Impact of Mental Health Parity and Addiction Equity Act on Costs and Utilization in Alabama's Children's Health Insurance Program

Published:August 02, 2018DOI:



      The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 mandates equivalent insurance coverage for mental health (MH) and substance use disorders (SUD) to other medical and surgical services covered by group insurance plans, Medicaid, and Children's Health Insurance Programs (CHIP). We explored the impact of MHPAEA on enrollees in ALL Kids, the Alabama CHIP.


      We use ALL Kids claims data for October 2008 to December 2014. October 2008 through September 2009 marks the period before MHPAEA implementation. We evaluated changes in MH/SUD-related utilization and program costs and changes in racial/ethnic disparities in the use of MH/SUD services for ALL Kids enrollees using 2-part models. This allowed analyses of changes from no use to any use, as well as in intensity of use.


      No significant effect was found on overall MH service-use. There were statistically significant increases in inpatient visits and length of stay and some increase in overall MH costs. These increases may not be clinically important and were concentrated in 2009 to 2011. Disparities in utilization between African-American and non-Hispanic white enrollees were somewhat exacerbated, whereas disparities between other minorities and non-Hispanic whites were reduced.


      Findings indicate that MHPAEA led to a 14.3% increase in inpatient visits, a 12.5% increase in length of inpatient stay, and a 7.8% increase in MH costs. The increases appear limited to 2009 to 2011, suggesting existing pent-up “needs” among enrollees for added MH/SUD services that resulted in a temporary spike in service use and cost immediately after MHPAEA, which subsequently subsided.


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