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National Estimates of Mental Health Insurance Benefits

Executive Summary

This study provides estimates of the number of individuals in the United States in 1999 who had mental health benefits as a part of their health insurance coverage, the subset of those individuals who had mental health benefits that met or exceeded a benchmark level of generosity, the number of individuals with parity in their mental health benefits, and the number of individuals potentially subject to state and Federal mental health parity laws.

Mental health benefits are assessed in terms of the types of services covered (inpatient care, outpatient care, and prescription drugs), dollar limits (annual expenditures and lifetime expenditures), utilization limits (number of days of inpatient care and number of outpatient visits), and cost sharing (deductibles, co-insurance, and co-payments). The benchmark level of generosity is defined in this report in terms of the types of services covered (inpatient and outpatient care and prescription drug coverage) and utilization limits (20 inpatient days and 30 outpatient visits). Full mental health parity is defined as mental health benefits with the same covered services, dollar limits, utilization limits, and cost sharing as the plan's medical/surgical benefits.

Mental Health Insurance Coverage

• In 1999, more than three-quarters (76 percent) of the U.S. population had mental health benefits as a component of their health insurance. Approximately 18 percent of the population had no mental health insurance benefits; the remaining six percent had unknown mental health benefits. Of the 18 percent with no mental health benefits, the vast majority (84 percent) had no health insurance whatsoever, while a small portion (16 percent) had health insurance with no mental health benefits.
• The proportion of the population with mental health insurance benefits varied moderately from state to state. The proportion of individuals in 1999 with mental health insurance ranged from a high of about 80 percent to a low of about 69 percent.

Generosity of Coverage of Mental Health Benefits

• In 1999, approximately 59 percent of individuals with private, employer-sponsored health insurance through a firm with 10 or more employees had mental health benefits meeting the benchmark level. The percentage of individuals with mental health benefits meeting the benchmark increased with firm size. These results are based on the assumption that health plans with parity in mental health benefits met or exceeded the benchmark.
• Of those with health insurance, 52 percent had mental health coverage that met or exceeded the benchmark of 30 inpatient days, 20 outpatient visits, and prescription drug coverage. Approximately 23 percent had mental health benefits less generous than the benchmark, and three percent had no mental health benefits.

Parity in Mental Health Benefits

• Among those with employer-sponsored health insurance, individuals in smaller firms were more likely to have parity in mental health benefits than their larger-firm counterparts. Approximately 23 to 24 percent of individuals who had health insurance provided through firms with 10 to 499 employees had mental health benefits equal to those of their medical benefits. In contrast, only 6 to 8 percent of individuals who had health insurance provided through firms with 500 or more employees had mental health benefits at parity.
• In 1999, 37 percent of individuals with health insurance coverage had parity in mental health benefits. The Medicaid program and private, employer-sponsored insurance are the two largest sources of health insurance coverage that provide mental health benefits at parity.
• In 1999, 13 states mandated full mental health parity in the private employer-sponsored health insurance market, requiring full equality of utilization and dollar limits, as well as cost sharing. An estimated 9.8 million (8 percent) of the 124.6 million individuals who had health insurance through private employer-sponsored plans were in health plans subject to state mental health parity requirements.
• If all states had a full financial mental health parity law in effect in 1999, with a small employer exemption for firms with 50 or fewer employees, the laws ultimately would have reached only 36 percent of individuals with private, employer-sponsored health insurance. Had all states implemented full financial mental health parity laws without small business exclusions, only an additional 19 percent would have been covered, bringing the total covered by the law to 55 percent of the private, employer- sponsored insurance market. These individuals represent approximately 25 percent of the total U.S. population.
• In 1999, the Mental Health Parity Act of 1996 (MHPA) ensured parity in some aspects of mental health benefits for approximately 42 percent of the U.S. population. Another 12 percent were exempt, either due to the small employer exemption (10 percent), or because the individual's plan did not cover mental health (2 percent). Enrollees in Federal programs not covered by the law accounted for another 24 percent of the total population. Individuals with individually purchased insurance, also not subject to the law's provisions, made up another 4 percent of the population. Data are insufficient to estimate whether individuals with health insurance from outside the household (2 percent) or non-working individuals with employer-sponsored health insurance were subject to the law (1 percent). The remaining individuals (15 percent) were uninsured.

I. Introduction

More than one in five Americans has a diagnosable mental disorder some time in his or her lifetime, yet only about half of those individuals receive professional mental health treatment (U.S. Department of Health and Human Services, 1999). One major determinant of an individual's access to mental health care is whether he or she has health insurance that includes mental health benefits. Research over the past decade (reviewed in Appendix A) has found that although most individuals in the United States had health insurance, and most with health insurance had mental health benefits, most mental health benefits were substantially less generous than the medical/surgical benefits provided by the same plans. Public concern over unequal treatment led to passage of the Mental Health Parity Act of 1996 (MHPA) (42 USC § 300gg-5), which required employers with 50 or more employees that were providing mental health benefits to apply the same dollar limits to mental health benefits as they did to their medical/surgical benefits. Although the MHPA technically tted" in September 2001, subsequent laws have extended the original statute's provisions through the end of 2003.

