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Mental Health Parity

Country: 
USA
Partner Institute: 
Johns Hopkins Bloomberg School of Public Health, Department of Health Policy and Management
Survey no: 
(14) 2009
Author(s): 
Emily Adrion and Gerard Anderson
Health Policy Issues: 
Role Private Sector, Long term care, Funding / Pooling, Quality Improvement, Benefit Basket, Access, Remuneration / Payment
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes yes yes yes yes no no

Abstract

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 introduced provisions prohibiting health insurance plans from offering benefit packages that include financial requirements or treatment limitations for mental health and substance use disorder services that are more restrictive than those applied to medical/surgical benefits.

Purpose of health policy or idea

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was passed as part of the Emergency Economic Stabilization Act of 2008 (H.R. 1424). The purpose of this Act was to amend previous legislation in order to require that, beginning in late 2009, any health insurance plan that covers both medical and surgical benefits and mental health or substance use disorder benefits cannot include financial requirements (such as copayments and cost sharing) or treatment limitations (such as number of visits or days covered) for mental health and/or substance use disorder services that are more restrictive than those applied to medical and surgical benefits covered by the plan. The purpose of the legislation is to improve patient access to mental health and substance abuse treatment services by reducing the financial barriers to access to care. 

This legislation is a component of a larger movement in the United States towards 'mental health parity'. In this case, 'parity' refers to the idea that mental health and substance use disorder services ought to receive the same coverage under health insurance plans as medical and surgical benefits. This is important, because prior to the enactment of the Wellstone-Domenici Act, private insurers had the freedom to impose greater cost sharing requirements and to limit the mental health and substance use disorder services offered in their benefit packages.

This legislation will impact all businesses with 50 or more employees that offer group health insurance, including those businesses that have self-funded health insurance plans regulated under the Employee Retirement Income Security Act (ERISA). The inclusion of self-funded plans is critical, because they make up a significant portion of the market and are exempt from existing state-level parity laws.

It is important to note that this legislation does not require insurers to cover mental health and substance use disorder services generally, nor does it require that specific mental health services be covered. The requirements apply only to plans that already offer mental health and substance use disorder services, and only impact cost sharing and treatment limitations for services that are covered.    

Senators Paul Wellstone and Pete Domenici - the original sponsors of the more limited mental health parity bill that passed in 1996 - worked together for years to pass legislation for parity in mental health and substance use disorder services. Paul Wellstone passed away in a plane crash in 2002, but the Act was named for both senators, in honour of their efforts in this area.

Main points

Main objectives

The main objective of the Wellstone-Domenici Act is to improve access to mental health and substance use disorder services by reducing financial barriers to access to care.

Type of incentives

Financial incentives affecting patients include reduced out-of-pocket costs for mental health care and substance use disorder services.

Non-financial incentives for employers/health plans include the legal ramifications of non-compliance with the law.

Groups affected

Employers, Employees, Health insurance companies, Individuals with mental illness and their families, Providers

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Characteristics of this policy

Degree of Innovation traditional rather traditional innovative
Degree of Controversy consensual neutral highly controversial
Structural or Systemic Impact marginal neutral fundamental
Public Visibility very low neutral very high
Transferability strongly system-dependent system-dependent system-neutral

The Wellstone-Domenici Act will result in modest changes in the characteristics of health insurance benefits available to persons with employer-sponsored health insurance coverage.

Political and economic background

Prior to the passage of the 2008 legislation, insurers had the freedom to impose greater cost sharing requirements and to limit the mental health and substance use disorder services offered in their benefit packages. Research has suggested that utilization of mental health services is significantly more responsive to cost sharing than is utilization of other medical services.

For years policy makers have sought to improve parity in the coverage of mental health and substance use disorder services. The Wellstone-Domenici Act marks the most recent effort to address parity by addressing the financial barriers to access.

Change based on an overall national health policy statement

The Wellstone-Domenici Act represents a bipartisan effort to improve parity in mental health and substance use disorder treatment.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes yes yes yes yes no no

Origins of health policy idea

For several decades advocates have argued for equal insurance coverage of mental health and substance use disorder treatment as compared with other illnesses. In 1996, 'partial parity' legislation was enacted that prohibited health insurance plans from setting annual or lifetime spending limits on mental health services that were lower than the limits set for the medical/surgical services covered. However, as a consequence of this legislation, many health insurance companies - in an effort to reduce costs - also opted to raise co-payments and set limitations on the number of outpatient visits and inpatient hospital days covered for mental health and substance use disorder services. 

In the 12 years that followed, several unsuccessful attempts were made to enact legislation that would guarantee full parity. The Wellstone-Domenici Act's passage might be seen as the result of a number of more subtle changes over time that contributed to this greater shift in national policy. These changes include: an increased recognition of the availability of effective treatment for many mental illnesses, recognition that mental illness and substance use disorders affect employee productivity, increased prevalence of managed behavioral health care (MBHC) capabilities which have helped to control costs and, perhaps most importantly, evidence from states and the Federal Employees Health Benefit (FEHB) program that mental health parity does not substantially increase costs.

