Do State Parity Laws Reduce the Financial Burden on Families of Children with Mental Health Care Needs?

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 Health Services Research - June 2007

Objective. To study the financial impact of state parity laws on families of children in need of mental health services.

Data Source. Privately insured families in the 2000 State and Local Area Integrated Telephone Survey National Survey of Children with Special Health Care Needs (CSHCN) (N=38,856).

Study Design. We examine whether state parity laws reduce the financial burden on families of children with mental health conditions. We use instrumental variable estimation controlling for detailed information on a child's health and functional impairment. We compare those in parity and nonparity states and those needing mental health care with other CSHCN.

Principle Findings. Multivariate regression results indicate that living in a parity state significantly reduced the financial burden on families of children with mental health care needs. Specifically, the likelihood of a child's annual out-of-pocket (OOP) health care spending exceeding $1,000 was significantly lower among families of children needing mental health care living in parity states compared with those in nonparity states. Families with children needing mental health care in parity states were also more likely to view OOP spending as reasonable compared with those in nonparity states. Likewise, living in a parity state significantly lowered the likelihood of a family reporting that a child's health needs caused financial problems. The likelihood of reports that additional income was needed to finance a child's care was also lower among families with mentally ill children living in parity states. However, we detect no significant difference among residents of parity and nonparity states in receipt of needed mental health care.

Conclusion. These results indicate that state parity laws are providing important economic benefits to families of mentally ill children undetected in prior research.