Considerable attention has been paid to the issue of parity as a way to improve mental health insurance coverage, but relatively little is known about the extent of current levels of coverage and about generosity of benefits. Even if current efforts to create parity mandates prove successful, little is known about the potential impact of these mandates on the number of people who would be affected. To broaden the current understandin sunseg of these issues, the study documented in this report addresses the following questions:

How many people in the United States have mental health benefits as a part of their health insurance?

How generous are the mental health benefits for those who have them? What limits are placed on mental health benefits, and how prevalent are those limits? How do the limits vary by source of insurance?

What proportion of the population falls under the jurisdiction of Federal and state parity laws?

Chapter II of this report presents estimates of the number of individuals covered by each source of mental health insurance coverage; Chapter III examines mental health benefit generosity by reporting the number of individuals with mental health benefits at a benchmark standard; and Chapter IV presents the number of individuals subject to Federal and state parity laws. Chapter V highlights the principal findings of the study.

The main text is supplemented with several appendices. Appendix A presents details regarding each source of mental health insurance. Appendix B presents the methods used to produce the estimates presented in Chapters II, III, and IV. Appendix C lists the members of the expert panel who provided guidance throughout this study. Appendix D presents the limits for mental health benefits in the 33 separate State Children's Health Insurance Programs (S-SCHIP). Detailed state-by-state data tables on 1) health insurance by primary source and on 2) private employer-sponsored health insurance by firm size and self-insured status are available from the authors at Mathematica Policy Research, Inc., upon request.

A. Data and Methods

The data sources for the analysis include the March 2000 Current Population Survey (CPS), the 1999 Medical Expenditure Survey-Insurance Component (MEPS-IC), and the Mercer Worldwide National Survey of Employer-Sponsored Health Plans. Each survey uses a nationally representative probability sample, with 1999 as the reference period. The CPS is sponsored by the U.S. Bureau of the Census and contains data from a sample of approximately 47,000 households concerning their health insurance coverage. The MEPS-IC is sponsored by the U.S. Department of Health and Human Services (DHHS) Agency for Healthcare Research and Quality (AHRQ), and contains data from a sample of approximately 20,000 public and private employers concerning the health insurance benefits they provide to their employees. The National Survey of Employer-Sponsored Health Plans, sponsored by Mercer Worldwide, contains data from a sample of approximately 2,700 private employers regarding detailed provisions of their health insurance plans.

The unit of analysis in this study is the individual (policyholders and covered family members). Since the CPS is the only one of the three databases that contains individualized information, it was used as the primary database. The other two databases were used to impute values not otherwise provided by the CPS. Imputed information includes greater detail on firm size and the provisions of the health plan than is available in the CPS.

As in most studies, the results presented are based on several key assumptions. First, in cases where persons reported more than one source of health insurance in the CPS, individuals are categorized in one health insurance group according to a hierarchy of insurance sources (Appendix B provides a more detailed discussion of the hierarchy). Second, because the CPS does not record Medicaid and State Children's Health Insurance Programs (SCHIP) enrollment separately, enrollment in SCHIP was estimated from administrative data, and Medicaid enrollment was estimated as the residual. Gaps in data were estimated by imputing the following:

For 14 states in which the MEPS-IC sample was not large enough to support state-level estimates, we assumed the proportion of self-insured firms with more than 50 employees was equal to the national proportion.

For 11 states, the MEPS-IC sample did not support reliable estimates of the percentage of firms with 10-49 employees. Thus, national estimates of the percentages were applied to these 11 states.

Hawaii, Maine, and Virginia have small employer exemptions in their parity laws for firms with 25 or fewer employees. Due to the size groupings for businesses in the available data, estimates of the number of individuals exempted from parity laws under the small business exclusions in these states are not possible. To accommodate the dearth of data, estimates for the number of individuals exempted from parity laws in these states were based on the assumption that the exemption protected employers with fewer than 50 employees. Therefore, the effect of parity laws in these three states is slightly underestimated.

A complete description of the data sources and a technical discussion of the imputation methods used in the study can be found in Appendix B.

II. Mental Health Insurance Coverage

This chapter presents estimates of the number of individuals who had mental health insurance benefits in 1999. Section A briefly describes sources of health and mental health insurance coverage. Section B estimates the number of individuals with health insurance by primary source of coverage. Section C estimates the percentage of individuals with mental health insurance among those with health insurance by source of coverage. Finally, Section D estimates the proportion of the total U.S. population with mental health benefits and includes state estimates of mental health coverage.

A. Sources of Health and Mental Health Insurance

The following is a brief description of the major sources of mental health insurance in the United States. These are listed in order, based on the number of individuals covered by each source. A more extensive discussion of these insurance sources can be found in Appendix A.

