Health Insurance Expansions and Providers' Behavior: Evidence from Substance-Use- Disorder Treatment Providers

We examine how substance-use-disorder (SUD) treatment providers respond to private-insurance expansions induced by states' equal coverage (parity) laws for SUD treatment vis-a-vis general health care services. Economic theory suggests that such laws will lead to changes in providers' behaviors. We use data on licensed specialty SUD treatment providers in the United States between 1997 and 2010 in a differences-in-differences analysis. During this period, 12 states implemented laws that require equality in coverage for SUD treatment. Following the passage of a state parity law, we find that providers are less likely to participate in public markets, are less likely to offer price discounts to patients, and increase the quantity of health care provided. Further, we find evidence of decreases in treatment intensity following passage of a parity law and of heterogeneity in effects across ownership status.