h parity law is deemed the most comprehensive of all state mental health parity plans. Vermont’s plan mandates that mental health insurance be offered in Health insurance plans. It, also, prohibits cost shifting and requires that service charge be equal to the limits for physical illnesses. Vermont’s plan also covers substance abuse and the law applies to all businesses regardless of its size. Parity and Managed CareBehavioral managed care organizations began emerging in the early 1990’s. A majority of these companies were subsidiaries of major health insurers such as Blue Cross and Blue Shield and Aetna. These subsidiaries became known as “carve-outs” because HMO’s were using them to subcontract mental health benefits. It was thought that behavioral managed care organizations would help to provide more accurate diagnosis and lower cost through the use of medical professionals experienced in mental health and substance abuse. It is a general rule “if managed care is not in place before parity, it will be there soon after.” (Otten 9). However, the presence of managed care makes it difficult to determine the impact of parity. According to one benefits specialist, “You won’t really know the true effect of parity except where it is added after managed care has been in effect for a few years.” Research has proven inconclusive regarding the effects of parity and manage care on mental health costs. Some advocacy groups have voiced concerns that managed care will begin under treating patients in order to reduce costs and maintain profits. One of the most use cost reductions by managed care is the reduction in hospitalization benefits. This is most often the most expensive benefit to cover. Due to the high cost of hospitalization, emphasis is concentrated on the use of medication. There has been a significant increase in the number and quality of medication offere...
