Am J Psychiatry 1982; 139:1425-1430
Copyright © 1982 by American Psychiatric Association
Reductions in insurance for mental disorders: adverse selection, moral hazard, and consumer demand
SS Sharfstein and CA Taube
Coverage for mental illness has been sharply reduced in the Federal
Employees Health Benefits Program (FEHBP), especially in the largest of the
participating plans, the Blue Cross and Blue Shield plan. The authors
examine the role of adverse selection (accumulation of high- risk consumers
within a given plan), moral hazard (demand for services for illness
depending in part on the price of the services), and lack of overt consumer
demand in the current trend. They point out the critical need for
psychiatry to develop more effective approaches to public education on the
nature of mental illness and its treatment. If the recent major cutbacks in
the FEHBP prevail, this kind of restriction is likely to become the
prevailing mode of mental illness coverage under private health insurance.