1. Employer-Sponsored Plans
Nearly half of the U.S. population is covered by employer-sponsored health insurance. A large majority of employers provide mental health insurance, but they impose more restrictive limits on that coverage than on the medical and surgical coverage they offer. Since the Mental Health Parity Act (MHPA) of 1996 prohibited employers from imposing different dollar limits on mental health coverage, employers increasingly have substituted utilization limits for dollar limits. In 1999, 80 percent of individuals with employer-sponsored mental health insurance had inpatient day and/or outpatient visit limits on their coverage (Sturm and Pacula, 2000).

Rather than contracting with health insurers, many employers-particularly large firms-have implemented self-funded plans that pay physicians and hospitals directly. The provisions of the Employee Retirement Income Security Act (ERISA) of 1974 exempt most self-funded plans from state mandates that require parity in coverage for mental health services and other health care. In a 1997 survey of employer-sponsored behavioral health benefits (Buck et al., 1999), employers indicated that only about 15 percent of their "most prevalent" plans (i.e., those with the largest enrollment) were self-funded. The survey found that the larger the number of employees, the greater the likelihood that the firm had a self-funded plan.

2. Medicare
Medicare is the largest publicly sponsored health insurance program in the United States, covering an estimated 36.1 million individuals in 1999. The majority of Medicare beneficiaries-87 percent in 1999 (Centers for Medicare and Medicaid Services, 2000a)-are aged 65 years and older. Approximately 13 percent of the Medicare population are under age 65 and qualify because either they are totally or permanently disabled, or they have been diagnosed with end-stage renal disease (ESRD). Medicare's benefit package is divided into Parts A and B. Part A provides hospital insurance; Part B provides medical insurance that covers physician services and outpatient expenses. Because of the limitations in Medicare's benefit package, 88 percent of Medicare beneficiaries in 1999 had some form of supplemental insurance coverage (Laschober et al., 2002). Major sources of this supplemental coverage included:

• Medicare+Choice (M+C). Medicare+Choice, Medicare's managed care program, allows health plans to offer supplemental benefits not covered in the traditional Medicare benefit package. In 1999, approximately 16 percent of Medicare beneficiaries were enrolled in Medicare+Choice (Health Care Financing Administration, 1999a); 84 percent of these Medicare+Choice enrollees had prescription drug coverage (Cassidy and Gold, 2000).
• Medigap insurance. In 1999, 24 percent of Medicare beneficiaries had supplemental coverage under a Medigap plan (Laschober et al., 2002). Two-thirds of Medigap plans are standard policies that cover the co-insurance for both Part A and Part B, the Part A deductible, and 365 additional hospital days during a beneficiary's lifetime. (These additional hospital days are for general hospitals only and do not extend the 190-day limit for inpatient care at psychiatric hospitals). Only about 27 percent of Medicare beneficiaries with Medigap supplemental insurance had some drug coverage in 1999 (Laschober et al., 2002).
• Employer-sponsored retiree coverage. Approximately 33 percent of Medicare beneficiaries in 1999 had supplemental health insurance through a current or former employer; 83 percent of these beneficiaries had some drug coverage (Laschober et al., 2002).
• Dual eligibility with Medicaid. Low-income Medicare beneficiaries can qualify for supplemental Medicare coverage through state Medicaid programs; in 1999, approximately 11 percent of Medicare beneficiaries had supplemental coverage from Medicaid.

3. Medicaid
Medicaid is a means-tested entitlement program for low-income individuals, financed jointly by the Federal government and the states. Generally, each state sets its own eligibility requirements beyond federally mandated minimum levels, based on a combination of income, assets, and categorical aid status. The most common categories of enrollees are low-income children, pregnant women, the elderly, the disabled, and parents meeting specific income thresholds. The Federal government mandates that all states must cover a core benefit package that includes inpatient and outpatient hospital services, as well as early and periodic screening, diagnosis, and treatment (EPSDT) for children under age 21. States also may choose to cover optional services, such as prescription drugs and clinic services.

4. State Children's Health Insurance Program (SCHIP)
Congress enacted the State Children's Health Insurance Program (SCHIP) in 1997 to expand health insurance coverage among children. SCHIP provided the states with Federal matching funds to insure low-income children who were not eligible for Medicaid by expanding their Medicaid program (M-SCHIP), by designing a separate child health program (S-SCHIP), or by combining the two approaches.

M-SCHIP must provide the full Medicaid benefit package that the individual state provides.

S-SCHIP must be comparable to one of the following benchmark plans: the Federal Employees Health Benefits standard option plan; the specific state's employee health benefit plan; the health maintenance organization (HMO) with the largest commercially enrolled population in the individual state; or another package approved by the Federal government.

5. Federal Employees Health Benefits Program (FEHBP)
The Office of Personnel Management (OPM) oversees the FEHBP, the health insurance program for employees of the Federal government. Beginning in 2001, the FEHBP required full mental health parity for all health plans participating in the program. Utilization limits and cost sharing for health plan coverage of mental illness must be at parity with limits and cost sharing for medical, surgical, and hospital services.

