People with mental health (MH) and substance use disorders (SUD) often delay or avoid seeking health care treatment for a variety of reasons, including stigma, lack of access, and the cost of visiting a clinician. Even commercially insured individuals with these conditions tend to avoid treatment due to another common barrier — out-of-pocket expenses, which have been steadily increasing in recent years. One approach to control health care spending in commercial insurance plans is to use “cost-sharing” (including co-payments, co-insurance, and deductibles) which can reduce the costs of premiums but shift more of the cost burden of health care to patients.

State and federal policymakers have expressed interest in reducing barriers to accessing mental health and substance use disorder treatment. In 2021 the state of New Mexico adopted one of the strongest policies to date to encourage access to MH/SUD treatments by passing the first law nationwide prohibiting cost-sharing for MH/SUD treatments. New Mexico’s law prohibits out-of-pocket payments for prescription drug costs for MH/SUD patients who are covered by state-regulated commercial insurance plans (including employer-based private insurance).

A new study from the University of Minnesota School of Public Health (SPH) analyzed the law’s early effect in two key areas: rates of out-of-pocket spending for psychotropic prescription drugs, and the volume of these drugs dispensed. Because the law does not apply to federal government employees, the researchers were able to compare outcomes between patients in state-regulated insurance plans versus those enrolled in federal employee health plans in New Mexico.

Analyzing outcomes from the first six months after the law took effect on January 1, 2022, the study, which was published in JAMA Health Forum, found:

• A significant reduction in patients’ out-of-pocket spending. Out-of-pocket expenditures for MH and SUD medications fell by $6.37 per prescription — a decline of 85.6% in out-of-pocket spending per prescription.
• No significant change in the overall volume of prescription drugs dispensed.
• The overall decrease in out-of-pocket spending was considerably larger for branded medications compared with generic medications, suggesting the law may disproportionately benefit patients who use branded medications which are often still under patent protections and have higher average out-of-pocket costs than generic medications.

The researchers suggested that the lack of increase in overall volume of drugs dispensed could be due to a range of factors, including lack of awareness of the law and the fact that the law did not have as large an impact on the cost of commonly-used generic drugs. The research team did find, however, that the law led to increases in volume of higher-cost and on-patent drug dispensing. The study suggests that future research should focus on the factors driving the volume of prescribed drugs.

“Underuse of mental health and substance use disorder treatment is a major public health challenge in the U.S.,” says Ezra Golberstein, SPH associate professor and lead author. “Medications can be a big financial burden for patients with MH/SUDs, and by specifically prohibiting insurance companies from charging out-of-pocket costs, this law addresses a frequently cited barrier to needed treatments. These findings suggest that eliminating cost-sharing for mental health and substance use disorder treatments can greatly reduce patient spending. It will be important to track how this law affects overall use of mental health and substance use disorder services going forward.”