Mental Health Parity

Mental health parity—equal insurance benefits for mental and medical disorders—is, in part, the result of years of work by groups such as the National Alliance for the Mentally Ill, government advocates, and thousands of other supporters to erase the stigma society attaches to mental illness—to bring it out of the dark shadows and acknowledge it as a disease as painful and often as life threatening as physical illnesses.

The Mental Health Parity Act

The Mental Health Parity Act (MHPA) was signed into law on September 26, 1996 and took effect January 1, 1998. This federal law is subject to concurrent jurisdiction by theDepartments of Labor, the Treasury, and Health and Human Services and prevents group health plans, insurance companies and HMOs from placing lower annual or lifetime dollar limits on mental health benefits than for medical and surgical benefits offered under the plan. For example, if a health plan has a $1 million lifetime limit on medical and surgical benefits, it cannot put a $100,000 lifetime limit on mental health benefits.

The MHPA, which expired on September 30, 2001 but has been extended each year since, has many loopholes. The law applies only to groups that offer mental health benefitsand have more than 50 workers; however, it does not require them to include mental health benefits in their benefit packages. It does not apply to health insurance coverage inthe individual market, and it does not address substance abuse or chemical dependency treatment. The law does, however, allow for limits on inpatient days, prescription drugs, outpatient visits, and raising deductibles which, in fact, has the effect of subjecting benefits to dollar limits. The United States General Accounting Office in May 2000 found that 87 percent of complying health plans evaded the spirit of the law by using day and visit limits to maintain unequal benefit levels for mental versus medical disorders.

Federal and State Parity Legislation

Since the passage of the 1996 law, new federal parity legislation has been put before the legislature, the most notable being the Mental Health Equitable Treatment Act of 2001 proposed by Senators Pete Domenici (R-NM) and the late Paul Wellstone (D-MN), the MHPA's original authors. Each year, permutations of this new federal law have been proposed and consequently shelved. As of May 2004, 35 states have passed their own form of mental health parity legislation. These state laws incorporate more inclusive parity coverage than the MHPA, and some include parity coverage for the treatment of substance abuse/drug and alcohol dependency.

The Mental Health Parity Controversy

The basis of mental health parity does not appear to be controversial, and there is evidence that treating psychiatric disorders contributes to lower medical costs and higher productivity. But opponents of mental health parity are generally opposed to mandated benefits of any type and are concerned about health care cost increases that can result from unlimited benefits. Lobbying groups representing insurance industry and business groups are staunch opponents. Proponents argue that cost increases will be minimal and that the real issue is discrimination against people with mental illnesses.