Achieving Mental Health Care Parity Might Require Changes In Payments And Competition

One of the most prominent features of the Affordable Care Act has been the promotion of individual health plans chosen by consumers in the Marketplaces. These plans are subject to regulation and paid by risk-adjusted capitation, a set of policies known as managed competition. Individual health insurance markets, however, are vulnerable to what economists describe as efficiency problems stemming from adverse selection, and Marketplaces are no exception. Health plans have incentives to discriminate against services used by people with certain chronic illnesses, including mental health conditions. Parity regulations, which dictate coverage for mental health benefits on par with medical and surgical benefits, can eliminate discrimination in coverage but redirect discrimination toward hard-to-regulate tactics from managed care such as restrictive network design and provider payment. This article reviews policy options to contend with ongoing selection issues. "Better enforcement" of parity has less chance of success than more fundamental but feasible changes in the way plans are paid or in the way competition among plans is structured.