Behavioral Healthcare Parity

Coverage

Mental Health

In 1996 Congress passed the Mental Health Parity Act of 1996, which was signed into law in 1996 and became effective January 1, 1998. The Mental Health Parity Act of 1996 requires group health plans to provide parity between mental health and medical or surgical benefits—but only covers annual dollar limits and lifetime aggregate dollar limits on claims paid. (partial or limited parity). The sunset date is September 30, 2001 (at which point the law will no longer be in effect).

What it does not do:

• It does not require health plans to provide mental health benefits, it only requires that the plans that provide mental health coverage meet the parity requirement.
• It excludes from the requirement: small employers (fewer than 50 employees) and employers who can prove that amending their benefits to this resulted in an increase of greater than 1 percent.
• The federal regulation does not impose any conditions on deductibles or limits on days or visits or require coverage for substance abuse.

In response to this legislation, many states have passed legislation that mirrored the federal act. More comprehensive (inclusive) state laws supersede the federal regulations; however, state regulations do not apply to self-insured employers. ERISA (Employee Retirement Income Security Act) preempts states from regulating employer provisions of health plans. Many large employers are self-insured, thus many Americans with health coverage through their private employer are in plans that are not subject to the state parity mandates. The National Alliance for the Mentally Ill (NAMI) maintains a website that tracks state parity legislation and the extent of the coverage provided by each state’s law. Their web address is : http://www.nami.org/campaign/statepar.htm.

Both Utah and New Mexico have passed parity legislation since January, 2000. New Mexico’s parity legislation provides coverage for all mental health, but excludes coverage for substance abuse and gambling. Treatment limitations and financial requirements on mental health benefits may not be imposed unless comparable limitations exist for other conditions (NCSL, 2000). Utah passed full parity for mental health, excluding substance abuse coverage. Utah’s law mirrors the federal Mental Health Parity Act of 1996. It provides that annual and lifetime limits on mental health benefits must be equal to those on physical health benefits (NCSL, 2000).

Federal Employee Health Benefit Plan

On June 7, 1999, at the White House Conference on Mental Health, President Clinton directed the U.S. Office of Personnel Management to ensure mental health and substance abuse parity for all federal employees by 2001. All health plans that participate in the Federal Employee Health Benefit Plan would have to comply. These plans provide coverage to 9.5 million federal employees.

Substance Abuse

The federal act did not include coverage for substance abuse treatment. Likewise, many state laws fail to include substance abuse treatment coverage as part of their parity laws. Separate federal legislation has been proposed. In 1999 Senator Paul Wellstone (D-MN) and Rep. Jim Ramstad (R-MN) championed the Substance Abuse Treatment Parity Act of 1999. The House bill (HR 1977) includes some exclusionary language in defining substance abuse treatment coverage:

"(4) SUBSTANCE ABUSE TREATMENT BENEFITS—The term `substance abuse treatment benefits' means benefits with respect to substance abuse treatment services but only insofar as such treatment services are abstinence-based. Such term includes non-narcotic medication-based therapy and appropriate transitional medication-based therapy."

This bill would exclude the use of narcotic-based therapy such as methadone or LAAM. The Senate bill (S. 1447) does not contain this exclusionary language. As of January 2000, there were 59 senators and representatives who had signed on as supporters.

Definitions

Parity means treating behavioral health illnesses (both mental health and substance abuse) in the same manner as other physical conditions in the construction of health care benefits. Thus, coverage for annual and lifetime limits, copays, and deductibles should be consistent with those under the medical benefits. The intention is to equalize behavioral health and physical health benefits. Historically, this has not been the case.

Types of Parity

Full parity—mental health and physical health care benefits have the same limitations on services and dollar costs, as well as the same share of costs paid by the employee. However, a full-parity law may include certain exemptions or limitations, such as excluding substance abuse treatment and allowing for the "50 employee" exemption.

Partial or limited parity—equality in some but not all of the areas covered under full parity. Generally excludes substance abuse treatment coverage and applies to select groups. Most often these select groups are state employees or people with serious mental illness (SMI). The SMI may include bipolar disorders, schizophrenia, major depression, obsessive–compulsive disorders, schizoaffective disorder, and delusional disorders.

