Three Steps to Better Mental Health Benefits

By Bill Bade, FSA, MAA, Consultant, Sydney Consulting Group

Like most good things in my life, my wife provided some inspiration for this article. We were driving to lunch, our two- and five-year-old boys in tow, and the youngest asked to listen to Ariana Grande and John Legend’s version of the title track “Beauty and the Beast”. (Yes, he’s that specific!). As I gloriously belted out the tune, my wife joked about how terrible of a singer I am and suggested that our musically inclined child might suffer some harm if he spent too much time listening to me. I like to remind her that she thought I had a beautiful voice while we were dating.

Nevertheless, I draw some parallels to the current state of product development in our supplemental health market: good product developers' mentor and train good product developers and bad product developers make “Beauty and the Beast” sound like the new intern logging into Microsoft Teams with both their computer and phone at the same time. Our wonderfully diverse market has been saturated with product in the last five years that generally looks and feels the same. This is because most product development seeks to copy the competition, and while this philosophy has its merits it shouldn’t preclude product developers from adding benefits that are unique in the marketplace.

There are numerous ways to approach differentiation and the best approaches reflect the carrier’s culture while weaving benefits into a cohesive product This is true of caregiving, concierge services, genetic testing, mental health, etc. I just happened to pick mental health as an example for this article. So, since mental health resources and support are the fourth most popular non-insurance benefits for US workers and the #1 benefit for Millennials, how can we build better mental health benefits within our insurance products?

I’m glad you asked!

Step #1: Define Mental Health

Mental health, behavioral health, mental illness, mental wellness, and mental fitness may be used interchangeably with some nuance (for example, behavioral health is typically a broader term that encompasses substance use, physical symptoms of stress, etc.). When these terms are used, however, they can mean different things to different people The Centers for Disease Control and Prevention (CDC) define mental health to include a person’s emotional, psychological, and social well-being[1]. The CDC also describes a list of mental illnesses that include attention deficit hyperactivity disorder (ADHD), Alzheimer’s (raise your hand if you associated Alzheimer’s with mental health benefits!), anxiety, autism, and Aspergers – but that’s just the “A’s” Setting aside the fact that just about anyone can claim anxiety, and stress is buried down in the “S’s”, it is estimated that approximately six million children between the ages of 4 and 17 have been diagnosed with ADHD Mental health can be defined in a manner that includes nearly every US citizen, which is obviously an expensive way to structure the benefit.

On the other hand, we could focus on specific mental illnesses such as major depression, bi-polar disorder, schizophrenia, etc. This would lower the cost of insurance benefits, but would it cause confusion with consumers? Should a restricted benefit be called something other than “mental health”?

There is a longer discussion necessary on this topic, but typically a valid definition of “mental health” can be obtained through internal surveys, external surveys, and/or focus groups to ensure that benefits reflect the expectations of consumers.

Step #2: Write the Contract Language

The contract language needs to be clear and concise while reducing the risk of litigation. Product developers should therefore consider the unique attributes of mental health and illnesses ranging from remissive (e.g. postpartum depression) to episodic (e.g. self-harm) to chronic (Alzheimer’s) and high frequency, low severity (e.g. anxiety) to low frequency, high severity (e.g. anorexia). How the benefit is designed will necessarily affect how it is written into the insurance contract and priced. I will not go into detail on this important topic for this article, but the savvy product developer understands its importance.

It is also important to reward evidence-based modalities of care such that negative outcomes are not incentivized. For example, if an insured is reimbursed $50 for a visit to psychiatrist and $100 for a visit to a primary care physician, the insured is incentivized to seek out what is likely a lower level of care for mental health This concept can be extended to types of facilities as well.

The bottom line is that mental health is complex and thoughtful consideration should be invested in development of contract language.

Step #3: Compare the Alternatives

Great product development leaves no stone unturned. Perhaps, as an alternative to an insurance benefit, a reasonable carrier will settle on third party offerings and/or guided programs (see Unum’s Behavioral Health solution). These solutions may be specific (such as a referral mechanism for top end psychiatrists) or broad by nature (addressing virtually any source of mental anguish). Identifying a useful offering and inking an exclusive deal is one way to provide longer-lasting differentiation in today’s market.

This article was intended as a starting point for the development of better mental health benefits. I hope that it helps you and your team jump-start the conversation about building an industry-leading product.

Biil Bade FSA, MAAA – Consultant

Sydney Consulting Group

Bill Bade, FSA, MAAA – Consultant Bill founded Sydney Consulting Group with a strong desire to provide client-focused actuarial, compliance, and strategic support to carriers of all in the supplemental benefits industry.