6. TRICARE
TRICARE is the health system operated by the U.S. Department of Defense for active-duty members of the armed forces and their dependents, military retirees and their dependents, and surviving spouses of deceased active-duty or retired military service members. The TRICARE program has three options: an HMO (TRICARE Prime), a preferred provider organization (PPO) (TRICARE Extra), and a fee-for-service option (TRICARE Standard, formerly CHAMPUS).

7. Veterans Affairs
The U.S. Department of Veterans Affairs (VA) provides care to eligible veterans, generally at VA hospitals, as well as enrollment and eligibility for care based on seven priority groups, in accordance with the veteran's health status and financial circumstances. The VA provides unlimited inpatient and outpatient mental health services and prescription drugs; cost sharing depends on an individual's priority level.

8. Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA)
The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) is the federally administered, fee-for-service health benefits program for dependents and survivors of veterans who have a total, permanent disability, or who died from a disability incurred or aggravated during active-duty military service. Unlike those receiving care through the VA, CHAMPVA enrollees may receive care through any provider.

9. Indian Health Service (IHS)
The Indian Health Service, part of the U.S. Department of Health and Human Services (DHHS), provides health care to American Indians and Alaska Natives who are members of federally recognized tribes. IHS facilities are located on or near Indian reservations. American Indians and Alaska Natives may receive care if they live in the geographic area where the facility is located. The IHS Mental Health and Social Services program, a community-oriented clinical and preventive services program, offers mental health services, primarily on an outpatient basis. Inpatient psychiatric services are provided under contract at local general, private psychiatric, and state psychiatric hospitals; virtually no partial hospitalization, transitional living, or child residential services are offered.

10. Individually Purchased Insurance
Individuals without access to health insurance in the group market may elect to purchase insurance in the individual market. Such individuals include early retirees without retiree benefits, persons who are self-employed, those whose employers do not offer health insurance, and individuals who have exhausted their continued group coverage allowable through the Consolidated Omnibus Reconciliation Act (COBRA) of 1986.

Unlike the group health insurance market, most states allow companies selling individual health insurance policies to accept or deny an applicant based on the individual's health status, including their mental health. Applicants often are required to provide a medical history and may have to undergo a medical examination (Gabel, 2002). Only 11 states require every insurer in the individual market to accept all applicants, regardless of health status (U.S. General Accounting Office, 2002, February).

B. Covered Lives With Health Insurance

Estimating the number of individuals with mental health insurance benefits is a three-step process. First, the number of individuals covered by each source of health (as opposed to mental health) insurance is estimated. Next, the proportion of individuals with each type of health insurance who have mental health benefits is estimated. Finally, the figures from the first and second steps are multiplied together to yield an estimate of the number of individuals with mental health insurance benefits.

Table II.1 presents the number and percentage of the U.S. population, by age group, reporting health insurance by their primary source of insurance in 1999. The figures are taken primarily from the Current Population Survey (CPS). However, the CPS combines SCHIP with Medicaid. (Detailed state-by-state data tables on 1) health insurance by primary source and on 2) private employer-sponsored health insurance by firm size and self-insured status are available from the authors at Mathematica Policy Research, Inc., upon request). The estimates of individuals covered by SCHIP programs were derived from Centers for Medicare and Medicaid Services administrative data (Centers for Medicare and Medicaid Services, 2000b).

Slightly more than 15 percent, or 42 million individuals, had no health insurance coverage in 1999. By far, the most common source of health insurance was private employer-sponsored insurance, covering more than 45 percent of the U.S. population, or 125 million individuals. Medicare, the Federal program designed primarily to provide health insurance to those aged 65 years and older, was the largest public source of health care insurance, covering 13 percent of the population, or 36 million individuals. The Medicare figures include Part A, covering hospital costs, and Part B, covering physician costs. Nearly all individuals aged 65 years and older reported Medicare as their primary source of health insurance.

The two Federal-state programs providing health insurance to low-income families-Medicaid and SCHIP-together covered more than 8 percent of the population, or 23 million individuals. Children constituted the majority of individuals for whom Medicaid was the primary source of health insurance. State and local government employee health plans covered nearly as many individuals as Medicaid and SCHIP combined-22 million. Less common sources of health insurance include:

• Insurance purchased by individuals, as opposed to health insurance purchased by a group of individuals, (e.g., an employer-sponsored group)
• FEHBP, the health insurance provided by the Federal government to its civilian employees and their dependents
• TRICARE, the health insurance program of the U.S. Department of Defense, provided to members of the armed forces and their dependents
• Two programs operated by the VA-direct care for veterans in VA hospitals and a fee-for-service plan for dependents of veterans, labeled CHAMPVA
• Health care provided by IHS, which delivers health care through health facilities located on or near Indian reservations to American Indians and Alaska Natives who are members of federally recognized tribes

Figure II.1 presents the primary source of health insurance coverage for individuals, by age, in 1999. In these figures, the category "other public" includes individuals enrolled in the FEHBP, state/local government employee plans, TRICARE, CHAMPVA, VA, and IHS. The Medicaid group also includes SCHIP enrollees.

