Effect of Curtailed Insurance Benefits on Use of Mental Health Care: The Tenneco Health Plan

This article presents the impact of a health insurance benefit redesign on utilization and costs for mental health care in a large corporation. The design change primarily limited coverage to 45 days of hospitalization and 20 outpatient visits. Group health insurance data before and after the benefit changes (effective January 1, 1984) were compared and analyzed. Per capita charges for mental health care between 1983 and 1985 decreased by 41%, from $89 to $53. Responses to the benefit modifications differed for inpatient and outpatient services. Inpatient costs and length of stay decreased dramatically, especially for dependents, while utilization rates remained about the same. Statistically significant increases occurred for outpatient care utilization and costs.