February 2000
Government Relations
Practice Directorate
Congress should close the loopholes in the Mental Health Parity Act of
1996, to fully ban discrimination against mental health and substance
abuse benefits in health plan design. The Act, originally sponsored by
Senators Pete Domenici and Paul Wellstone and Representative Marge
Roukema, prevents larger health plans from imposing lifetime and annual
dollar limits on mental health benefits that are different from
those imposed on medical/surgical benefits. The Act has had a minimal
cost, but some health plans have evaded the spirit of the law by replacing
dollar limits with arbitrary limits on inpatient days and outpatient
visits.
The U.S. Surgeon General asserts there is no scientific justification
for treating mental and physical health differently. The Surgeon’s
General’s Report on Mental Health (Nov. ‘99) asserts that diagnoses of
mental disorders made using specific criteria are as reliable as those for
general medical disorders. And, a range of treatments of well-documented
efficacy exists for most mental disorders.
Parity is an affordable and effective objective, says the Surgeon
General. Case studies of five states that had a parity law for at
least a year revealed a small effect on premiums – at most a change of a
few percent, plus or minus. Further, employers did not attempt to avoid
the laws by becoming self-insured or by passing on costs to employees.
Some businesses are already removing mental health benefit limits at
cost savings. However, without passage of federal legislation that
creates a level playing field, insurers are not likely to voluntarily
remove arbitrary benefit limits. Insurers have placed limits on mental
health benefits out of misplaced fear that benefits without these limits
would attract poor risks, increase their costs, and place them at a
competitive disadvantage. New legislation will create a level playing
field where all insurers can offer low cost mental health parity coverage
through use of private market efficiencies.
The House should pass Representative Roukema’s bill, H.R. 1515,
which closes every loophole while maintaining the small
business exemption and not mandating benefits. If mental health and
substance abuse benefits are offered, a plan may not impede access by
using discriminatory dollar limits, day and visit limits, coinsurance,
deductibles or out-of-pocket maximums. The bill does not interfere with
efforts to deliver cost-effective mental health care, as health plans
remain free to use preadmission review and other appropriate techniques.
The Senate should pass the Domenici-Wellstone bill, S. 796, with an
amendment to provide full parity for the range of mental health disorders.
S. 796 currently provides for full parity -- closing the parity
loopholes -- for a specified list of severe mental illnesses (SMI). While
S. 796 provides parity for day and visit limits for other illnesses not on
the narrow SMI list, children and adults with equally disabling disorders,
including bulimia, serious emotional disorders and anxiety disorders need
full parity and an end to the parity loopholes. Cost studies performed by
the CBO and independent actuarial firms show that broad-based parity costs
only pennies more than SMI. All loopholes in the 1996 Act should be closed
for all patients. There is no logic to continue the discrimination and
financial insecurity that threatens these families in need.