Table II.1. U.S. Population by Primary Source of Health Insurance, 1999

Figure II.1. Primary Source of Health Insurance Coverage in U.S., by Age, 1999

Source: 2000 Current Population Survey.

Note: "Other Public" includes Federal Employee Health Benefit Plan, state/local government employee plans, TRICARE, CHAMPVA, VA, and IHS. "Medicaid" includes SCHIP enrollees.

C. Mental Health Insurance Among Those With Health Insurance

Table II.2 presents the percentage of people with health insurance who also had both inpatient and outpatient mental health benefits, by source of health insurance. For example, the table indicates that 96 percent of individuals with private employer-sponsored health insurance at a self-insured firm were insured for the costs of inpatient mental health care.

Nearly all individuals with health insurance had at least some coverage for both inpatient and outpatient mental health care. The only exception was that roughly one in 20 individuals covered by employer-sponsored plans did not have mental health benefits of any kind. Moreover, roughly one in 10 individuals covered by plans sponsored by small firms (fewer than 50 employees) had no mental health benefits.

D. Total Population With Mental Health Insurance

The number of individuals in the U.S. population with mental health insurance coverage is estimated as the product of Table II.1 (the proportion of the population with health insurance) and Table II.2 (the proportion of those with health insurance and mental health benefits). At least 90 percent of those in the U.S. population who had health insurance had mental health benefits as a component of that insurance-approximately 76 percent of the total U.S. population (Table II.3).

Eighteen percent of the population had no mental health insurance, either because they had no health insurance (15.4 percent), or because their health insurance did not provide mental health benefits (2.4 percent). It is impossible to tell whether an additional 6.5 percent had mental health benefits, because data were not available for individuals covered under an individual policy, were non-working but had employer-sponsored insurance, or were covered from a source outside the household. The figures for inpatient mental health benefits and outpatient mental health benefits are nearly identical.

The proportion of the population with mental health coverage varied moderately from state to state. In 1999, the proportion of individuals with mental health insurance ranged from a high of 82.0 percent in Minnesota, 82.9 percent in Massachusetts, and 81.9 percent in Hawaii to a low of 68.6 percent in California, 68.7 percent in Texas, and 69.3 percent in Louisiana (Table II.4). The primary reason for the state-to-state variation was the proportion of the population in each state without health insurance. Rates of uninsurance ranged from a low of 7.6 percent in Minnesota, 8.3 percent in Indiana, and 8.6 percent in Missouri to a high of 23.3 percent in Texas, 22.5 percent in Louisiana, and 21.0 percent in Arizona.

Table II.2. Percentage of Health Insurance Covered Lives With Inpatient and Outpatient Mental Health Benefits, by Source, 1999

Table II.3. U.S. Population With Mental Health Insurance, 1999

State rates of uninsurance vary for a number of reasons. First, smaller firms were less likely to offer health benefits than larger firms (Kaiser Family Foundation and Health Research and Educational Trust, 2000) and the proportion of individuals employed by small firms varied from state to state. Second, the proportion of individuals enrolled in public insurance programs, such as Medicaid and SCHIP, varied by state due to differences in the income of the state population and state eligibility levels. Finally, states with large immigrant populations, such as California and Texas, had higher rates of uninsurance because of unique restrictions on immigrant access to public health programs (Kaiser Family Foundation, 2000).

The percentage of individuals who had health insurance without mental health benefits varied over a much smaller range-from a low of 1.0 percent in Massachusetts, 1.3 percent in Florida and Hawaii, and 1.4 percent in Mississippi, to a high of 4.0 percent in California, 2.9 percent in Minnesota, and 2.8 percent in Colorado, Connecticut, and New Jersey. Among the factors behind this variation were the proportion of the population covered by private employer-sponsored insurance, the state rate of self-insurance, and the rate of enrollment in Federal programs.

Table II.4. Proportion of Population With Mental Health Insurance, by State, 1999 (Percentages)

E. Summary

Approximately 76 percent of the U.S. popu-lation had mental health benefits in 1999. The lack of health insurance was the most significant reason why an individual did not have mental health benefits. Even at the state level, differences in the percentage of individuals with mental health coverage primarily were driven by differences in state rates of health insurance coverage. Approximately nine out of 10 individuals with health insurance had mental health benefits as part of their coverage. Nearly all public insurance sources and the overwhelming majority of private, employer-sponsored health insurance plans covered mental health benefits. However, little is known about mental health benefits among some subgroups of coverage. For instance, no information is available on the prevalence of mental health benefits in individual insurance plans or in health plans for retirees.

III. Generosity of Mental Health Benefits

This chapter provides estimates of the proportion of individuals who have mental health benefits that meet or exceed a benchmark level of generosity, or that meet a common level of mental health coverage. Wherever possible, generosity of mental health benefits refers to one of the following: 1) benefits that meet or exceed the benchmark level of coverage; 2) benefits that are less than the benchmark; or 3) benefits that are not included in health insurance coverage.

