Page images

dered on an ambulatory basis. Efforts must be made to find acceptable ways in which psychiatrists may be brought into HMOs. Some psychiatrists may choose to enter such programs on a full-time basis. Still others may wish to treat only selected individual patients. There is no legislative obstacle to this, but if such relationships are to be achieved it will be necessary for psychiatrists to understand the somewhat specialized mission and objective of the HMO. At the same time it will be necessary for the directors of HMOs to understand some of the distinctive needs of psychiatric treatment and to fully appreciate the potential resource of the private practicing phychiatrist. Such a rapprochement takes time and effort, and district branches of the APA must develop top-level groups to seek out ways in which the private practicing psychiatrist can effectively participate in HMOs.

Still in its early phases, the health maintenance organization approach is gaining momentum. Mental health benefits should be included in this and all newly developing systems. But realistically we should not expect the HMO to cover the full range of mental health problems. It can be expected to provide an adequate base for active rehabilitative treatment and preventative measures. Efforts should be made to establish linkages between the extensive mental health programs already in existence, including private practicing phychiatrists, community mental health centers, general hospitals, private phychiatric hospitals, and state hospital systems. Such opportunities are still open, but psychiatrists must assume leadership and take prompt and aggressive action to assure that mental health is included in the health maintenance organization.


1. Health maintenance organizations. Medical World News, Oct. 29, 1971, p. 41. 2. Reed L. S., Meyers E. S., Scheidemandel P. L.: Insurance Plans and Psychiatric Care Utilization and Cost. Washington, D.C., American Psychiatric Association (in press)

3. Goldberg I. D., Krantz G., Locke B. Z.: Effect of a short-term outpatient psychiatric therapy benefit on the utilization of medical services in a prepaid group practice medical program. Medical Care 8: 419-428, 1970.

4. Follette W., Cummings N. A.: Psychiatric services and medical utilization in a prepaid health plan setting. Medical Care 5:25 35, 1967.


This report gives the results of a study conducted by the American Psychiatric Association, with the aid of a grant from the National Institute of Mental Health, of the utilization of care for mental conditions under health insurance. The report-a volume of over 400 pages-will be published early in June 1972. The study was directed by Louis S. Reed, Ph.D., a well-known health economist; co-authors of the report with Dr. Reed are Mrs. Evelyn S. Myers, managing editor of the American Journal of Psychiatry, and Mrs. Patricia L. Scheidemandel, research associate, Joint Information Service of the APA and the National Association for Mental Health.

The project was advised by a committee of consultants consisting of representatives of Blue Cross, Blue Shield, the insurance industry, two community prepayment plans, labor organizations, and five psychiatrists active in different fields.

Utilization data were obtained for over 40 private health insurance plans or programs in this country, including the Blue Cross and Blue Shield nationwide plan for federal employees, 12 local Blue Cross and seven local Blue Shield plans, three insurance companies, nine community group-practice plans, one community individual-practice plan, and 10 plans of unions or employee organizations. A primary source of data was the utilization reports of the various health insurance plans for federal employees. Data were also obtained on utilization under Medicare, Medicaid, CHAMPUS, and other public programs in this country, and on utilization under the Canadian government programs of hospital and medical service insurance.

The salient findings are as follows:


1. Health insurance coverage of mental illness is widespread. At the end of 1970, 128 million persons-63 percent of the civilian population-had some coverage of hospital care for mental conditions under private health insurance and 78 million-38 percent of the total population-had some coverage of outpatient psychiatric care.

2. While most insurance programs cover mental illness, under many programs the coverage is restricted compared with that for general conditions. The difference is least in regard to hospital care and physician in-hospital visits, and greatest in regard to care for ambulatory patients.

3. Virtually all Blue Cross plans cover mental conditions in general hospitals, but many plans provide fewer days of care for mental than for general conditions in general hospitals, and provide restricted benefits-or none at all-in private mental or public mental hospitals. The situation is similar for Blue Shield.

