New Evidence on the Effects of State Mental Health Mandates

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Inquiry-Fall 2008

State mental health parity laws improve equity in private insurance coverage for mental and physical health services, but prior research shows no effect on service use. We study whether state parity differentially affects individuals by employer size since large firms are often exempt from state health mandates due to the Employee Retirement Income Security Act. We also examine whether state parity laws differentially affect use among individuals with low incomes or in poor mental health. We find that individuals in smaller firms are more likely to use services post-parity implementation and that this effect is concentrated among low-income individuals.