Evaluation of Parity in the Federal Employees Health Benefits (FEHB) Program: Final Report. I. Background to the Policy of Parity

12/31/2004

In a speech in Albuquerque, New Mexico, on April 29, 2002, announcing the creation of the President’s New Freedom Commission on Mental Health, President George W. Bush reiterated the importance of mental health parity. President Bush said, “Americans with mental illness…deserve a health care system that treats their illness with the same urgency as a physical illness.” While noting the importance of “full mental health parity,” he emphasized that it must be accomplished without significantly raising health care costs. In July 2003, the Commission issued its final report, Achieving the Promise: Transforming Mental Health Care in America (2003), in which it observed that mental health benefits have traditionally been more restricted than general medical benefits. The Commission stated its support for parity and cautioned,

“Insurance plans that place greater restrictions on treating mental illnesses than on other illnesses prevent some individuals from getting the care that would dramatically improve their lives.”

President Bush has often pointed to the Federal Employees Health Benefits (FEHB) Program as a model for health insurance. The FEHB Program is the largest employer-sponsored health insurance program in the Nation, serving more than 8 million Federal employees, annuitants, and their dependents. The U. S. Office of Personnel Management (OPM) administers the FEHB Program, which currently offers about 250 health plan choices, providing over $29 billion in health care benefits annually.

At the White House Conference on Mental Health in June 1999, former President Bill Clinton directed OPM to institute a policy of parity, expanding mental health and substance abuse (MH/SA) coverage within the FEHB Program. OPM and the Office of the Assistant Secretary for Planning and Evaluation (ASPE) of the Department of Health and Human Services (HHS) contracted with ROW Sciences (now Northrop Grumman Information Technology, Inc., Federal Enterprise Solutions/Health Solutions [HS]) to lead an evaluation of the implementation and impact of the new parity policy in the FEHB Program. With investigators from the Harvard Medical School, University of Maryland Medical School, Westat, and the RAND Corporation, HS established the Parity Evaluation Research Team (PERT) as the vehicle for conducting this evaluation.

The term parity refers to a policy in which specified MH/SA insurance benefits are equal to the benefits for general medical services. Typically, this means expanding the coverage for MH/SA services by removing special limits on care (such as annual and lifetime ceilings on expenditures for MH/SA care or limits on the number of outpatient visits or inpatient days) or reducing copayments or deductibles for MH/SA care.

Historically these types of limits and higher cost-sharing provisions have led to MH/SA insurance benefits that differed from those for general medical care and have been considered a barrier to accessing adequate MH/SA care and treatment. Several national and State efforts have initiated MH/SA parity policies. The following sections of the report describe these efforts.

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