What managed care techniques do insurers use to control
What managed care techniques do insurers use to control
Our insurance Show more Case Study: Mental Health Parity Presenting to the board Chris spoke with pas-sion. Our insurance plan should provide the same coverage for mental health services as for other medical services. Its the right thing to do and its good business. If our employees or their dependents have untreated mental health problems the employees become less productive and waste money getting treated for other stuff.Thank you Chris said Kerry the companys CEO. This is an important question for us and the Benefits Committee will carefully consider it. After Chris left the room Kerry turned to Jordan the direc-tor of human resources and said Jordan whats your take on this?There are actually two questions here said Jordan. First how elastic is the demand for ambulatory mental health services? How much will use of mental health services increase if coverage improves? Second how effective is mental health care? This second question is the more important one because good mental health care can have such powerful effects.Now a number of studies have concluded that use of mental health services is more price sensitive than use of other ambula-tory care. Analyses of ambulatory mental health services have found elasticities ranging from 0.44 to 1.00. These results could be sta-tistical flukes. Consumers who expect to use mental health services may choose insurance plans that offer generous coverage for those services. However the RAND Corporation researchers Keeler Manningand Wells in 1988 used data from the RAND Health Insurance Experiment which randomly assigned respondents to insurance plans to resolve this issue. The RAND analysis generally confirmed that the demand for mental health services is more price sensitive than the demand for general ambulatory medical services. Demand for each is inelastic but the elasticity for mental health services is 0.8 and the elasticity for other outpatient services is 0.3. Most consumers will not use any mental health services but plans that offer generous mental health benefits will cost more. We cant ignore this.Im confused said Addison an internist on the board. In 2012 McConnell and colleagues published a study showing that Oregons law requiring mental health parity in commercial insurance plans had little effect on spending. How could that be? Real life appears to be contradicting the RAND study. Im sure the plans for federal employees used managed care techniques to control spending Jordan jumped in. And mental health spending isnt the issue. The issues are what hap-pens to other healthcare spending and what happens to our workers. Im pretty sure theres good evidence showing that effective mental health treatment can reduce other costs and improve productivity. Discussion questions: Why does it matter whether demand for mental health services is more elastic than demand for other services? The price elasticity of demand for ambulatory mental health services appears to be about 0.8 and the price elasticity for general ambulatory medical services appears to be about 0.3. How much would spending increase for each type of care if copayments were cut from $40 to $25? What managed care techniques do insurers use to control spending? Is there evidence that better treatment of mental health problems reduces other spending? Is there evidence that better treatment of mental health problems improves productivity? What is your recommendation to the Benefits Committee? Show less
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