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OCR Page 1 of 8207/30/96
09:40
OMB AD HP
5.
002
002
07/29/96 18:25
JL.1-04-56 16:44 FROM.CBO/BAD/HRCEU
ID.202 226 2820
PAGE 1/3
TO:
Dean Rosen, Rebecca Jones
FROM:
Jeff Lemieux, CBO
SUBJ:
Preliminary Federal Cost Estimate: Limited Mental Health Parity Proposal
DATE:
6/4/96
I have attached a preliminary federal cost estimate of your proposal for a limited parity
for mental health parity. Over the ten years between 1997 and 2006, CBO and the Joint
Committee on Taxation (JCT) estimate that the revised proposal mental health parity
would increase the deficit by about $1.9 billion
The revised proposal is different from the proposal in the Senate-passed plan in several
ways.
Substance abuse benefits would not be subject to any mandates for parity,
Parity would apply only to two types of insurance items as specified in the
proposal:
1.
Aggregate lifetime limits
DRAFT
2.
Aggregate annual limits
Plans serving employers with 25 or fewer employees would be exempt,
Plans would be allowed to have separate insurance products for mental and
medical health coverage, with more stringent thresholds of management for mental
health care, and
Medicare and Medicaid would be exempt
(In its previous estimate, CBO had assumed that these last two clarifications would be
made as the legislation progressed Therefore, they do not change the federal cost
estimate.)
The Congressional Research Service estimates that premiums for a typical fee-for-service
plan using customary management teclmiques to control costs would initially increase by
0.4 percent under this proposal. This estimate has not been adjusted for the impact the
proposal would have on certain managed care plans or the fact that employers with 25 or
fewer employees would be exempt Both adjustments could lower the estimated cost of
06-04-96 04:55PM P001 #20
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