Health Insurance Expansions and Provider Behavior: Evidence from Substance Use Disorder Providers

We examine how substance use disorder (SUD) treatment providers respond to private insurance expansions induced by state equal coverage (‘parity’) laws for SUD treatment vis-à-vis general healthcare services. Economic theory suggests that such laws will lead to changes in provider 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 healthcare provided. Further we find evidence that treatment intensity declines following passage of a parity law and heterogeneity in effects across ownership status.