Mental Health Coverage Parity for Federal Employees Takes Effect This Week
As President Clinton's executive order mandating mental health parity for nine million federal employees takes effect this week, the New York Times examines the state of mental health parity in the country. Under the order, private health plans covering federal employees can no longer impose higher copayments or deductibles for mental health services than for general care. They will also no longer be able to set lower limits for outpatient visits or hospital days for mental disorders than costs for general or surgical care. The new policy also requires insurers to cover alcohol and drug abuse treatment at levels equal to general medical care. The Times reports that the new policy, along with the fact that 32 states have laws that "in some way address" mental health treatment disparities, signals that "the notion of equality in coverage is gaining wider acceptance." In addition, the Times notes that greater understanding of the biological connection to many mental disorders, as well as "new and better" treatments, have "led to a greater acceptance" of some mental disorders.
However, business groups and insurers worry that mental health parity laws will cause health care costs to "spin out of control" and employers to "forgo health insurance altogether." Thus, managed care cost control measures "are now in widespread use." According to an analysis prepared by the National Mental Health Advisory Council, the panel that advises the National Institute of Mental Health and the HHS secretary, parity increased health premiums by 1.4%, "far less" than the 10%-15% that critics expected. In another analysis by PricewaterhouseCoopers, providing parity for mental illness and substance abuse raised total health care costs by 2.5%-3.5%, with parity for mental illness alone raising costs by 2%-3%. Mental health parity might actually incur savings, the Times reports. For example, some studies have shown that access to mental health services can offset general medical costs, decrease absenteeism, reduce the psychiatric disability claims employees make and offset court and prison costs.
Impact of Managed Care
While managed care has helped to control the costs of implementing mental health parity, some doctors question its impact. Many insurers have given the responsibility of managing mental health services to companies that specialize in containing costs by reviewing treatment and establishing provider networks. For Vermont internist Dr. John Matthew, the Times reports that the "stepped-up management has been bad for his patients' mental health," particularly in the extra time and effort necessary to schedule appointments for mental health patients. But health care "experts" say that in the "right hands," such practices can ensure patients receive the proper treatment from the proper provider and also that treatment does not continue longer than necessary. In states that already use "management strategies" to contain costs, parity laws have been "beneficial." According to one study, a "combination of parity and managed care" led to an increase in the number of adults and children who utilized outpatient mental services. But in states where managed care came into being after parity was introduced, parity laws "do not seem powerful enough to dampen the impact of cost cutting," the Times reports.
'True Equal Coverage' a Long Way Off
Despite the advances in offering mental parity, "true equal coverage" for physical and mental ailments remains "elusive," according to Jennifer Heffron, senior director of state affairs for the not-for-profit National Mental Health Association. Heffron said that because many states' mental parity laws also include "many restrictions," the laws have "little impact" and in some instances, insurers "simply found other, more subtle ways to limit coverage for mental illness." Even the 1996 Federal Mental Health Parity Act, which banned differences in care costs for mental health care and general medical care, "lacks the regulatory teeth to have much real effect," the Times reports. The law exempts businesses where costs would increase by more than 1% as a result of equal coverage. Furthermore, the 1996 parity law does not require employers that currently do not provide mental health coverage to offer it and "says nothing about unequal copayments and deductibles." A congressional report released in May showed that "thousands" of businesses violated the law. A General Accounting Office report found 14% of employers continued to set lower lifetime dollar limits for mental health treatment, and thousands more "merely substituted limits on covered days of hospital care or visits to a mental health professional for dollar limits." Sen. Pete Domenici (R-N.M.), who co-wrote the law with Sen. Paul Wellstone (D-Minn.), said he hopes to "persuade" Congress to close some of the law's loopholes when it is scheduled for reauthorization next September (Goode, New York Times, 1/1).