Firms' Demand for Employment-Based Mental Health Benefits

42 Pages Posted: 7 Jul 2005 Last revised: 10 Mar 2010

See all articles by Judith A. Shinogle

Judith A. Shinogle

RTI International

David S. Salkever

UMBC, Department of Public Policy

Date Written: June 2005


Employment-based health insurance is the main source of health coverage for the non-elderly. Few previous studies have examined the factors that impact employer decision-making in selecting the coverage to offer to their employees and none have examined generosity of mental health coverage. This paper uses cross-sectional data from a survey of medium to large firms, including information on employee characteristics, to examine the empirical determinants of mental health coverage choices. We find that the firm's demand for mental health coverage is strongly influenced by employee characteristics. We also find that certain state and local policy interventions directed at enhancing access to mental health care have impacts on coverage decisions. Specifically, public provision of mental health lowers mental health coverage generosity and parity legislation increases mental health generosity. Future research with panel data is warranted to examine the causal effects of these policies.

Suggested Citation

Shinogle, Judith A. and Salkever, David S., Firms' Demand for Employment-Based Mental Health Benefits (June 2005). NBER Working Paper No. w11436. Available at SSRN:

Judith A. Shinogle

RTI International ( email )

1615 M Street NW, Suite 740
Washington, DC 20036-3209
United States

David S. Salkever (Contact Author)

UMBC, Department of Public Policy ( email )

1000 Hilltop Circle
Baltimore, MD 21250

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