4. Insurance companies under group policies almost always provide the same coverage for hospital care and physician service in the hospital as for other conditions. Coverage of outpatient care is generally restricted as compared with that for general conditions. Under individual policies, care for mental conditions both in and out of hospitals is usually restricted or excluded.

5. Most other plans-the community group-practice and individual-practice plans, self-insured plans of employers or unions, and private group medical clinics-provide some coverage of mental conditions, although the benefit is often a limited one.


Hospital care.-The most reliable experience among plans functioning on a free-choice-of-physician, fee-for-service basis is the high option of the Blue Cross and Blue Shield plan for federal employees, covering over 4,000,000 persons. This program, under its basic benefits, provides full coverage of hospital care for mental conditions in general hospitals and member mental hospitals for 365 days per admission; under its supplemental benefits, it pays 80 percent of charges in non-member mental hospitals in excess of a general deductible of $100. Under both benefits in 1969 there were 5.7 hospital admissions for mental conditions per 1,000 covered population-4.2 percent of admissions for all conditions. Days of care for mental conditions numbered approximately 89.3 per 1,000 population and comprised 8.8 percent of total days for all conditions. Total charges for hospital care of mental conditions amounted to approximately $4.13 per person covered, equal to 6.3 percent of total charges for all conditions.

Data from 12 local Blue Cross plans (total enrollment more than 22 million), most of which provide only 30 days of care for mental illness in general hospitals, indicate an admission rate for mental conditions ranging from 1.4 to 6.3 per 1,000 population and days of care ranging from 23 to 111 per 1,000 population. Admissions for mental conditions ranged from two to four percent of those for all conditions and mental days from three to 11 percent of days for all conditions. Under eight plans of federal employee organizations, chiefly postal workers, admissions for mental disorders ranged from 2.1 to 4.9 per 1,000-from one to five percent of all admissions and mental days ranged from 38 to 161 per 1,000-four to 13 percent of days for all conditions.

Under nine prepaid group-practice plans, admissions for mental conditions ranged from 0.6 to 3.1 per 1,000 covered population and days of care from 2.7 to 54.0 per 1,000. Mental admissions ranged from one to five percent of those for all conditions and mental days of care from one to ten percent of those for all conditions. In these plans, utilization rates for mental conditions are significantly lower than those of plans functioning on a free-choice-of-physician basis, just as they are for general conditions, but the proportion of mental to total conditions is about the same.

Under Medicare (which provides the same hospital benefits in general hospitals for psychiatric conditions as for other conditions, but limits benefits in psychiatric hospitals to 190 days during a lifetime) discharges and days of care for psychiatric conditions in 1966 were at an annual rate of 3.3 and 50.8 per 1,000 covered population respectively, equal to 1.4 percent and 1.6 percent of the rates for all conditions. In 1969, total program expenditures for hospital care for psychiatric conditions in both general and psychiatric hospitals amounted to

approximately $4.40 per covered person, equal to two percent of expenditures for hospital care for all conditions.

Under Canada's federal-provincial program of hospital insurance, which provides complete hospital care in general hospitais for all conditions for as long as needed (but no coverage in mental hospitals), hospital discharges and days of care for mental conditions in 1967 numbered 4.7 and 83.4 per 1,000 population, respectively. This was equal to 3.1 and 4.6 percent of the rates for all conditions. In-hospital physician visits.-Under the high option of the Blue Cross and Blue Shield plan for federal employees there were 14 claims per 1,000 population for in-hospital visits and consultations for mental disorders, for a total of 57.6 visit days per 1,000 and benefit payments of 66 cents per covered person. Visit days for mental disorders were 9.7 percent of visit days for all conditions. Total benefit payments for mental illness amounted to 2.8 percent of all benefits under basic medical-surgical benefits (including surgery, anesthesia, maternity, X-ray, and laboratory) for all conditions.