Comprehensive parity—coverage for mental health and substance abuse benefits is consistent with those under the medical benefits as relates to coverage for annual and lifetime limits, copays, and deductibles. As of March 2000, five states had passed comprehensive parity laws—Connecticut, Maryland, Minnesota, Vermont, and Virginia.

• An estimated 18 million Americans are addicted to drugs or alcohol (Califano, 1992).
• Only 50 percent of the individuals who need treatment receive it; only 20 percent of adolescents with alcohol and drug addiction obtain treatment. (National Coalition of State Alcohol and Drug Treatment and Prevention Associations fact sheet. New York: Legal Action Center, 1998)
• The costs to society of untreated addiction is estimated at more than $165 billion… (Physicians Leadership on National Drug Policy, 2000)
• "Treatment of addiction is as successful as treatment of other chronic diseases such as diabetes, hypertension, and asthma." (NIDA, 1999)

Mental Health:

Findings from the Surgeon General’s Report on Mental Health, released in December 1999:

• Mental illness is the second leading cause of disability and premature mortality.
• One in five Americans experience a mental disorder over the course of a year.
• 15 percent of the adult population uses some form of mental health service each year, yet nearly half of all Americans with severe mental illness do not seek treatment.
• Mental disorder diagnoses are as reliable as those for general medical disorders.
• 15 percent of adults with a mental disorder also experience a co-occurring substance use disorder. The report also cites evidence that individuals benefit most from treating both disorders together.

Costs of Parity

According to the Surgeon General’s Report on Mental Health, December 1999, studies show that mental health parity laws have resulted in minimal cost increases. In a carved-out managed care program, research indicates that mental health parity results in less than a 1 percent increase in overall health care costs. In addition, the Department of Health and Human Services released a report, The Costs and Effects of Parity for Mental Health and Substance Abuse Insurance Benefits, April 1998, which reviewed five states to assess estimates of premium increases. According to the report, the cost increase on family insurance premiums for full parity for both mental health and substance abuse services in "tightly managed" private insurance plans would be less than 1 percent. The premium increase for a composite of programs (FFS, PPO, POS, and HMO) would average 3.6 percent. The National Conference of State Legislatures’ Issue Brief on Parity, March 2000, also reviewed various actuarial studies addressing the cost impact of parity. Highlights of their research include the following findings:

• In 1999 the Vermont Health Care Administration testified before the Vermont legislature that the cost of implementing their substance abuse and mental health parity (as reported by the managed care companies) has been less than the projected 3.4 percent. (Note: Vermont is considered to have the most comprehensive state parity legislation—defining "mental health" to include any condition/disorder involving mental illness/substance abuse falling under any category in the mental disorders section of the International Classification of Diseases).
• Several states conducted studies on premium cost increases due to parity laws. In New Hampshire (1994), insurance carriers reported no change in premium costs. In Minnesota (1995), one system reported a $0.26 increase per month per employee, and another system found no significant increase due to parity. In Maryland’s first year of parity (1994), the most experienced managed care company reported a decrease of 0.2 percent in medical premiums due to mental health.
• In opposition to parity, health insurance representatives point out that the premium increase varies depending on the degree to which the care is managed, with PPO and fee-for-service plans projecting an average 5 percent increase. Other studies emphasize that limited increases are associated with more intensively managed benefits plans, and many consumers prefer less intensively managed plans whose costs, they claim, may become prohibitive under these terms. They caution that these laws have only been in effect for a limited time, and thus cost data and utilization effects of parity may be insufficient to measure accurately.

NASW Policy and Position on Parity

The National Association of Social Workers supports parity for both mental health and substance abuse benefits. NASW encourages members to advocate for mental health and substance abuse benefits coverage that is comparable to coverage for other medical illnesses. As outlined in Social Work Speaks, National Association of Social Workers, Policy Statements, 2000-2003 (NASW, 2000a, b):

"Social workers should advocate parity with other health conditions for benefit coverage" (p. 22).

"NASW advocates that comprehensive insurance coverage for alcohol, tobacco, and drug addiction treatment be mandated for all insurance policies at the federal and state levels" (p. 23).

NASW’s position is that "mental health treatment be provided in parity with treatment for other types of illnesses in all health care plans" (p. 226).

