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On September 26, 1996, President Clinton signed into law limited mental health parity legislation which prohibits insurers or plans serving 50 or more employees from setting lower annual or lifetime dollar caps on mental health benefits than for other health benefits. Employers or plans that experience a premium increase of 1% or more will be exempt from the requirement, which is effective from Jan. 1, 1998 to Sept. 30, 2001. This legislation established a victory over ERISA's preemption of state mandates for behavioral health and establishes the behavioral health community as a recognized partner in the healthcare continuum. However, the legislation did not address many of the limits insurance plans frequently apply solely to the coverage of behavioral health services. These restrictions include limits on the number of treatment visits and/or days of treatment, co-pays, and deductibles. The National Council will seek re-authorization of the existing parity law, while pushing for legislation that will achieve full parity of coverage for behavioral healthcare services. GAO Finds Mental Health Parity Law Skirted in Private Sector Public Policy Report June 2000, page 1 General Accounting Office (GAO) investigators have found thousands of employers are violating the 1996 Mental Health Parity Act by setting annual or lifetime dollar limits on employees’ mental healthcare that are lower than the limits for general medical and surgical services. Other employers have lowered the general medical and surgical lifetime limits in order to bring them in line with existing mental health benefits. Others are simply failing to comply with the equal benefits provision of the law. The findings came in a GAO report released in mid-May that found 9,000 to 14,000 employers, in 26 states surveyed for the report, were violating federal standards. Most others (87 percent) were found to be technically in compliance with the law, but those employers find ways to restrict access to mental healthcare by setting limits on the number of office visits or days of hospital care, as opposed to the dollar limits that the law directs. As a result, employees and their dependents have often seen only minor changes in their health benefits resulting in little or no increase in their access to mental health services, according to the study. The report was released during a hearing on the Mental Health Equitable Treatment Act of 1999 by the Senate Health, Education, Labor and Pensions Committee, which is chaired by Senator James M. Jeffords (R-VT). That bill would expand the federal parity bill first enacted in 1996, which is set to expire. One of the 1996 bill’s sponsors, Senator Pete V. Domenici (R-NM), said the original bill didn’t go far enough, as now confirmed by the GAO report. "The Mental Health Parity Act of 1996 was a good first start," he said. "But that law is not working as intended. While there has been adherence to the letter of that law, there are certainly violations of the spirit of the law. Ways are being found around the law by placing limits on the number of covered hospital days and outpatient visits." The GAO report also examined the law’s effect on claim costs. The report concluded that, while most employers have not examined changes in their plans’ claims costs, the federal parity law appears to have had a negligible effect on those costs. Only about three percent of responding employers reported that compliance with the law increased their claims costs, and virtually no employers have dropped their mental health benefits or health coverage altogether since the law was enacted. In addition, published estimates of the cost of federal parity are typically less than 1 percent. More comprehensive parity laws as enacted by some states are generally estimated to have higher but modest cost increases of about 2 to 4 percent. Some 30 states in the meantime have enacted their own parity legislation, many of which provide broader parity coverage than the federal law. The Mental Health Equitable Treatment Act of 1999 would provide parity only for severe, biologically-based mental illnesses, and other specified severe mental illnesses such as post-traumatic stress disorder. The National Council was able to have diagnoses for children added, including attention-deficit-hyperactivity disorder, as well as bulimia and anorexia nervosa. However, the legislation does not require a health plan to provide coverage for alcohol and substance abuse benefits, or require that an employer provide coverage of mental health benefits. On a positive note, the legislation lowers the employer exemption from those with fewer than 50 employees to those with fewer than 25. It also removes the exemption for employers if premiums are increased more than 1 percent, and re-authorizes the lifetime and annual cap parity provisions of the 1996 law, which will sunset in 2001. In addition, the bill prohibits limits on the number of covered hospital days and outpatient visits for all mental illnesses, the non-monetary loophole to the existing law that many employers used to duck the requirement to provide full mental health parity. While very positive hearings were held on the issue, it is unlikely that this legislation will move this year given the short congressional schedule and the upcoming elections.
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