In September 2010, the Affordable Care Act (ACA) extended dependent care coverage to all individuals younger than age 26. The coverage expansion likely caused an increase in private insurance coverage and mental health treatment use for young adults.¹ For mental health and substance use treatment, changes in who pays for care can be evaluated using the Medical Expenditure Panel Survey (MEPS).

Using annual data from 2004 to 2012, the average treatment payments by payer type before and after the dependent care expansion were calculated for all individuals aged 19 to 26 who reported treatment for mental health or substance use issues. Average yearly treatment costs remained constant at approximately $1,600. Although total costs remained level, the types of payers changed significantly. Private insurance became a much more common source of payment in the post-reform period, increasing from $520 to $822. Likewise, the share of treatment paid by Medicaid and other public sources, such as Medicare and Veterans Affairs/Civilian Health and Medical Program for Uniformed Services (VA/CHAMPUS) declined from a pre-reform total of $698 to $417 in the post-reform period. Post-reform out-of-pocket payments by individuals and other private source payments remained at comparable levels to the pre-reform period.

By expanding insurance coverage, the ACA shifted the payment for mental health and substance use treatment away from public sources and onto private insurers. It also reduced young adults’ reliance on public funds to receive treatment.