Insurance Parity
Fact Sheet: Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
The legislation applies to all group health plans with 51 or more employees. It will cover 82 million individuals in self-insured employer health plans that are not governed by state parity laws and another 31 million in plans that are subject to state regulation.
Major Provisions:
- Scope: The legislation imposes no requirement as to what conditions must be covered. But whatever is covered must be at parity with medical coverage (except to the extent that a state parity law requires broader coverage). Specifically, it prohibits group health plans that offer coverage for mental health and substance-use conditions from imposing treatment limitations and financial requirements on those benefits that are stricter than for medical and surgical benefits.
- Out-of-network coverage: If a plan offers out-of-network benefits for medical/surgical care, it must also offer out-of-network coverage for mental health and addiction treatment and provide services at parity.
- State Laws: The legislation preserves strong state parity and consumer laws. State parity laws vary widely from state to state.
Oversight: The legislation establishes an important oversight mechanism to determine if insurers are discriminating against certain conditions or failing to cover some treatments.
Cost Exemption: The cost exemption allows a health plan to be exempted from the federal parity law if it can prove that parity is raising its total plan costs by more than 2 percent in the first year after enactment of the parity law and 1 percent thereafter. But plans must first implement parity for at least six months.
Background
Insurance discrimination: Employer-provided health plans have for years routinely set stricter treatment limits and imposed higher out-of-pocket costs on mental health care than care for any other illness. The Mental Health Parity Act of 1996 took a first step toward ending such discriminatory practices and established the principle that mental health benefits should be “on par” with medical and surgical benefits. But the law outlawed only the use of disparate annual or lifetime dollar limits between mental health coverage and coverage of other illnesses. Insurance plans still routinely set arbitrary caps on how many mental-health treatment sessions or days of hospital care they will cover – regardless of medical need. And those who “get in the door,” often face far higher out-of-pocket costs than for treatment of any other illness. Congressional efforts to end those discriminatory practices – to close the loopholes in the 1996 act – have been thwarted for the last six years.
Parity Legislation: The Senate and House both passed parity bills during this Congress. The Senate passed the Mental Health Parity Act of 2007, S. 558, unanimously on September 18, 2007, and the House on March 5th passed the Paul Wellstone Mental Health and Addiction Equity Act, H.R. 1424. The measures had common elements, while differing on a few issues. An agreement that bridged these differences was reached by House and Senate negotiators in June. Final approval was delayed until the Senate and House reached agreement on how to fund the modest cost of the legislation, and on the vehicle on which to send this historic measure to the President’s desk.
Parity News
Millions of Americans with mental disorders do not have equal access to health insurance. Many health plans discriminate against these people by limiting mental health and substance abuse healthcare by imposing lower day and visit limits, higher co-payments and deductibles and lower annual and lifetime spending caps.
Mental Health America and is local and state affiliates support comprehensive health insurance parity legislation, which would ban these practices by requiring the same health insurance coverage for mental disorders as physical disorders.
State Actions
To date, 34 states have made into law some form of mental health parity. Several have enacted laws that require insurance parity only for a small set of specified diagnoses or serious mental illnesses, however. These laws discriminate against children and adult whose illnesses can be as disabling as those specified in the laws, but do not fit neatly within the statutes’ criteria. Adults excluded from protection under these laws include those who have multiple personality disorders, anorexia nervosa and bulimia, post-traumatic stress syndrome, and substance abuse disorders. Children with serious emotional disturbances and substance abuse disorders are also excluded. Therefore, Mental Health America advocates for inclusion in laws all disorders listed in the Diagnostic and Statistical Manual of Mental Disorders—IV (DSM-IV).
The laws in three states can serve as models for legislation other states that are either considering the issue for the first time or are considering revising their existing parity law. These states are Vermont, Maryland and Connecticut. To obtain copies of these states’ laws, as well as Mental Health America’s parity-related reports, contact Mental Health America’s Advocacy Resource Center.
Federal Parity
In 1996, Congress passed the Mental Health Parity Act (P.L. 104-204), which made it unlawful for companies with more than 50 employees to set annual and lifetime dollar insurance limits for mental health care (unless the same dollar-limits apply to medical and surgical care). Many employers and insurers violated the spirit of that law, however, by placing other restrictions on mental health benefits, such as limits on the number of covered outpatient office visits and number of days for inpatient care.
Repeated legislative efforts in Congress to close these loopholes have won broad bipartisan support. President Bush at one time expressed support for, and pledged to push for enactment, of parity legislation, but has not renewed that call. Congressional leaders have blocked efforts to bring an expanded parity bill to an up-or-down vote, however, and Congress has instead simply kept the 1996 law in force, through a series of one-year extensions.
This year, Reps. Jim Ramstad, R-Minn, and Patrick Kennedy, D-R.I., introduced the Senator Paul Wellstone Mental Health Equitable Treatment Act, H.R. 1402, a measure that would require employers with more than 50 employees to provide comprehensive mental health and substance-use parity. In the Senate, Sens. Pete Domenici, R-N.M., and Edward Kennedy, D-Mass., who sponsored parity legislation in the last Congress and continued to work on this issue behind the scenes, introduced the Mental Health Parity Act of 2007 (S. 558), in February. The Senate unanimously passed a modified version of that bill on September 18th. With the House measure continuing to make progress as well, stay up to date on what’s happening in Congress on mental health parity legislation, by checking out our latest Legislative Alerts and updates.
Technical Assistance Resources
Mental Health America has developed a series of resources to help advocates in their parity campaigns. In addition, Mental Health America will research additional questions on this important topic. The following documents are available through the Advocacy Resource Center:
- Expanding Mental Health Parity Toolkit. This toolkit provides background information for people who are amending their current parity laws are working to pass parity for the first time. Toolkit contents include: MHA Contact List; Expanding Parity Fact Sheet; Skeleton Media Announcement; State Insurance Parity Laws Charts; Advocacy Check List for 2001; Substance Abuse Insurance Parity: A Guide for Advocates; Media information on the Surgeon General's Report; Why Mental Health Parity makes Economic Sense; State Parity Language for Children; and Parity Case Study: Connecticut.
- Strategies for Negotiating Comprehensive Parity. Discusses strategies for keeping the parity debate focused on providing protections for all Americans along with specific responses to scenarios that could jeopardize comprehensive or full parity proposals.
- Substance Abuse Insurance Parity: A Guide for Advocates. Provides background information on the issues surrounding substance abuse parity.
- Research Studies. Mental Health America collects research studies on the implementation of parity as well as cost analyses and other research on the topic. Please contact the Advocacy Resource Center if you are interested in some of these more in depth studies.
Page last updated: 10/03/2008