Cal. Parity Law Has Little Effect on Premiums or Coverage

Published June 1, 2002

A new report from Mathematica Policy Research Inc. concludes implementation of California’s mental health parity law has had, to date, no ill effect on health insurance in the state. The researchers noted, however, that their results are preliminary, and that “the full impact of parity may not be known for several years.”

California passed its parity law in 1999 to improve access to and the quality of mental health services in the state. The law, which requires private health insurance plans to provide equal coverage for physical health and selected mental health conditions, also attempts to end discriminatory practices in health insurance and reduce the stigma associated with mental illness.

In “A Snapshot of the Implementation of California’s Mental Health Parity Law,” researchers Timothy Lake, Alicia Sasser, Cheryl Young, and Brian Quinn conclude,

“… mental health benefits have been expanded to conform with the parity mandate, but it will take time and additional effort to address such goals as reducing stigma and improving access to care for people with mental illness. … [T]here is a broad consensus that the full impact of parity may not be known for several years, until consumers become more aware of the expanded benefits.”

Study Interviews Stakeholders

The report, written in February 2002 and formally released in April, is the first comprehensive look at the law’s impact, one year after its implementation. The Mathematica researchers interviewed more than 60 individuals representing more than three dozen organizations at the state and local levels, including representatives from state and county governments, health plans, providers, employers, and consumer advocates.

Those stakeholders reported premiums did not increase substantially in the first year, as some had feared they would. Moreover, employers did not drop coverage or switch to self-insured plans in order to avoid the law’s mandate.

Although most aspects of implementation went smoothly, Lake and his colleagues noted the following challenges:

  • Some consumers experienced disruption in care as a result of some health plans’ transition to managed behavioral health organizations in response to the law.
  • The implementation of parity only for selected conditions, rather than for all mental health diagnoses, created administrative challenges and confusion for some stakeholders.
  • Some stakeholders remain uncertain about the extent to which the law will enable or encourage people who have traditionally received treatment from the public sector, such as children with serious emotional disturbances, to obtain care from private providers.
  • Consumers were not well informed about the changes, despite communication and education efforts on the part of health plans, providers, state agencies, and others.

“An important goal of the law is to remove discriminatory limits on mental health benefits under private insurance. This goal was achieved during the first year, but much work remains to be done to make parity work well in the future,” said Lake, a health researcher at Mathematica and lead author of the report. “Consumers will need more education about the law to achieve goals such as improving access to care and reducing stigma.”

Mathematica, a nonpartisan research firm, conducts policy research and surveys for federal and state governments, foundations, and private-sector clients. The California parity study was conducted for the California HealthCare Foundation.

Diane Carol Bast is editor of Health Care News.

For more information …

The Mathematica report, “A Snapshot of the Implementation of California’s Mental Health Parity Law,” is available on Mathematica’s Web site at For printed copies, contact the group’s publications department at 609/275-2350.

Lead author Timothy Lake can be reached at 617/491-7900, ext. 230; email [email protected].