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Costs of Mandates for Outpatient Mental Health Care in Private Health Insurance

Linda K. Frisman, MA; Thomas G. McGuire, PhD; Margo L. Rosenbach
Arch Gen Psychiatry. 1985;42(6):558-561. doi:10.1001/archpsyc.1985.01790290040004.
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• Various methods for estimating the cost of mandated mental health benefits have been devised, each resulting in substantially different estimates. These methods neglect to distinguish between the two components of cost to the insurer: social cost (due to increased utilization) and shifted cost (from other sources of payment). We apply a method we developed for estimating the two types of costs of mandates for outpatient mental health services that integrates data from insurers with information from the literature on financing of mental health services. We applied our method to legislation recently proposed in Massachusetts that would double the mandated minimum benefit level from $500 to $1,000. We expect payments by the largest carrier in the state to increase by a factor of 1.65. More than half of this increase represents shifted costs rather than new costs to society.


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