Initiators of idea/main actors

  • Providers: Providers are generally supportive of the legislation which should improve access to care.
  • Payers: Insurance company support is mixed: the overall industry opinion (expressed by AHIP) is supportive, but many individual insurance companies cite administrative challenges and increased costs as reasons to be opposed.
  • Patients, Consumers: Patients/consumers employed in companies with >50 employees are likely be supportive as this legislation would result in reduced out-of-pocket costs for services.
  • Private Sector or Industry: The private sector is generally concerned about the incremental costs of this policy. However, while the legislation may increase the costs of providing insurance for their employees, it is also recognized that it may improve employee productivity.
  • Others

Approach of idea

The approach of the idea is described as:
amended: Arguments for full parity for mental health and substance use disorder services have been made for decades. This legislation represents an attempt to address some of the limitations of legislation passed in 1996 that partially addressed the parity issue.

Innovation or pilot project

Else - Parity laws (of varying levels of comprehensiveness) already exist in the majority of states and as part of the Federal Employees Health Benefit (FEHB) program.

Stakeholder positions

This legislation received widespread support/acceptance from nearly all stakeholders including firms with greater than 50 employees, their employees, providers and the insurance industry. Although America's Health Insurance Plans, the national organization that represents the health insurance industry, expressed support for the legislation, the position of individual insurance companies is somewhat more mixed. This is largely due to the complexities associated with the implementation of the legislation, particularly the administrative complexities relating to the alignment of mental health and substance use disorder benefits with those for medical and surgical services. They were also concerned with the incremental costs associated with the implementation of this legislation. Determining equivalency of services, and potential issues associated with "carve-out" behavioral health benefits, have been cited as the key challenges associated with implementation.

Actors and positions

Description of actors and their positions
Providers
Physicians, hospitals and other providersvery supportivevery supportive strongly opposed
Payers
America's Health Insurance Plans (AHIP)very supportivesupportive strongly opposed
Individual insurance companiesvery supportiveopposed strongly opposed
Patients, Consumers
Patients, Consumersvery supportivevery supportive strongly opposed
Private Sector or Industry
Employersvery supportiveopposed strongly opposed
Others
Celebritiesvery supportivevery supportive strongly opposed

Influences in policy making and legislation

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was passed as part of the Emergency Economic Stabilization Act of 2008 (H.R. 1424). Different versions of the legislation were passed with bipartisan support by both the US House of Representatives and the US Senate by September of 2008. The final bill was signed by President Bush in October of 2008.

Legislative outcome

success

Actors and influence

Description of actors and their influence

Providers
Physicians, hospitals and other providersvery strongstrong none
Payers
America's Health Insurance Plans (AHIP)very strongvery strong none
Individual insurance companiesvery strongvery strong none
Patients, Consumers
Patients, Consumersvery strongstrong none
Private Sector or Industry
Employersvery strongvery strong none
Others
Celebritiesvery strongvery strong none
Physicians, hospitals and other providers, Patients, ConsumersCelebritiesAmerica's Health Insurance Plans (AHIP)Individual insurance companies, Employers

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

Health insurance companies  will be most directly involved in (and affected by) the implementation of the Wellstone-Domenici Act. Individual insurance companies will be responsible for the alignment of mental health and substance use disorder benefits with those for medical and surgical services and for developing processes for determining equivalency of services.

One key challenge associated with implementation relates to the potential issues associated with carve-out behvioral health benefits. "Carve-outs"are behavioral health benefits that employers purchase seperately from medical benefits. In some cases, employers may have one "carve-out' vendor and several plans providing medical benefits. In such a case, the "carve-out" vendor would have to ensure equivalency of their benefits with those benefits in each of the health plans offered by the employer.

Monitoring and evaluation

No mechanism to regularly monitor and evaluate the implementation of the Wellstone-Dominici Act was included in the legislation itself.

Results of evaluation

N/A

Expected outcome

The reduction of financial barriers to access to mental health and substance abuse treatment services will potentially result in increased utilization of these services and improved treatment outcomes for those affected.

An increase in the utilization of mental health and substance use disorder services would likely result in an increase in costs, both for employers and for employees, as health insurance companies increase overall health insurance premiums to compensate for the increased expenditures on their end. The Congressional Budget Office projected that the legislation would result in an increase in premiums of between 0.2-0.4 percent.

The most significant undesirable effect of the legislation would be the abandonment of mental health and substance use disorder treatment benefits by employers. Because the legislation only applies to health insurance plans that cover both medical/surgical benefits and mental health or substance use disorder benefits, there is potential for employers to eliminate coverage of all mental health and substance use disorder benefits.

Impact of this policy

Quality of Health Care Services marginal marginal fundamental
Level of Equity system less equitable neutral system more equitable
Cost Efficiency very low very low very high

The Wellstone-Domenici Act will have a modest impact on the utilization of mental health and substance use disorder services.

References

Sources of Information

Dixon K. Implementing Mental Health Parity: The Challenge for Health Plans. Health Affairs. (28) 3: 663-665. May/June 2009.

Glied S, and R.G. Frank. Shuffling toward ParityBringing Mental Health Care under the Umbrella. New England Journal of Medicine. (359) 2: 113-115. July 10, 2008.

Kuehn BM. Congress Passes Mental Health Parity Bill. JAMA. (300) 16: 1868. October 22/29, 2008.

Pear R. Bailout Provides More Mental Health Coverage. The New York Times. October 5, 2008.

Shern DL, Beronio KK, and H.T. Harbin. After Parity-What's Next. Health Affairs. (28) 3:660-662. May/June 2009.

Author/s and/or contributors to this survey

Emily Adrion and Gerard Anderson

Suggested citation for this online article

Adrion, Emily and Gerard Anderson. "Mental Health Parity". Health Policy Monitor, October 2009. Available at http://www.hpm.org/survey/us/b14/5