What Works

The state of Vermont successfully negotiated and enacted behavioral health parity legislation that is considered the most comprehensive, to date, and includes coverage for both mental health and substance abuse. Dr. Ken Libertoff (1999) of the Vermont Association for Mental Health has written a book entitled Fighting for Parity in an Age of Incremental Health Care Reform, which chronicles this achievement. He highlights 10 lessons learned for advocates attempting to champion comprehensive parity in their states.

The 10 Lessons We Learned

1. Develop a broad-based, well-organized coalition that often starts with a base of key membership groups and constituencies joining around a major issue.
2. Set a comprehensive parity agenda and stay focused on that goal. Begin with the most comprehensive, best piece of legislation. Don’t compromise-- the legislative process tends to modify and cut down.
3. Build your case. Provide cost impact data (actuarial studies and cost analysis of parity implementation). Vermont enlisted the services of Coopers & Lybrand to perform a Vermont-specific actuarial report for cost projections.
4. Understand the political environment and powerful opposition to parity—business and insurance industry.
5. Seek out the opposition. Prior to the 1997 legislative sessions, Vermont held informal meetings with business and health care leaders for information sharing, negotiation, problem solving and potentially engaging them in the design of parity legislation.
6. Develop the campaign into a bipartisan effort. Mental health and substance abuse are not bipartisan diseases.
7. Timely, targeted communication, public education, and media relations are key factors. Vermont found that a well-written position paper, as well as regular coalition meetings and news updates to members, was essential in maintaining cohesion and momentum.
8. Create a written, consistent parity platform.
9. Advocate for consumer protections that are essential companions to parity legislation.
10. Passing the bill is half the battle—implementation is the next step, with its unique challenges.

Outlook

Senators Pete V. Domenici and Paul Wellstone have introduced federal legislation (the Mental Health Equitable Treatment Act of 1999) that seeks to expand on the current federal mental health parity law. Their legislation prohibits limits on the number of covered inpatient days and outpatient visits for severe mental illnesses, extends the current sunset period on the MHPA of 1996, eliminates the exemption for businesses incurring costs more than 1 percent, and lowers the small business exemption from fewer than 50 employees to fewer than 26 employees. (S. 796)

In addition, as previously referenced, Senator Paul Wellstone and Representative Jim Ramstad have introduced federal legislation to provide parity for substance abuse treatment benefits. (S.1447 and H.R. 1977)

April 2000: The Government Accounting Office, the accounting arm of Congress, is slated to release a report on the implementation of the Mental Health Parity Act (MHPA) of 1996.

April 2000: Office of Personnel Management will issue its annual "carrier" letter to the Federal Employee Health Benefits Plan (FEHBP) insurance carriers. This letter will inform the carriers of the mandate for mental health and substance abuse parity coverage for the 9 million FEHBP employees to be implemented by 2001.

References

Califano, J. A. (1992, December 21). Three-headed dog from hell: The staggering of public health threat posed by AIDS, substance addiction and tuberculosis. Washington Post.

Libertoff, K. (1999). Fighting for parity in an age of incremental health care reform: A battle against discrimination in the health care industry. (Available from NMHA—703-684-7722)

National Association of Social Workers. (2000a). Alcohol, tobacco, and other substance abuse. In Social Work Speaks, National Association of Social Workers Policy Statements, 2000–2003 (pp. 19–26). Washington, DC: NASW Press.

National Association of Social Workers. (2000b). Mental health. In Social Work Speaks, National Association of Social Workers Policy Statements, 2000-2003 (pp. 222–228). Washington, DC: NASW Press.

National Conference of State Legislatures. (2000, March). Issue brief on parity. Washington, DC: Health Policy Tracking Service.

National Institute on Drug Abuse. (1999, October). Principles on drug addiction treatment (NIH Publication # 99-4180).Rockville, MD: National Institutes of Health.

Physicians Leadership on National Drug Policy. (2000). Position paper on drug policy. Providence, RI.

U.S. Department of Health and Human Services. (1999). Mental health: A report of the surgeon general. Rockville, MD: U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, National Institutes of Health, National Institute of Mental Health.

U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Center for Mental Health Services, Center for Substance Abuse Treatment. (1998). Insurance benefits: The costs and effects of parity for mental health and substance abuse insurance benefits [Online]. Available: www.mentalhealth.org, or by calling the Knowledge Exchange Network at 1-800-789-2647.