The Cost of Mental Health Care: A Cost-Sharing Law

By Danélia Botes

March 31, 2024

Introduction:

The scarcity of mental health and substance use disorder (MH/SUD) treatment is a significant public health issue in the US, contributing to high levels of morbidity and mortality. Many people with MH/SUDs often hesitate to seek health care due to stigma and the lack of accessible clinicians. For those with commercial insurance, out-of-pocket expenses due to cost-sharing serve as another barrier. This article examines the mental health landscape in the US and the impact of cost-sharing laws on the cost of healthcare, focusing on the New Mexico No Behavioural Health Cost Sharing (NCS) law.

Who Receives Mental Health Care?

Persistent disparities exist in access to mental health care. In 2021, only 47% of US adults with mental illness received any mental health services. Workforce shortages contribute to this issue, with more than half of US residents living in areas short of mental health professionals. Even insured individuals often find it difficult to use their insurance for care, as nearly half of psychiatrists do not accept insurance. In 2021, 55% of people with serious mental illness who needed but did not receive mental health care cited unaffordability as the main barrier. Inadequate insurance payment and coverage was the primary obstacle for an additional 33%.

Towards More Equitable Access

The tradition of private practice psychiatry, coupled with the availability of cash-paying patients, exacerbates mental health workforce shortages, especially when demand outstrips supply. Despite expansions in insurance coverage and legal mandates that health plans include mental health care coverage, out-of-pocket costs remain a significant barrier. In 2021, racial and ethnic disparities in treatment rates were also evident.

The Implications of Cost-Sharing

Cost-sharing, which includes copayments, coinsurance, and deductibles, is designed to curb the overuse of health care. However, for individuals with MH/SUDs, cost-sharing can discourage the use of effective treatments. The RAND Health Insurance experiment in the 1970s demonstrated this, showing that higher cost-sharing led to larger reductions in mental health care than other health care use.

The New Mexico No Behavioural Health Cost Sharing Law

In April 2021, New Mexico passed the NCS law, prohibiting cost-sharing for MH/SUD treatment for individuals with commercial insurance plans. This law was a response to the need to reduce the costs of MH/SUD treatment, given the vast personal and societal costs of these conditions. However, the impact of the law on patient outcomes is yet to be fully understood.

The Impact of the New Mexico No Behavioural Health Cost Sharing Law

In order to lower MH/SUD treatment costs, the NCS was passed. The NCS applies solely to state-regulated commercial insurance plans, including fully insured, employer-sponsored plans, individual market plans, and New Mexico state employee health plans (SEHPs), which cover public school employees. The data suggests that the NCS effectively shielded patients from out-of-pocket spending on medications for MH/SUDs. A recent study discovered that the average out-of-pocket expense for psychotropic medications decreased by $6.37, or 85.6%, when compared to New Mexico federal employees who were not impacted by NCS. However, the overall volume of dispensed MH/SUD prescription drugs did not significantly change.

Conclusion:

New Mexico’s NCS law provides a case study on how legislation can tackle financial obstacles to mental health care. It has effectively cut down out-of-pocket costs for psychotropic drugs. However, the total amount of dispensed MH/SUD prescription drugs hasn’t changed significantly. This situation highlights the complex nature of mental health care access. It’s not just about cost, but also about professional availability and lingering mental health stigma. We have yet to see the law’s effect on non-drug services. Yet, the initial success in lessening the financial strain of medication signals a hopeful beginning. Despite this, the data on mental health care access indicates a long road to equitable mental health care. It’s clear that while laws like NCS can contribute, we need a multi-faceted strategy. This strategy should address workforce shortages, insurance coverage, and societal stigma.

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