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Mental Health Parity Legislation, Cost-Sharing and Substance Abuse Treatment Admissions


  • Dhaval M. Dave
  • Swati Mukerjee


Treatment is highly cost-effective in reducing an individual's substance abuse (SA) and associated harms. However, data from Treatment Episodes (TEDS) indicate that per capita treatment admissions substantially lagged behind increases in heavy drug use from 1992-2007. Only ten percent of individuals with clinical SA disorders receive any treatment, and almost half who forgo treatment point to accessibility and cost constraints as barriers to care. This study investigates the impact of state mental health and SA parity legislation on treatment admission flows and cost-sharing. Fixed effects specifications indicate that mandating comprehensive parity for mental health and SA disorders raises the probability that a treatment admission is privately insured, lowering costs for the individual. Despite some crowd-out of charity care for private insurance, mandates reduce the uninsured probability by a net 2.4 percentage points. States mandating comprehensive parity also see an increase in total treatment admissions. Thus, increasing cost-sharing and reducing financial barriers may aid the at-risk population in obtaining adequate SA treatment. Supply constraints mute effect sizes, suggesting that demand-focused interventions need to be complemented with policies supporting treatment providers. These results have implications for the effectiveness of the 2008 Federal Mental Health Parity and Addiction Equity Act in increasing SA treatment admissions and promoting cost-sharing.

Suggested Citation

  • Dhaval M. Dave & Swati Mukerjee, 2008. "Mental Health Parity Legislation, Cost-Sharing and Substance Abuse Treatment Admissions," NBER Working Papers 14471, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:14471
    Note: HE

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    Cited by:

    1. Brendan Saloner & Yaa Akosa Antwi & Johanna Catherine Maclean & Benjamin Lê Cook, 2015. "Access to health insurance and utilization of public sector substance use treatment: Evidence from the Affordable Care Act dependent coverage provision," DETU Working Papers 1509, Department of Economics, Temple University.
    2. Johanna Catherine Maclean & Brendan Saloner, 2015. "Substance Use Treatment Provider Behavior and Healthcare Reform: Evidence from Massachusetts," DETU Working Papers 1511, Department of Economics, Temple University.
    3. Johanna Catherine Maclean & Ioana Popovici & Elisheva Stern, 2015. "Health Insurance Expansions and Provider Behavior: Evidence from Substance Use Disorder Providers," DETU Working Papers 1510, Department of Economics, Temple University.
    4. Maclean, J. Catherine & Saloner, Brendan, 2017. "The Effect of Public Insurance Expansions on Substance Use Disorder Treatment: Evidence from the Affordable Care Act," IZA Discussion Papers 10745, Institute for the Study of Labor (IZA).
    5. Niko de Silva & Benno Torgler, 2011. "Smoke Signals and Mixed Messages: Medical Marijuana & Drug Policy Signalling Effects," CREMA Working Paper Series 2011-18, Center for Research in Economics, Management and the Arts (CREMA).
    6. Antwi, Yaa Akosa & Maclean, J. Catherine, 2017. "State Health Insurance Mandates and Labor Market Outcomes: New Evidence on Old Questions," IZA Discussion Papers 10578, Institute for the Study of Labor (IZA).
    7. Johanna Catherine Maclean & Jonathan H. Cantor & Rosalie Liccardo Pacula, 2015. "Economic downturns and substance abuse treatment: Evidence from admissions data," DETU Working Papers 1504, Department of Economics, Temple University.
    8. Popovici, Ioana & Maclean, J. Catherine & French, Michael, 2017. "The Effects of Health Insurance Parity Laws for Substance Use Disorder Treatment on Traffic Fatalities: Evidence of Unintended Benefits," IZA Discussion Papers 10746, Institute for the Study of Labor (IZA).
    9. repec:eee:pubeco:v:154:y:2017:i:c:p:67-94 is not listed on IDEAS
    10. Swensen, Isaac D., 2015. "Substance-abuse treatment and mortality," Journal of Public Economics, Elsevier, vol. 122(C), pages 13-30.
    11. Ioana Popovici & Johanna Catherine Maclean & Michael T. French, 2017. "Health Insurance and Traffic Fatalities: The Effects of Substance Use Disorder Parity Laws," NBER Working Papers 23388, National Bureau of Economic Research, Inc.
    12. Hefei Wen & Jason M. Hockenberry & Janet R. Cummings, 2014. "The Effect of Substance Use Disorder Treatment Use on Crime: Evidence from Public Insurance Expansions and Health Insurance Parity Mandates," NBER Working Papers 20537, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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