Less Than One Percent of Vermont Employers Report Dropping Coverage
Due to State’s Comprehensive Parity Law

A recent government study shows that only 0.3 percent of Vermont employers reported that they stopped providing health insurance coverage for their workers due to the state’s mental health parity law passed in 1997. The study sought to determine how the implementation of the Vermont parity law affected all major stakeholders: health plans, employers, providers and consumers.

According to the study, only 0.1 percent of employers reported that parity played a role in the decision to self-insure.

The report, "Effects of the Vermont Mental Health and Substance Abuse Parity Law," was released this week by the Substance Abuse and Mental Health Services Administration (SAMHSA).

Other key findings of the SAMHSA report include:

• More people received outpatient mental health services following implementation of the Vermont law. The percentage of users per 1,000 members of the two major health plans in the state increased 6 to 8 percent.

• Fewer people received any substance abuse treatment after the parity law was implemented. The percentage of users per 1,000 members decreased by 16 to 29 percent.

• Consumers paid a smaller share of the total amount spent on mental health and substance abuse services following implementation of the state parity law. The share paid out by Blue Cross/Blue Shield members declined from 27 percent to 16 percent of total mental health and substance abuse spending.

• Among those individuals with serious mental illnesses, the proportion of people spending more than $1,000 out-of-pocket annually was cut by more than half.

• Following the implementation of the Vermont parity law, the amount spent by Blue Cross/Blue Shield for mental health and substance abuse services increased by 19 cents per member per month.

• In relation to BlueCross/Blue Shield spending for all services, spending for mental health and substance abuse services accounted for 2.47 percent of the total after parity – up only from 2.30 percent prior to the parity law.

• Managed care for mental health and substance abuse services was an important factor in controlling costs following implementation of the parity law. For Blue Cross/Blue Shield members who received their coverage through a carve-out program, both the likelihood of receiving mental health treatment and the average number of outpatient mental health visits per user declined.

• Both consumer and employer awareness of the parity law in Vermont was low. As a result, stakeholders believed that some problems may have been avoided with the development of a proactive consumer education program from the outset.

The study reflects experiences during the first 2-3 years of parity in Vermont. The study may not be reflective of experience in other states that have recently implemented parity laws. However, the SAMHSA study demonstrates that parity for mental health and substance benefits was achieved in the state.

As of January 2003, 33 states had enacted parity laws that surpassed the provisions of the Federal Mental Health Parity Act of 1996. The Vermont parity law is the most comprehensive legislation in the country. The law defines mental health conditions broadly; covers substance abuse; and requires equal terms and conditions with general health care for service limits and cost sharing. The Vermont law covers the entire commercially-insured population, with no exemptions for small businesses. The sole exception is self-insured groups due to Federal preemption laws.

For more information about the SAMHSA Vermont parity report go to www.samhsa.gov.

Read NAMI’s Policy Position on Parity.