1.  Higher Costs. The U.S. already spends a greater percent of our national income on health care than any other country - an amount equal to $4,700 for every person in America, or $18,800 for a family of four! (Most of this amount is paid in hidden taxes to support someone else's health care.) A parity mandate would make those costs even higher. According to Price Waterhouse, this mandate alone would increase insurance premiums by 10%. (See Price Waterhouse LLP, Analysis of the Mental Health Parity Provision in S. 1028, 1996 and Mental Health Mandates and Cost Impact on Consumers, p. 1.)

Note that higher costs do not necessarily mean more services. Among developed countries, the history of health economics teaches one clear lesson: If you increase demand without increasing supply, you end up paying higher prices for the same services you had to begin with. Other countries experienced severe health care inflation when they adopted national health insurance. We experienced it after creating Medicare and Medicaid.

An increase in the demand for mental health services will not produce an increase in supply unless there are unemployed or underutilized doctors, nurses, facilities, etc. There is no problem in increasing the supply of pharmaceuticals. But where are all the underutilized doctors and nurses?

It is possible, through economic incentives, to induce personnel to switch to mental health from some other health care field. But the result is more money spent without any more overall health care. The extra services received by some (mental health) patients will be offset by fewer services available to other patients.

Note that although the supply of doctors is relatively inelastic, there is an abundant supply of potential untrained providers - ranging from pop psychologists to members of the clergy. (For a discussion of the range and variety of professions providing substitutable services for mental health care, see Mental Health Economics, pp. 13-15.) Yet, although an enormous amount is spent on "talk therapy" every year, it is unclear that it does any good.

2.  More Uninsured. Health insurance mandates imposed by state governments have already priced as many as one out of every four uninsured out of the market for insurance. A parity law would make things worse. According to a Blue Cross Blue Shield study, for every 1 percent that mandates cause health insurance premiums to increase, 3 percent of small employers would be forced to drop health coverage for their employees. So if parity increased the cost of premiums by around 10 percent, 30 percent of small employers would no longer be able to afford coverage. A study by the Congressional Budget Office estimated that for every 1 percent increase in premiums, 200,000 Americans would lose their insurance. This implies that a nationwide parity law would cause 2 million additional people to be uninsured. (See: The Cost of Health Insurance Mandates, Mandated Benefit Laws and Employer-Sponsored Health Insurance and HIAA Study: Ten Million Uninsured Due To Mandates.)

3.  Higher Taxes. More uninsured means more people unable to pay their medical bills and relying on free care from the public sector instead. That means a bigger burden for taxpayers.

4.  More Managed Care. One way to avoid the abuses of managed care is to have managed care plans compete against other plans on a level playing field. But a parity law would tilt the playing field in favor of managed care. This is because almost all parity laws have a managed care loophole: they tie the hands of fee-for-service plans, while leaving managed care plans free to restrict services virtually at will. Studies show that managed care can reduce the cost of mental health care. But if the deck is stacked in favor of managed care, patients can suffer for three reasons:

• Under managed care, providers tend to see themselves as agents of third-party payers rather than agents of patients; and third-part payer guidelines, rather than patient needs, tend to determine how they practice medicine.

• Under many managed care contracts, providers have an economic incentive to under-provide care; in general, the less they do, the more they earn.

• In general, any limits on care in an insurance contract can also be achieved through a carefully drafted agreement with providers. The affirmative seeks to eliminate clauses in insurance contracts that, say, limit the number of physician visits or hospital days. But insurers can achieve these same results through contracts that give providers economic incentives to withhold care. A parity law, therefore, does not necessarily mean that the mentally ill will get more care. They may get less care. In fact, the General Accounting Office concluded that insurance benefits for the mentally ill were actually reduced after the last mental health parity bill passed by Congress. (See: GAO Parity Study)

5.  Less Innovation. A parity requirement would essentially outlaw attempts to experiment and innovate with different payment schemes. For example:

• One South African insurer found that you get lower costs and better outcomes for diabetics if they enroll in centers of excellence with the insurer paying 2/3 of the cost and the patient the other 1/3 from his Medical Savings Account. (See Medical Savings Accounts in South Africa, section entitled "Medical Savings Accounts: Focused Factories for the Chronically Ill") The next step is to try the same approach with asthma. Could this model also work for substance abuse patients? If the affirmative has its way we will never find out.

• The federal government and the Robert Wood Johnson Foundation have collaborated on pilot programs in several states that give physically disabled Medicaid patients control of their own health care dollars - allowing them to directly purchase such services as help with bathing, eating, dressing, etc. (Medicaid for the Employed Disabled) Could such an approach also work for the mentally disabled? If the affirmative has its way, we will never know.

6.  Worse Health Outcomes. Independent of managed care, a parity law is likely to lead to worse health outcomes than with the opposite approach: Encouraging a variety of payment mechanisms, depending on the nature of the illness. A parity law would certainly be worse than what could be achieved with flexible Medical Savings Accounts.

7.  A slippery slope for other illnesses. Although the affirmative is focused on mental health, the logic of their argument is that we should have the same payment rules for every illness. That means that there would be no center of excellence for diabetes or asthma patients with special patient cost-sharing. This is bad economics and it is also bad health care.

8.  A slippery slope for other special interests. The history of mandates at the state level follows a pattern: once the state passes a mandate in an area, a slew of special interests spring forth to ask for more mandates. For example, after state governments required insurers to cover mental health, we got more laws:

• Forty-two states now have laws stipulating that if insurers provide coverage for psychiatrists, they must also provide coverage for psychologists.

• California and nine other states mandate coverage for marriage counseling.

• Vermont, North Carolina and Maine mandate coverage for pastoral counseling.

Elevating this special interest feeding frenzy to the national level can only result in higher costs and more people uninsured.