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Arch Gen Psychiatry. 1996 Oct;53(10):933-7.

Some economics of mental health 'carve-outs'.

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  • 1Department of Health Care Policy, Harvard School of Public Health, Boston, Mass, USA.


We discuss the rationale for benefit carve-out contracts in general and for mental health and substance abuse in particular. We focus on the control of adverse selection as a principal explanation and find that this is consistent with the wide-spread use of sole-source contracting with periodic rebidding. We also find that some degree of risk sharing is common; we interpret this as a method of balancing cost-containment incentives with incentives to maintain access and quality on unmeasured dimensions.

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