Behavioral Health Benefit Dollars Have Plummeted, New Study Finds

Consumer, Provider Groups Say Patient Care May Be At Risk; Announce Strategy to Improve Coverage and Benefits

May 07 1998

Washington, D.C. - Behavioral healthcare benefit costs have been slashed 670 percent more than general healthcare benefit costs over the past 10 years (1988-1997), according to a new study by the Hay Group, an actuarial and benefits consulting firm in Washington, DC. Where the value of general healthcare benefits has declined 7 percent (from $2,326.86 per covered individual in 1988 to $2,155.60 in 1997), the value of behavioral healthcare benefits has declined 54 percent (from $154.08 in 1988 to $69.61 in 1997), according to the report. Behavioral health as a percent of the total healthcare benefit has plummeted 50 percent in 10 years (dropping from 6.2 percent in 1988 to 3.1 percent in 1997).

The Hay Group study (Health Care Plan Design and Cost Trends: 1988 through 1997) is the first to look at what has happened to behavioral health care compared to general health care during the tumultuous period of the last ten years. The report was prepared by the Benefits Practice of the Hay Group's Washington, DC, office. It was commissioned by the National Association of Psychiatric Health Systems (NAPHS), which represents the nation's behavioral healthcare provider organizations; the National Alliance for the Mentally Ill (NAMI), which is a grassroots self-help, support and advocacy organization of consumers, families, and friends of people with severe mental illnesses; and the Association of Behavioral Group Practices (ABGP), which works collaboratively with NAPHS on advocacy issues. The report was funded by the NAPHS Education and Research Foundation.

"The revolution that has swept health care over the past ten years has had a particularly strong negative impact on behavioral health," said William D. Zieverink, M.D., president of the National Association of Psychiatric Health Systems. Dr. Zieverink is a psychiatrist with Behavioral Health Strategies in Portland, OR. It is important to control healthcare costs, he said, "however, the trend of slashing behavioral health dollars appears to be continuing unabated. Even when recognizing the need to cut costs and eliminate waste from the system, behavioral health benefits have been disproportionately cut compared to general healthcare benefits. Dollars are disappearing from the behavioral health system."

"The erosion of behavioral health dollars is simply discrimination in another - very dangerous - form," added Laurie Flynn, NAMI Executive Director. "This type of discrimination means that resources desperately needed by those with serious brain disorders are being eliminated." For example, the number of plans with annual visit limits for outpatient behavioral health care has nearly doubled. In 1997, 48 percent of plans imposed annual visit limits for outpatient behavioral health care compared to just 26 percent in 1988, according to the Hay Group report. By 1997, the most prevalent limit was 20 outpatient visits. In contrast, 46 percent of the plans that imposed a visit limit in 1988 allowed a maximum of 50 visits. Today, only 17 percent allow 50 visits. "This report suggests once again that individuals with serious mental illnesses and their families who most need access to effective treatments are benefiting the least," said Ms. Flynn.

"It is time to seriously consider the implications of severe loss of funding and loss of access on the lives of real people," added Leonard S. Goldstein, M.D., president of the Association of Behavioral Group Practices. Dr. Goldstein is also president of Northern Virginia Psychiatric Group, PC, in Fairfax, VA. "We all want to control costs," said Dr. Goldstein. "But how far is too far? This study should encourage all employers and payors to take a second look at their benefit design for behavioral health to be certain that it can deliver what they expect it to."

NAPHS, ABGP, and NAMI have joined together to develop an Employer's Checklist designed to help purchasers of behavioral health benefits evaluate their own behavioral health benefits. 

"The prevalence of mental and addictive disorders is high," said Dr. Goldstein. "The impact of these disorders when left untreated is very high - both in economic and human terms. Behavioral health issues need to be on the radar screen of every employer in the nation."


Plan design information for 1988 through 1997 was extracted from the Hay Benefits Report for each year. The Hay Benefits Report collects data on the typical design of healthcare benefits provided by medium and large employers in the United States. The data in the 1997 Hay Benefits Report was collected from 1,043 U.S. employers representing a broad industry and geographic mix.

The benefits for each year were coded into Hay's Mental Health Benefit Value Comparison (MHBVC) model. MHBVC was developed by the Hay Group for the National Institute of Mental Health to provide estimates of the costs of mental health parity.

About the Study Sponsors

The Hay Group, founded in 1943, is an international consulting firm providing the full range of human resources and management services to clients throughout the world. The Benefits Practice of the Hay Group, formerly Hay/Huggins Company, Inc., was one of the first consulting organizations in the United States to provide independent actuarial services. Hay/Huggins traces its history to 1911 when Huggins and Company was founded in Philadelphia. Since 1973, Hay/Huggins has been a wholly-owned subsidiary of the Hay Group and maintains a national network of local consulting offices which are responsible for delivering actuarial and benefit consulting services to our clients. These offices are located in Philadelphia, Washington, DC, Atlanta, Boston, Chicago, Dallas, Kansas City, Los Angeles, New York, and San Francisco.

The National Alliance for the Mentally Ill (NAMI) is a nonprofit, grassroots, self-help, support and advocacy organization of consumers, families, and friends of people with severe mental illnesses, such as schizophrenia, major depression, bipolar disorder, obsessive-compulsive disorder, and anxiety disorders. Founded in 1979, NAMI has more than family members and consumers who seek equitable services for people with severe mental illnesses. NAMI has more than 1,140 state and local affiliates in all 50 states, the District of Columbia, Puerto Rico, and Canada.

The National Association of Psychiatric Health Systems (NAPHS) represents behavioral healthcare systems that are committed to the delivery of responsive, accountable, and clinically effective treatment and prevention programs for people with mental and substance abuse disorders. Its members are behavioral healthcare provider organizations, including 400 specialty hospitals, general hospital psychiatric and addiction treatment units, residential treatment centers, partial hospital services, behavioral group practices, and other providers of care. In 1997, the Association of Behavioral Group Practices (ABGP) also joined NAPHS as a system member, further expanding NAPHS's representation of the continuum of care. NAPHS concentrates on three key areas: strengthening advocacy for behavioral health services; building strategic alliances; and collecting and disseminating information to help members understand, respond to, and manage change.

The Association of Behavioral Group Practices (ABGP) has been formed to advocate for a marketplace in which behavioral group practices can deliver effective, quality behavioral healthcare services and thereby improve the lives of individuals, families, and communities. ABGP works:

  • to serve as the national advocacy voice for behavioral group practices
  • to communicate the role, benefits, value, and effectiveness of behavioral group practices in the healthcare delivery system
  • to strengthen the advocacy voice for behavioral healthcare through collaboration, coordination, and communication with delivery system providers along the continuum of care