Substance Abuse Parity Would Cause Many To Lose Health Coverage

Oct 21, 1999

FOR IMMEDIATE RELEASE

October 21, 1999

CONTACT: Richard Coorsh

(202) 824-1787

rcoorsh@hiaa.org

WASHINGTON, D.C. – Legislation that would mandate all health plans to provide open-ended benefits for substance abuse would make coverage more available for people who need these services, but less affordable to the millions of Americans who cannot buy health insurance, according to Chip Kahn, President of the Health Insurance Association of America (HIAA).

Mr. Kahn said that under substance abuse parity, purchasers of coverage – employers and consumers – would end up paying more for their health coverage, regardless of the effectiveness of repeated treatments for substance abuse. "It’s impossible not to empathize with individuals suffering from substance abuse," noted Mr. Kahn. "However, we must recognize that requiring all employers to provide open-ended coverage for substance abuse would tip the balance between cost and coverage for some, and result in no coverage at all for many Americans."

Mr. Kahn’s remarks were part of his testimony today at a Capitol Hill hearing before the House Subcommittee on Criminal Justice, Drug Policy, and Human Resources.

According to Mr. Kahn, proponents of substance abuse parity, and other benefit mandates, often propose these mandates in a vacuum – without regard to how mandates might raise coverage costs – by saying that each mandate only would increase employers’ or consumers’ premiums by one or two percent. He also pointed out that a 1999 HIAA study by health care economists Gail Jensen and Michael Morrisey estimates that chemical treatment coverage – coverage more narrow than substance abuse – raises health insurance premiums by an average of nine percent a year. Meanwhile, it is estimated that every one percent increase in the cost of premiums causes 300,000 people to lose or not afford health coverage.

Mr. Kahn also noted that none of the federal health insurance programs for which Congress is responsible – including Medicare, Medicaid, and the Federal Employees Health Benefits Program (FEHBP) – provide substance abuse parity, most likely because of its cost. Furthermore, he said that President Clinton’s controversial "Health Security Act" contained limits on substance abuse benefits.

"We must work together to bring as much affordable coverage as we can to as many consumers as possible," concluded Mr. Kahn. "Benefit mandates work against that objective."

HIAA is the nation’s most prominent trade association representing the private health care system. Its more than 270 members provide health, long-term care, dental, disability, and supplemental coverage to more than 123 million Americans.

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