VOODOO HEALTH ECONOMIICS

Devon Herrick | NCPA BLOG

Recent episodes of mass violence have raised awareness of severe mental illness. The perpetrators of these horrendous crimes were undoubtedly suffering from significant psychiatric problems. Policies that aim to prevent mass violence have found broad bipartisan support in Congress. During the month of August while Congress is in recess, some Member of Congress are hard at work crafting bills designed to reduce the likelihood of future violence.

The competing bills fit roughly into four different categories: 1) improved systems preventing deranged people from acquiring guns; 2) early detection and intervention; 3) mental health treatments for deranged people in prisons and in public programs like Medicaid, and, finally, a wasteful, shotgun approach: 3) strengthen mental health parity mandates, intended make psychiatric care more accessible and boost behavioral health spending for those in health plans regulated by Obamacare.

Coverage for mental health treatments are already required under the Affordable Care Act — and earlier laws. Prior to Obamacare President Bush and President Clinton both signed bills strengthening mental health parity. Mental health parity mandates require health plans cover mental health treatments — such as psychiatric hospital stays and counseling sessions — at identical dollar limits to physical health treatments. Thus, if your health plan provides unlimited care for cancer, heart attack, stroke or any other physical ailments, your plan must provide unlimited care for mental health conditions. In years past, many health plans limited psychotherapy to only five or 10 outpatient sessions per year; and authorized inpatient psychiatric care only in the most severe cases.

It’s not clear that additional health plan mandates would actually result in violent, deranged individuals receiving the behavioral intervention they need. It is relatively difficult for family members (or law enforcement) to force individuals suffering from severe mental illness to accept treatments they don’t want. Until the 1960s, most civil commitments were involuntary. People in need of psychiatric care were institutionalized — usually against their will. The involuntary civil commitment standards that prevailed until the 1960s mostly required family members’ assertions of medical need. Although civil commitment laws vary state by state, involuntary civil commitment now generally requires a burden of proof that the patient is a danger to self or others. Moreover, the length of time patients can be involuntarily committed (generally for evaluation) is only about 72 hours. That’s such a narrow window that it’s unclear how mental health parity mandates could deter deranged individuals contemplating violence. Thus, the goal of mental health parity mandates are presumably to massively boost psychiatric care spending to a broad range of people in hopes the few people in desperate need will get care before they commit violent acts.

This strategy would be very expensive. Currently, about seven percent of health care expenditure is on mental or behavior health (including substance abuse counseling). How much more do policymakers think we should spend on mental health? Per capita health expenditure is already nearly $10,000 annually. Of this, about $1,000 is on drug therapies, $2,000 is on physician care while $3,000 is on hospital inpatient care. The remaining $4,000 is spend on administration and a variety of services, such as dental care, medical equipment and home health, etc. By the way, of the $10,000 Americans spend per capita on medical care annually, individuals pay less than $1,000 out of pocket. Keep in mind, totals aren’t mutually exclusive. Mental health spending is imbedded in areas such as hospital, physician and drug therapy. (For instance, about one-quarter of mental health spending is on drugs while another quarter is spent on treatment in hospitals.)

Health economists and actuaries are beginning to understand how different medical conditions warrant different levels of cost-sharing in order to hold down costs while encouraging patient adherence to therapy.

The NCPA has published reports over the years on how mental health is different than treatments for physical health problems (here, here, here and here). For one thing, a major problem with generous mental health parity mandates is that mental conditions are subjective. In the absence of objective standards — like blood tests that could definitively identify mental illness and measure treatment success — insurers have to rely upon patients’ subjective descriptions of their feelings. Insurers (and patients) also have to trust their therapists’ subjective reports on progress. It’s probably safe to assume that psychotherapists believe even mentally healthy people could benefit from periodic counseling. Although this view is likely their honest opinion, it is also consistent with counselors’ desire to get paid. This moral hazard and the ambiguity of treatment progress increases mental health treatment costs — which is why insurers historically benefited limits and required different levels of cost-sharing for behavior health treatments.

Consider this: not all mental health treatments are in response to a mental disorder. Some patients viewed sessions with their therapist like a therapeutic massage for their emotions: pleasant but possibly not something they would consider worthwhile if required to pay for them.

A study in an economic journal back this up. It found that more than one-third (38 percent) of mental health patients did not have a mental health disorder.

Who would be the likely beneficiaries under a stronger mental health mandate that encourages more people to seek care? As former Atlantic columnist Megan McArdle has pointed out, the number of people with severe mental illness is miniscule compared to those who are merely unhappy with their life. A generous mental health mandate would mostly provide costly — medically unnecessary — gripe sessions for the moderately unhappy. Discontented people could dump all manner of trivial complains on their therapist: unfulfilling jobs, inattentive spouses and life opportunities missed — all paid for by other peoples’ money.

Mental health mandates also open the door to fraud. Texas, Florida and a few other states suffered a series of fraudulent providers around 1990, when patients with questionable mental health needs were admitted to for-profit, psychiatric hospitals. Patients’ health plans were then systematically looted; only to be discharged the day their mental health benefits ran out. One company was accused of charging $1,100 (per person, per day) for recurring three hour “group” therapy sessions. It was also accused of marking up common, nonprescription drugs 30,000 percent and billing for services never provided. Diagnosis and treatment plans were often adjusted to syphon off the maximum insurance coverage limits.

Many of the shady providers preyed on adolescents whose parents had good employer health coverage. Office-based counselors were employed to funnel adolescents into costly inpatient therapy. Counselors would convince parents their teens’ angst was depression that could lead to suicide. The teens were then admitted to affiliated psychiatric hospitals, where their mental health benefits were maxed out over the course of a week or two. The teens were miraculously “cured” and discharging the day their insurance would no longer pay.

Ways to prevent violence committed by people with severe mental illness is a discussion worth having. Although the perpetrators of mass shootings undoubtedly have mental health issues, people with serious psychological conditions are far more likely to be the victims of violence than the perpetrators of violence. In a free society there are no easy answers when obstinate, delusional patients resist seeking treatment. Although their conditions warrant care, it’s likely the current proposals will do more to over-treat the affluent than help those truly in need. Let’s not pretend this over-priced Band-Aid would prevent mass shootings.

Source: Health Policy Blog