The benchmark level of generosity for mental health insurance benefits is coverage of 30 inpatient days, 20 outpatient visits, and prescription drugs. This level was chosen to represent the level of coverage typical of many health plans and is not intended as a measure of plan adequacy.

Utilization limits for the benchmark were selected based on three pieces of evidence. The first was the advice of an expert advisory panel (the members of which are listed in Appendix C) on the typical provisions of employer-sponsored mental health insurance benefits in 1999. The second was the Mercer Worldwide Survey of Employer-Sponsored Health Insurance Plans, which indicated the typical mental health insurance plan in 1999 covered 30 inpatient days and 20 outpatient visits (see Appendix B). A third indicator was the Federal Employee Health Benefit Plan (FEHBP) requirement that all contracting health plans cover a minimum 30 inpatient mental health days and 20 outpatient mental health visits in 1999.

In addition to utilization limits, prescription drug coverage was included in the benchmark benefit package. Prescription drugs are now a primary form of treatment for many mental illnesses. In 1997, prescription drugs accounted for almost 13 percent of total mental health care spending (Mark, 2000). Prescription drug coverage also is considered "standard" in the employer-sponsored health insurance market (Kaiser Family Foundation, 2000). Cost sharing and dollar limits were not included in the definition of benefit generosity since these measures vary considerably among health plans. Additionally, this definition of generosity only examines the availabilty of mental health benefits, not the affordabilty.

A. Generosity of Mental Health Benefits, by Source of Coverage

Although the most recent research on the generosity of mental health benefits has focused on private, employer-sponsored plans, this chapter provides a more comprehensive review of the generosity of mental health benefits from all major payors, including benefits available to Medicare beneficiaries, Federal employees, SCHIP and Medicaid enrollees, individuals receiving care in the military and veterans' health systems, and the Indian Health Service (see Table III.1). Several public providers of health insurance, such as Medicaid and Medicare, are major payors of mental health care, and the generosity of their coverage has significant implications for the extent and breadth of mental health coverage in the United States.

1. Private, Employer-Sponsored Insurance
In 1999, approximately 59 percent of individuals with private, employer-sponsored health insurance provided through a firm with 10 or more employees had mental health coverage that at least met the benchmark (see Table III.2). The remaining individuals either had mental health benefits that fell below the benchmark (36 percent), or they had no mental health benefits at all (4 percent).

Estimates for the private, employer- sponsored health insurance market were derived from the Mercer Worldwide Survey of Employer-Sponsored Health Plans. The Mercer survey provides no specific information on benefit limits for medical/surgical services for those health plans indicating parity in mental health benefits. The survey did not identify plans offering mental health benefits that were at parity but that did not meet the generosity standard. This study assumes all plans with mental health benefits at parity had mental health benefits that met the benchmark standard.

The generosity of mental health benefits varied with firm size. The percentage of individuals with mental health benefits meeting the benchmark increased as firm size increased. Only 46 percent of individuals with employer-sponsored health insurance in a firm with 10-49 employees had mental health benefits that met the benchmark, but the number increased to 67 percent for individuals who had employer-sponsored health insurance in a firm with 500 or more employees.

2.  Medicare
The traditional Medicare benefit package does not meet the benchmark benefit since it lacks prescription drug coverage, a major component of today's mental health care. However, approximately 62 percent of Medicare beneficiaries in 1999 had some prescription drug coverage through supplemental insurance, including a Medicare HMO, Medicaid, or an employer-sponsored retirement plan (Laschober et al., 2002). Therefore, Medicare beneficiaries with prescription drug coverage through supplemental insurance were counted as having mental health insurance that meets the benchmark standard (see Table III.3).