Outpatient care (care for ambulatory patients).-Data are available for three different types of programs: (a) major medical plans, where the insurance pays 75 or 80 percent of charges in excess of a deductible; (b) programs on a freechoice-of-physician, fee-for-service basis which provide full coverage of the first few visits to a psychiatrist, with additional visits covered on an ascending scale of coinsurance; and (c) group-practice plans, which generally provide all necessary care (other than long-term intensive therapy) or full coverage of the first few initial visits with additional visits at a small extra charge.

The best experience under the major medical programs is that of the high option Blue Cross and Blue Shield plan for federal employees, which, under its supplemental benefits, pays 80 percent of physicians' charges for outpatient care (the same for mental as for other conditions) subject to a general deductible of $100 per person per year. In 1969 there were 13 claims per 1,000 population for reimbursement of physician charges for mental conditions. Eligible charges amounted to $2.99 per covered person and benefit payments were equal to approximately $2.16 per covered person.

Physician charges for mental conditions under supplemental benefits amounted to 37 percent of physician charges for all conditions. Several factors contribute to this high percentage. Psychiatrists' charges for office visits, because of the time involved, are usually higher than those of other physicians. A few visits to a psychiatrist will accumulate charges exceeding the deductible, whereas persons having office visits for other conditions may have only a few visits a year and the charges incurred will not exceed the deductible. A large proportion of the charges of other physicians-all surgery, all maternity, all X-ray and laboratory services, and all in-hospital visits are paid for under basic benefits and do not come under supplemental benefits. Physician charges for psychiatric care payable in whole or in part under the program amounted to nine percent of physician charges for all types of care for all conditions.

Data from the Connecticut General Life Insurance Company on experiences under major medical policies for insured groups covering over four million persons indicate that under policies paying 50 percent of physicians' charges for outof-hospital care, with limits of $10 per day and $1,000 total for mental benefits in a year, covered physicians' charges for out-patient care of mental conditions amounted to approximately $1 or $1.20 per person covered.

Data from the Prudential Insurance Company of America for four insured groups indicate claim payments for outpatient psychiatric care ranged from 50 cents to $2.50 per covered person.

Under eight federal employee organization plans participating in the federal employees health insurance program, charges for physician services for mental conditions in or out of hospital ranged from 27 cents to $2.40 per covered person. Under the outpatient psychiatric program for auto workers, the covered person pays nothing for the first five visits to a psychiatrist, 15 percent of the physician's fee for the sixth through tenth visits, 30 percent for the 11th through the 15th visits, and 45 percent thereafter, up to a benefit maximum of $400. There is no coinsurance if the patient receives services from an outpatient department, mental health center, or clinic. Data are available on experience in 1970 under three plans:

1. Michigan Blue Cross and Blue Shield, with over two million workers and dependents covered, reported 94 services per 1,000 covered population and benefit costs of $2.17 per covered person.

2. Maryland Blue Cross and Blue Shield, with 24,000 persons covered for this benefit, reported 83.7 services per 1,000 population and benefit costs of $1.94 per covered person.

3. New York City Blue Cross and Blue Shield, covering 34,000 persons for this benefit, reported about 98 services per 1,000 covered population and benefit payments of about $2.32 per covered person.

Group Health Insurance, Inc., of New York City, under its program for federal employees (which pays for outpatient psychiatric services up to benefit limits of $500 for a child under 12 and $300 for a person aged 12 and over), had benefit costs in 1970 of approximately $2 per covered person. In the preceding year benefit payments for psychiatric amounted to approximately four percent of total payments for all physician services in the office, home, and hospital.

Under eight group-practice plans, including the various Kaiser plans and the Health Insurance Plan of Greater New York, which provide outpatient psychiatric care ranging from limited to fairly comprehensive, the number of visits for psychiatric care ranged from 51 to 170 per 1,000 covered population. Visits for psychiatric care ranged from 1.3 to 4.4 percent of physician visits for all conditions.

