Financing Psychotherapy

This paper summarizes Financing Psychotherapy: Costs Effects and Public Policy, winner of the 1983 Elizur Wright presented by the American Risk and Insurance Association. The purpose of the book is to consider the arguments pro and con for inclusion of coverage for psychotherapy in health insurance, and the role of public policy in regulating coverage. Adverse selection in insurance markets, consumer ignorance, and the "offset effect" of psychotherapy are the justifications for mandatory coverage of psychotherapy in health insurance. In a demand study including 4,000 patients, empirical research shows that utilization of psychotherapy is highly responsive to the terms of cost-sharing. Special limits on coverage for psychotherapy are desirable to maintain the attractiveness of insurance policies. (September 1986)