THE POLITICS AND ECONOMICS OF MENTAL-HEALTH PARITY LAWS

The enactment of the Domenici-Wellstone amendment in September ber 199 6, which calls for the elimination of certain limits on coverage for m ental health care under private insurance, is being hailed as a major step forward in the quest for ''parity'' in mental health coverage. Pa rity legislation is being introduced in a number of state legislatures and is finding new enthusiasm in Congress. In this paper we consider the efficiency rationale for these laws and examine their likely impac t in the; era of managed care. We conclude that although such successe s represent important political events, they may offer only small gain s in the efficiency and fairness of insurance markets.