The Value of Behavioral Health Benefits Declines in Past Year, Study Finds

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Past-Year Experience Continues a Decade of Discriminatory Trends, Say NAPHS and ABGP

(Washington, D.C., April 30, 1999)……The value of behavioral healthcare benefits continued a decade-long decline between 1997 and 1998, according to an updated analysis conducted for the National Association of Psychiatric Health Systems and the Association of Behavioral Group Practices by the Hay Group, an actuarial and benefits consulting firm in Arlington, VA. Psychiatric care also continues to be subject to greater limits than general health care, according to the report titled Health Care Plan Design and Cost Trends: 1988 through 1998. The new analysis is a follow-up to a major report released last year looking at what has happened to behavioral health care compared to general health care during the previous ten years.

The value of behavioral healthcare benefits in the past year (1997-1998) has decreased from $70.96 per covered individual in 1997 to $69.87 in 1998 (a 1.5% decrease). Benefit "values" in this report are based on the average cost of providing the benefits to employees in a typical medium to large U.S. company and are expressed in constant 1998 dollars. The past-year decline continues a decade-long trend in which the value of behavioral health benefits (in constant dollars) has declined each and every one of the past 11 years.

The decline in the value of behavioral health benefits over time has been far steeper than the decline in the value of general healthcare benefits. Where the value of general healthcare benefits declined 11.5% from 1988 to 1998 (from $2,372.01 per covered individual in 1988 to $2,098.68 in 1998), the value of behavioral healthcare benefits has declined 54.7% (from $154.48 in 1988 to $69.87 in 1998).

Within the past year, as general healthcare benefits have also faced cutbacks, behavioral health care as a proportion of the total value of employer-provided health care benefits stabilized, going from 3.1% of the total in 1997 to 3.2% in 1998. This stabilization occurred as the value of general healthcare benefits in the past year declined more rapidly (down 4.5%) than the value of behavioral health benefits (down 1.5%). When viewed over time, however, behavioral health as a percent of the total healthcare benefit has plummeted 50 % in 11 years (dropping from 6.2% of the total in 1988 to 3.2% in 1998).

In addition to tighter management controls, behavioral healthcare benefits have become more limited both within the past year and over the past decade.

The percentage of plans imposing any type of limit on inpatient psychiatric care increased in one year, going from 86% of plans in 1997 to 88% of plans in 1998.

The percentage of plans imposing an annual visit limit on outpatient care rose, from 48% of plans in 1997 to 57% of plans in 1998. (One explanation may be that plan designs have been modified to offset the costs of compliance with the Mental Health Parity Act, although no supporting data are yet available.)

There is a growing trend toward providing outpatient psychiatric care with a separate visit copayment or deductible (done by 39% of plans in 1998, compared to 35% of plans in 1997), as opposed to providing these benefits under the general medical plan deductible (done by 35% of plans in 1998, compared to 38% of plans in 1997).

The new Hay Group study (Health Care Plan Design and Cost Trends: 1988 through 1998) was prepared by the Benefits Practice of the Hay Group’s Arlington, VA, office. It was commissioned by the National Association of Psychiatric Health Systems (NAPHS), which represents the nation’s behavioral healthcare provider organizations, and the Association of Behavioral Group Practices (ABGP), which focuses on advocacy from a group practice perspective.

"This update of last year’s landmark Hay Group report continues to demonstrate that dollars are disappearing from the behavioral healthcare system," said Thomas Bender, president of the National Association of Psychiatric Health Systems. Mr. Bender is Vice President of Psychiatric Operations for Universal Health Services, Inc., in King of Prussia, PA. "We recognize the need to cut costs and eliminate waste from the system, but this study shows that behavioral health benefits continue to decline and have been disproportionately cut compared to general healthcare benefits."

"As healthcare costs overall are rising gradually, what does it say that behavioral healthcare costs have been slashed dramatically and cut in half, particularly at a time when very costly manifestations of behavioral disorders are all over the newspaper such as in violence in the schools?" said 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 need to understand the impact drastic behavioral healthcare benefit cuts can have on the lives of real people. How can we continue to meet the needs of individuals with severe mental illnesses if the resources necessary to provide care are decimated? It is time for every employer and payer to take a second look to be certain their behavioral health benefit plans can deliver what they expect."

Methodology

Plan design information for 1988 through 1998 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 1998 Hay Benefits Report was collected from 1,017 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 Organizations

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 clients. These offices are located in Philadelphia, Washington, DC, Atlanta, Boston, Chicago, Dallas, Kansas City, Los Angeles, New York, and San Francisco.

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 children, adolescents, and adults with mental and substance use 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, youth services organizations, and other providers of care. In April 1999, the Association of Behavioral Group Practices (ABGP) merged with NAPHS, becoming a special-interest section committed to advocating 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. 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) was formed in 1997 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; and to strengthen the advocacy voice for behavioral healthcare through collaboration, coordination, and communication with delivery system providers along the continuum of care. Effective April 1999, ABGP has merged with the National Association of Psychiatric Health Systems (NAPHS) and continues to serve as a special-interest section within NAPHS focused on its original goals.

Key Findings

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