Parity at last: Mental health, physical health get equal coverage
■ A new law will end the higher cost-sharing and stricter treatment limits that many health plans impose on mental health coverage.
Posted Nov. 10, 2008.
In October, Congress finally closed loopholes that left the nearly 58 million Americans with mental illness needlessly vulnerable to health insurance discrimination. Passage of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 ends more than a decade of political gridlock on the issue.
The measure, signed into law Oct. 3 as part of the economic recovery bill, prohibits group health plans that offer mental health and substance-abuse treatment from setting higher co-payments, deductibles and other cost-sharing for those services than they have for medical and surgical care. It also bars stricter limits on the number of outpatient visits and days in the hospital.
Physician organizations, including the American Medical Association and American Psychiatric Assn., mental health advocacy groups and some lawmakers had been fighting for these provisions since the first mental health parity act passed in 1996. That law bans insurers from imposing lower annual and lifetime benefit caps for mental illness treatment.
But after the 1996 statute's enactment, health plans continued to discriminate against patients by imposing tougher cost-sharing rules and treatment limits on mental health coverage. Insurance and business organizations fought hard against expanding the protections beyond the initial parity law.
Over time, however, chinks in their arguments began to appear. It became clear, thanks to the first parity law, that equality in mental health coverage has a very modest impact on insurance costs and does not cause the access problems that the insurance and business communities had long predicted. Meanwhile, employers began realizing that it pays in the long run to manage chronic diseases, including mental illnesses, because doing so improves productivity.
So about four years ago, insurance and business groups began negotiating with parity advocates in Congress and the health care community. The result was the Wellstone/Domenici legislation that served as the model for the new law.
Its enactment last month was praised by the AMA, the APA and other physician organizations; mental health advocacy associations; and major insurance and business groups. The measure strikes a balance by protecting patients without harming employers' ability to offer affordable coverage.
In a nod to the business community, the act does not require companies to offer mental health benefits, and it doesn't apply to employers with 50 or fewer workers. It provides a yearlong exemption for health plans that see their costs go up 2% in the first year of the law. The threshold is 1% thereafter.
Health insurers will be able to define mental illness for coverage purposes, as opposed to being required to use an objective authority, such as the Diagnostic and Statistical Manual of Mental Disorders. But they must make available their criteria for medical necessity determinations.
Today, nearly all states have some sort of mental health parity statute on the books, but employer-funded group health plans typically are exempt from state insurance laws. The new parity act applies to these plans. That means that 82 million people enrolled in self-funded group plans are covered by the law. In total, the measure is expected to apply to more than 113 million Americans' health coverage.
The law is a victory not only in terms of insurance equality but also in the struggle to destigmatize mental illness. As APA President Nada L. Stotland, MD, MPH, put it: "This legislation is a reflection of the American public's recognition that mental illnesses are real and treatable, and that fair coverage is to everyone's benefit."
Proper treatment is very effective. Between 70% and 90% of people have significant reduction of symptoms and improved quality of life with a combination of pharmacological and psychosocial treatments and supports, according to the National Alliance on Mental Illness.
Now, more patients than ever finally will have access to the care they desperately need.