Expanding insurance coverage to alternative types of psychotherapists: demand and substitution effects of direct reimbursement to social workers.

When insurance benefits for outpatient psychotherapy are expanded to cover alternative (less expensive) types of providers, lower reimbursements from beneficiaries' use of these providers may offset reimbursement increases attributable to any concomitant increase in demand for services. In this paper, outpatient claims data from Massachusetts Blue Shield for 1979-83 are used to estimate demand and substitution effects of a state mandate of direct reimbursement to social workers, starting April 1, 1982. Empirical results for the first year of the mandate showed that while the percentage of beneficiaries using the benefit did not change from 1981, eligible social workers in the state treated 10% of "new" users of the outpatient benefit and 2% of "continuing" users. While the substitution effect predominated, the particular characteristics of the Massachusetts case limit more general applicability of the results.