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The Effects of Telemedicine on the Treatment of Mental Illness: Evidence from Changes in Health Plan Benefits

The COVID-19 pandemic resulted in an explosion in demand for telemedicine and with it myriad new, untested telemedicine policies. We isolate the impact of a policy which selectively removed cost-sharing for telemedicine services from April-September 2020, estimating changes in telemedicine utilization, the elasticity of demand for telemedicine, and its substitutability with in-person services. Additionally, we study the effects of shifting to the virtual environment on treatment decisions, adverse health events, and spending. We focus specifically on the treatment of mental illness which constitutes the majority of telemedicine use and is likely to remain the primary use in the post-pandemic landscape.