Under the supplementary medical insurance part of Medicare, which pays 50 percent of physicians' charges for outpatient charges for mental conditions in excess of the general deductible of $50, but only up to a maximum benefit payment of $250 a year, two enrollees per 1,000 in 1967 received some psychiatric care. Eligible charges amounted to 14 cents and benefit costs to a little more than 12 cents per enrolled person-equal to two tenths of one percent of total benefits under the program.

In Canada, under the federal-provincial programs of medical insurance covering virtually the entire population of each province, physician services for mental conditions in and out of hospital are covered on the same basis as physician services for all other conditions, i.e., virtually in full. In five provinces for which data were available the number of psychiatric services in 1970 ranged from 50 to 185 per 1,000 covered population and comprised one to two percent of all physician services for all conditions. Benefit payments for psychiatric care ranged from 43 cents to $2.37 per covered person, representing two to four percent of benefit payments for all conditions.

Variation by age, sex, and other characteristics.-Utilization of both inpatient and outpatient care is relatively low for children and the aged and highest for adults between the ages of 20 to 55. Utilization by females far exceeds that of males. Differences in utilization of outpatient care by income and educational levels are great, with utilization highest among affluent, well-educated groups, especially those in the education and health fields, the communications media, and the performing arts.


The available data indicate that hospital care for mental conditions in all types of hospitals for up to 365 days per admission can be provided for a working population at about $4.50 per covered person at 1969 hospital-cost levels (hospital costs in 1972 are appreciably higher). The cost would be equal to about six or seven percent of the cost for all conditions. Physicians' in-hospital service for these patients at 1969 fee levels would cost in the neighborhood of 70 cents per covered person. Major medical coverage of outpatient psychiatric care at 1969 fee levels, at 80 percent of charges after a deductible of $100, would cost about $2.15 per covered person. It would cost much less for some population groups and much more for others, depending upon income, education, and occupation. Limited first-dollar coverage of outpatient psychiatric care, as under the United Auto Workers program, can be provided at a cost of about $2.00 to $2.50 per covered person at 1970 fee levels. Group-practice plans can provide fairly comprehensive outpatient psychiatric care through visits to the psychiatric department numbering about three to four percent of visits for all conditions.

Utilization of mental health care for ambulatory patients is apt to increase in the future as the general level of education of the population rises. On the other hand, utilization of hospital care for mental illness may well decline.


The cost of providing insurance coverage of mental conditions both in and out of hospital is relatively low-a few dollars per covered person a year and a relatively small proportion of the cost of coverage for all conditions. From the standpoint of cost, insurance of mental health care is feasible.

That insurance coverage is feasible does not in itself mean that it is desirable. Actually, cost has very little to do with whether insurance coverage of a particular type of illness is desirable or not. Several types of illness, such as cancer and heart disease, carry higher price tags than does mental illness. The crucial factors are whether the service is useful and needed, whether it is necessary that the cost be met through insurance, and whether insurance is practicable from the standpoint of paying only for needed and essential services.

Mr. KYROS [presiding]. Dr. Gibson, I think that was a very concise and informative statement, and we also have your added material here in regard to HMO's. I frankly believe that if the costs are not prohibitive and we can get psychiatric care in there, I would be in favor of it.

We have a quorum calling. Perhaps Dr. Roy has a question.

Mr. Roy. I have no questions. I want to thank you for your complete statement and the contributions you have made during the entire consideration of this HMO bill.

I am inclined very much to believe what you say. The difficulty is narrowing the basic benefit package and you are aware we had testimony yesterday that we are still a little broad as far as the ability of an HMO to compete in the marketplace.

As I see the HMO structure, what you are saying should be said within each individual health organization. I think under these circumstances that not only many, but increasingly many HMO's will adopt what you are saying.

Mr. KYROS. You might submit this to the record for us-if mental health services were included in basic services, what would be the cost per year?

Dr. GIBSON. I would have to have a definition of the level of service. Mr. KYROS. Set up your own program terms for what you think is a basic psychiatric service and give us a figure.

Dr. GIBSON. We will be pleased to do so and provide the committee with that.

[The following information was received for the record:]

« PreviousContinue »