Researchers at the School of Public Health have found that companies offering employee health plans with high deductibles for mental health services had significantly more claims for long-term psychiatric disabilities than those firms with fewer financial barriers to such coverage. The findings, said the scientists, suggested that by offering employees greater access to outpatient specialty care, companies can reduce the incidence of such long-term disability claims.
In the private sector alone, 9 percent of all claims for group long-term disability, or LTD, insurance, and 13.1 percent of the dollar cost of all claims, are the result of mental disorders. Serious mental disorders tend to have earlier ages of onset and are more persistent than many other disabling conditions, making such psychiatric LTD claims more costly on a per-claim basis than claims for other disorders. Moreover, return from disability status to work may be more difficult for persons with serious mental problems.
The study--an exploratory investigation of the factors that influence how many psychiatric LTD claims a company will face--also provided strong evidence that the incidence of psychiatric LTD claims went down if a firm's disability program was actively administered by its own front-line managers. Companies also experienced fewer long-term psychiatric claims if they offered alternative jobs to those employees on disability leave. The study appeared in the April 2000 issue of The Milbank Quarterly.
Lead author David S. Salkever, a professor in the Department of Health Policy and Management, School of Public Health, said, "We tried to determine the relative importance of many factors affecting employers' experience with psychiatric LTD claims: local economic conditions, policies determining long-term disability coverage, who was managing the disability program and the fringe benefits package provided by the employer."
To be included in the study, a company had to have offered at least 300 of its workers an LTD policy through a particular major provider (UNUM) during the period 1993 through 1995. A total of 1,441 companies were identified as meeting the inclusion criteria, 244 of which responded to the researchers' detailed questionnaire on employee health benefits. One hundred eighteen employees from these 244 companies had filed 407 individual claims for psychiatric disabilities that had begun in calendar years 1993 through 1995. Of these claims, 39.07 percent were for "affective psychoses" (including major depression) and 37.59 percent were for neurotic disorders (anxiety and phobias). Only 29.2 percent of claimants in the data set were male. For the 407 claims analyzed, the mean dollar payment was $29,793.
The researchers identified a number of variables that were significant predictors of LTD claims rates. For example, employees who worked in industries with high injury rates--usually blue-collar rather than white-collar jobs--were significantly less likely to report that their LTD claims stemmed from mental disorders. Age effects were usually not significant.
The scientists found that fringe benefits offered by employers tended to increase the attractiveness of taking LTD leave. Short-term disability coverage and retirement plans, for example, tended to increase the incidence of psychiatric LTD claims because they reduce the ultimate cost to the employee. Also, in regions of the country where Social Security Disability Insurance benefits were more readily available--because the disability determination process was less strict or because being on DI benefits was more culturally acceptable, or both--those employees on short-term disability had a greater incentive to file an LTD claim and remain on disability while applying for DI benefits.
"With respect to financial access," Salkever said, "our findings were the opposite of what one would expect. Our data indicate that health plans with the highest financial barriers--very high first-dollar costs for mental health services or very high average co-insurance rates for health and mental health services, or both--had higher rates of psychiatric LTD claims. Conversely, companies that offered their employees easier access to specialty mental health services saw a reduced incidence of LTD claims."
The study also found that the way a firm managed its disability program also significantly influenced the incidence rate of psychiatric LTD claims. Thus, those firms whose disability programs were managed by the same office within the firm that oversaw health benefits had significantly lower claims rates than did firms that contracted with outside disability managers who also provided employee assistance services. Those firms, however, that contracted with outside health or mental health plans for disability management services had increased claims rates. The authors suggested one explanation: Outside contractors may concentrate on administering health and mental health benefits because they are much larger in dollar terms than LTD benefits.
Support for this study was provided by UNUM-Provident and by the National Institute of Mental Health.