Table III.1. Public Sources of Mental Health Insurance in 1999

Program	Benefit Summary	Relationship to Bechmark Benefit
Medicare	Inpatient: 190-day lifetime limit on psychiatric hospital days, same as medical benefit for psychiatric care in general hospital. Cost sharing same as medical benefit. Outpatient: No limit on utilization. Most mental health doctor and professional services have 50 percent co-insurance, compared with medical services that have 20 percent co-insurance. Also covers partial hospitalization and occupational therapy.	Does not meet benchmark due to lack of prescription drug benefit; however, many beneficiaries have prescription drug coverage through supplemental insurance (see text and Appendix A).
Medicaid Children 0 to 21 years of age	Technically, Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) requirement provides for all medically necessary inpatient and outpatient care in all states.a Optional services that may be part of a state plan include residential care, partial hospitalization, clinic services, and case management.	Meets benchmark.
Medicaid Adults 22 years and older	Benefit varies by state, but generally includes physician services, outpatient hospital services, partial hospitalization, rehabilitative services, and occupational therapy. Federal exclusion of inpatient care provided in Institutions for Mental Disease (IMDs) generally precludes care in psychiatric hospitals. However, states provide inpatient psychiatric care in general acute hospitals.	Six states do not appear to meet benchmark because of utilization limitations (see text).
SCHIPb Medicaid Expansion (M-SCHIP)	Same benefit as that available in state Medicaid program.	Meets benchmark.
SCHIP Separate Program Expasion (S-SCHIP)	Benefits vary by state but generally just cover inpatient and outpatient services. (Appendix D).	Two of 33 states with S-SCHIP program do not meet benchmark (Montana and New Hampshire).
Federal Employee Health Benefit Programc	Inpatient: Minimum benefit of 30 mental health days per year at 50 percent cost sharing. Outpatient: Minimum benefit of 20 outpatient mental health visits per year at 50 percent cost sharing.	Meets benchmark benefit.
TRICARE	Inpatient: Generally, for children under age 19, 45 inpatient mental health days per year. For adults, 30 inpatient mental health days per year. Outpatient: Approval needed for more than eight visits per fiscal year. Partial hospitalization limited to 60 days per year. Cost sharing for inpatient and outpatient services depends on eligibility category and whether individual is enrolled in TRICARE Prime, Standard, or Extra.	Meets benchmark benefit.
Veterans Affairs (VA)	No limits on inpatient or outpatient services. Also covers rehabilitative services, partial hospitalization, and preventive services. Cost-sharing the same as for medical services.	Meets benchmark benefit.
Civilian Health and Medical Program of the Department of Veteran Affairs (CHAMPVA)	Inpatient: 45 inpatient mental health days per year for children, 30 inpatient days per year for adults. Outpatient: 23 outpatient visits per year. Also covers crisis intervention and 60 days per year of partial hospitalization. Cost sharing is same as for medical benefits.	Meets benchmark plan.
Indian Health Service (IHS)	No special limits.	Meets benchmark plan.
Source: Program information materials. a Many states are not yet in full compliance with EPSDT requirements; however, all children technically are eligible for such services. b In 1999, only children were enrolled in SCHIP. Since that time, some states have allowed adults to enroll. c In 2001, FEHBP mandated mental health parity for all participating health plans

Table III.2. Generosity of Mental Health Benefits Among Individuals With Private, Employer-Sponsored Insurance Provided by Firms With 10 or More Employees, 1999

3.  Medicaid
Under the Federal early and periodic screening, diagnosis, and treatment (EPSDT) requirement, children enrolled in Medicaid with an identified mental disorder are eligible to receive an unlimited amount of medically necessary mental health services, including inpatient days, outpatient visits, and prescription drugs. For this reason, all Medicaid-enrolled children are categorized as receiving mental health benefits meeting the benchmark standards. However, state implementation of and adherence to EPSDT standards varies. A recent report issued by the U.S. General Accounting Office (GAO) stated, "The extent to which children in Medicaid across the country are receiving EPSDT services is not fully known, but the available evidence indicates that many are not receiving these services" (U.S. General Accounting Office, 2001). Absent quantitative evidence about the number of Medicaid-enrolled children receiving EPSDT services, all children are counted as having access to such services.

With regard to adult beneficiaries, an examination of state Medicaid plans revealed six states in which the Medicaid benefit package for adults between the ages of 22 and 64 years does not appear to meet the benchmark of 30 inpatient mental health days, 20 outpatient mental health visits, and prescription drug coverage (Commerce Clearing House, see dates below).

Table III.3. Generosity of Mental Health Benefits Among Those With Health Insurance, 1999

Individuals With Health Insurance Through:	Total Insured Population (millions)	Benefits at Least Meeting Benchmark (percent)	Mental Health Benefits Less Than Benchmark (percent)	Mental Health Benefits of Unknown Generosity (percent)	Health Insurance But No Mental Health Benefits (percent)	Health Insurance With Unknown Mental Health Benefits (percent)
Employer-Sponsored Insurance Through a Firm of: 1 to 9 Employees	12.5	N/A	N/A	87.1	12.9	0
Employer-Sponsored Insurance Through a Firm of: 10 or more Employees	108.5	59.3	36.4	0	4.3	0
Employer-Sponsored Insurance Through a Firm of: Non-Working Employer-Based	3.7	N/A	N/A	N/A	N/A	100
Medicare	36.1	62.3	37.7	0	0	0
Medicaid: Children birth to 17 years	12.2	100	0	0	0	0
Medicaid: Adults 18 years or oldera	9	94.1	5.9	0	0	0
SCHIPb (M-SCHIP)	0.7	100	0	0	0	0
SCHIP (S-SCHIP)	1.3	99.7	0.4	0	0	0
Federal Employee Health Benefit Plan (FEHBP)	5.2	100	0	0	0	0
State/Local Government	22.5	N/A	N/A	98.3	1.7	0
TRICARE	4.9	100	0	0	0	0
CHAMP/VA	0.3	100	0	0	0	0
Veterans Affairs (VA)	0.5	100	0	0	0	0
Indian Health System (IHS)	0.3	100	0	0	0	0
Individual Purchased	9.6	N/A	N/A	N/A	N/A	100
Coverage From Outside the Household	4.6	N/A	N/A	N/A	N/A	100
Total	231.9	52.1	23.1	14.2	2.9	7.7
Source: Mathematica Policy Research, Inc. (MPR) calculations based on the Current Population Survey, the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC), the Mercer Worldwide Survey of Employer-Sponsored Health Plans, and program information materials. N/A: Not Available a All states were considered to meet the benchmark except Alabama, Arkansas, Mississippi, Oklahoma, West Virginia, and Wyoming. Estimates of the percentage of adult Medicaid recipients from these states were derived from CMS's Medicaid enrollment files for 1999. b Enrollment information for M-SCHIP and S-SCHIP programs is from Centers for Medicare and Medicaid Services (2000b). Benefit information for S-SCHIP programs is from the National Conference of State Legislatures (2001) and does not include cost sharing (see Appendix D).

