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How to cut costs, raise revenue, and improve services without raising taxes

Like passengers on a runaway train, we cannot tear our horrified eyes away from the approaching edge of the so-called “fiscal cliff,” drastic, across the board funding cuts that will occur in January unless Congress  accepts  some version of the Bowles Simpson commission recommendations of modest tax increases and rational reductions in spending.  Meanwhile, current  conversation resounds with calls to shovel in more coal to increase our speed. We are careening past alternate tracks laid by wiser congresses than the one that just adjourned. Changing the terms of our investment in health care in general-- and behavioral health care in particular-- could avoid the calamity and achieve the impossible dream: raising revenue without raising taxes and cutting costs without decimating essential services.

How is this possible? The 2008 Paul Wellstone and Peter Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) extended 1996 mental health parity legislation. The MHPAEA requires insurance companies that offer mental health benefits to cover addiction services as well, without unique constraints. The Patient Protection and Affordable Care Act (PPACA) of 2010 further strengthens this by requiring that insurers reimburse for mental health expenses at the same rate as other medical expenses. The economic analysis of implementing this act shows that health care is not, as current debate implies, merely an unsustainable drain on public coffers.

Addictions cost society, and the government, billions.   Investing in addiction treatment brings enormous savings.  According to the most recent SAMSHA analysis, every dollar spent on addiction treatment returns seven dollars in value. Three factors-- reduction in other health care costs, reducing the costs of crime,  and increasing productivity --more than offset the cost of care.

Simply put, the criminal justice system, now the de facto mental health and addictions treatment system, costs much more per person than the system it replaced, with far less favorable outcomes. Substance abusers tend to be younger than other chronically ill populations, with longer potential for productive life, if successfully treated.  Increasing productivity means increasing government revenue, without raising a single tax rate for anyone.  Returning the majority of substance users and mentally ill people to a system of care rather than punishment would reduce government expenditures in the criminal justice sector, at both the state and federal level.

Unfortunately, the potential savings of the MHPAEA and PPACA have yet to be realized. While waiting for DHHS to issue final regulations, insurers have actually reduced their support for residential drug treatment programs and many other behavioral health services. They continue to separate case management for psychiatric and addiction services from the standards applied to other services (“mental health carveouts”). Behavioral care case managers conceal the protocols by which they make decisions, making it impossible for providers to know which treatments are covered and undermining government enforcement.

In a data driven fashion, the current administration is moving towards creating final regulations that would force health insurance providers to support a broad range of addiction services. Wellstone and Domenici together laid the tracks to a safer and more just society. The upcoming months will tell us whether we will ignore the signals or switch to the track that leads not to a cliff, but to a society where the government can invest in people who repay the  support they receive, with interest.

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  1. Wilhelmina C Korevaar, MD, MMM

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    Thank you for this. You have touched the surface of what I believe to be true as well. Addictions are the ruin of our society, and now too often they begin with prescription narcotics. So, it appears there is more to be done than just addressing this at the back end. We need a way to educate doctors about just what it means to write that first prescription in the emergency room or post operatively. Setting expectations about acute pain following trauma or surgery can go a long way toward reducing reliance upon narcotics as a panacea. And, that simple conversation would go a long way toward prevention of future addictions.

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