American Psychiatric Association
Mental Health Parity – Its
Time Has Come
Background:
No matter the form, discrimination is wrong. Yet, nearly 98%
of private health insurance plans discriminate against patients seeking
treatment for mental illness by requiring higher copayments, allowing fewer
doctor visits or days in the hospital, or higher deductibles than imposed on
other medical illnesses. This discrimination results from outdated
misconceptions and the stigma surrounding mental illnesses. If left to continue,
the financial and human costs of untreated mental illness will far exceed the
costs purported by opponents – that covering mental health services will
exponentially and unfairly increase premiums for all enrollees. In fact, data
have shown that instituting equal coverage for treatment of mental illnesses
will result in lower total health care costs. Parity legislation has been
introduced in the House and Senate to correct these inequities.
An Illness Is an Illness
- More than 50 million adults – nearly 25% of the U.S. adult population
– suffer from mental disorders or substance abuse disorders on an annual
basis.
- 18 million Americans are affected by depression annually. A recent study
examining six major medical conditions – including hypertension, diabetes,
lung diseases, and arthritis – found only severe heart disease to be
associated with more disability and interruption of daily functioning than
depression.
- The National Institute of Mental Health has shown that success rates of
treatment for disorders such as schizophrenia (60%), depression (70-80%) and
panic disorder (70-90%) surpass those of other medical conditions (heart
disease, for example, has a treatment success rate of 45-50%).
The High Costs to Society of Untreated and Undertreated Mental Illnesses are
Well-Documented
- Providing equal coverage for all illnesses makes good economic sense;
when mental illnesses go untreated, costs begin to escalate. The National
Institute of Mental Health estimates that the annual cost of untreated mental
illnesses exceeds $300 billion, primarily due to productivity losses (missed
days of work and premature death) of $150 billion, health care costs of $70
billion, and societal costs (increased use of the criminal justice system and
social welfare benefits) of $80 billion.
- In 1990, our nation’s direct medical care costs and indirect costs from
mental illness, alcohol, and drug abuse totaled more than $313 billion. That
was more than cancer ($104 billion in 1987), respiratory disease ($99 billion
in 1990), AIDS $66 billion in 1991) or coronary artery disease ($43 billion in
1987).
- An MIT Sloan School of Management report showed in 1995 that clinical
depression costs American businesses $28.8 billion a year in lost productivity
and worker absenteeism.
Problems Within the Private Health System Increase Costs, Too
- When mental health services are restricted, patients are often forced
to accept an array of "covered" treatments, which often alleviate some
symptoms rather than allowing patients to receive the proper treatment
for their disorder. This increases overall societal costs, since the patchwork
treatment plan forces patients to keep reentering the health care system
because they are receiving inadequate care.
Parity in Mental Illness Coverage Could Help Save Money
- In its 1993 landmark report to Congress, the National Mental Health
Advisory Council concluded that parity coverage for severe mental illness
would result in net savings of $2.2 billion a year. It stated, "The enormous
but often hidden costs of untreated or undertreated severe mental illnesses
which are now borne by the general health care system and society at large,
can be appreciably reduced."
- A state of California study (1994) demonstrated that for every $1 spent to
treat alcohol and drug disorders, taxpayers were saved $6 in future costs.
Savings of $1.5 billion were largely due to reductions in health care costs
and crime.
Studies and State Parity Laws Demonstrate that Providing Equitable Coverage
of Treatment for Mental Illness is Affordable
- A 1996 Milliman and Robertson study found the likely effect of parity
would increase typical plan premiums by a modest 2.5% to 3.9%. A Coopers &
Lybrand analysis, excluding substance abuse, found a 2.6% premium increase.
These estimates are borne out by the Congressional Budget Office (CBO), which
projected similar (4%) premium increases for the federal Domenici-Wellstone
full parity amendment (not the scaled-back amendment eventually enacted into
law). According to CBO’s estimate, employers would bear the cost of only 1.6%
of the estimated premium increase.
- Since implementation of North Carolina’s state employees’ parity law in
1992, mental health payments as a portion of total health payments decreased
from 6.4% to 3.4% in FY 1996. This represents a 47% reduction in costs. During
the same time period, there was a 64% reduction in hospital days paid by the
State Employees Health Plan for mental illness (NC State Health Plan Office).
- Allina Health System in Minnesota, a state that saw parity become law in
1995, reported a mere 26-cent increase per month for its 460,000 enrollees.
Blue Cross/Blue Shield of Minnesota reported a premium reduction of 5-6% in
its small business health plans.
Advances in Medical Science Have Yielded Successful and Cost-Effective
Treatments for Mental Disorders
- Major depression can be treated successfully with antidepressant
medications and psychotherapy in 65 – 80% of all cases – a success rate that
exceeds many current common medical treatments for non-psychiatric illnesses.
- Clozapine treatment for schizophrenia, approved by the FDA in 1990, saves
an average of $23,000 in treatment costs per patient annually, largely
reducing the need for hospitalization. An estimated $1.6 billion has been
saved with clozapine treatment.
- HealthSelect of TEXAS showed that the average annual treatment cost for a
patient with schizophrenia was more than $1,000 less than the costs for a
patient with heart disease.
Why Do We Need Mental Health Parity Legislation Enacted into Law?
- The enactment of the Mental Health Parity Act of 1996 (P.L. 104-204)
was the first step in ending the discrimination against individuals with
mental illnesses. However, the fight is far from over. Most state laws – as
well as the federal law – are limited in scope or application: the federal law
only applies to mental health annual or lifetime cost limits, but not to
substance abuse, copayments, deductibles, or inpatient/outpatient treatment
limits. State parity laws vary widely: many do not address substance abuse,
are limited to serious mental illness, or apply only to government employees.
- At the federal level, there are varying approaches to building upon the
1996 law. Representatives Marge Roukema (R-NJ), Pete DeFazio (D-OR) and Bob
Wise (D-WV) have introduced H.R.1515, the Mental Health and Substance Abuse
Parity Act of 1999. Their bill proposes to extend full parity to those who are
covered by mental health or substance abuse plans. Senators Pete Domenici
(R-NM) and Paul Wellstone (D-MN) have introduced S. 796, the Mental Health
Equitable Treatment Act of 1999, which provides parity for inpatient and
outpatient visit limits and extends full parity for specific mental illnesses
listed in the bill. Representative Jim Ramstad (R-MN) and Senator Wellstone
introduced a substance abuse parity bill last year and plan on its
reintroduction this Congress. Whatever the approach, it is clear there is
congressional support for extending and building upon the 1996 law.
- Discrimination, whatever the form, is WRONG. Mental illness is just like
any other medical illness, but treating it differently in health care plans is
unconscionable. The time has come for the federal government to step in and
end this last bastion of government-sanctioned discrimination against people
who suffer from real – but unfortunately still misunderstood – illnesses of
the brain.
