Additional information on the cost of treating severe mental illness is provided in the last section of this memorandum. Definition of Prt CRS estimated the premium increase for a typical indemnity plan, incorporating the following assumptions about the definition of mental health parity: o Outpatient visits would be unlimited (compared with a typical limit of 20 visits a year for mental health services).

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