Alabama has a limit of 16 inpatient hospital days per year for both physical and mental conditions. The state also limits outpatient psychotherapy to 14 visits per year; it is unclear whether individuals could circumvent the limit by using clinics. The limit on psychotherapy is part of an overall 14-visit limit for all physician services (October 23, 2001).

Arkansas limits adults to 24 inpatient hospital days per year for physical and mental health conditions. The state also limits outpatient visits to 12 per year for all physician services. The state plan does not cover psychologist services for adults (April 6, 1999).

Mississippi limits total outpatient physician services to 12 per year. Psychiatric services by a physician are limited to 10 individual medical psychotherapy sessions and six group medical psychotherapy sessions (September 18, 2001).

With the exception of enrollees in SoonerCare Plus, a Medicaid managed care program in Oklahoma City, Oklahoma, Medicaid enrollees are subject to an inpatient hospital limit of 24 days per year total for physical and mental conditions (April 16, 2002).

West Virginia limits inpatient care to 25 days per year for all conditions (December 31, 2001).

Wyoming has a limit of 12 visits per year on all outpatient services for adults in its Medicaid program (December 18, 2001).

The Institution for Mental Diseases (IMD) exclusion prohibits states from receiving Federal reimbursement for Medicaid patients aged 22 to 64 years in IMDs, although states may add inpatient services in an IMD as an optional service for the elderly population. However, Medicaid programs generally provide inpatient psychiatric services to adult enrollees through general hospitals.

4. SCHIP
State SCHIP programs are of three types: a Medicaid expansion (M-SCHIP), a separate program (S-SCHIP), or a combination of the two. SCHIP enrollees in an M-SCHIP program are entitled to the same benefits available under the Medicaid program. In 1999, approximately 700,000 children were enrolled in an M-SCHIP program.

For states that choose to implement an S-SCHIP program, benefits can be quite different from those available in the state Medicaid program. The Federal government requires only that state S-SCHIP benefit packages be comparable to one of the following benchmark plans: the FEHBP standard option plan, the state's employee health benefit plan, the health maintenance organization with the largest commercially enrolled population in the state, or another package approved by the Federal government.

Specific to mental health benefits, the S-SCHIP program must include coverage that is at least 75 percent of the actuarial value of selected plans (Center for Mental Health Services, 2000). Benefit limits are common among the 33 states using the S-SCHIP option (see Appendix D). Of the 33 states with S-SCHIP programs, 10 have no limits on mental health benefits (two additional states have at least one S-SCHIP plan option with no limits on mental health benefits), another 21 have benefit limits that meet or exceed the benchmark, and two (Montana and New Hampshire) have mental health benefits below the benchmark.

In 1999, approximately 5 percent of S-SCHIP enrollees were in a plan with no limits on mental health coverage and just fewer than 95 percent were in a plan with limits that nonetheless met the benchmark benefit. Fewer than 1 percent of S-SCHIP enrollees were in the two states with a benefit package below the benchmark.

5. Other Sources of Health Insurance
In 1999, the mental health benefit packages in FEHBP, TRICARE, and CHAMPVA met the benchmark criteria. Although an estimated 98 percent of individuals with health insurance sponsored by state and local governments have mental health benefits, comprehensive data on the generosity of coverage of those plans is not available.

No information on mental health benefits, including whether mental health conditions are covered, is available for retired individuals with insurance from their previous employer (3.7 million), individuals with insurance from a source outside the household (4.6 million), or those with individually purchased health insurance policies (9.6 million).

Figure III.1 Generosity of Mental Health Benefits in Total U.S. Population, 1999

B. Summary

Approximately 52 percent of individuals with health insurance had mental health benefits in 1999 that met or exceeded the benchmark package (Table III.3). However, when the uninsured are included, the percentage of individuals with mental health insurance in 1999 that met or exceeded the benchmark drops to approximately 44 percent of the entire U.S. population (see Figure III.1). Approximately 20 percent of the U.S. population had mental health benefits that did not meet the benchmark, and at least another 2 percent had health insurance that did not cover mental health services at all. For an additional 19 percent, insufficient data prevented estimates of the generosity of their mental health benefits: 12 percent had mental health benefits of unknown generosity, and 7 percent had health benefits, but with unknown mental health benefits. The remaining 15 percent were uninsured.

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