Representative Patrick J. Kennedy speaking at a rally in March on Capitol Hill. Mr. Kennedy
and Representative Jim Ramstad, third from left, led the fight in the House for mental health parity.
More than one-third of all Americans will soon receive better insurance coverage for mental health treatments because of a new law that, for the first time, requires equal coverage of mental and physical illnesses.
The requirement, included in the economic bailout bill that President Bush signed on Friday, is the result of 12 years of passionate advocacy by friends and relatives of people with mental illness and addiction disorders. They described the new law as a milestone in the quest for civil rights, an effort to end insurance discrimination and to reduce the stigma of mental illness.
Most employers and group health plans provide less coverage for mental health care than for the treatment of physical conditions like cancer, heart disease or broken bones. They will need to adjust their benefits to comply with the new law, which requires equivalence, or parity, in the coverage.
For decades, insurers have set higher co-payments and deductibles and stricter limits on treatment for addiction and mental illnesses.
By wiping away such restrictions, doctors said, the new law will make it easier for people to obtain treatment for a wide range of conditions, including depression, autism, schizophrenia, eating disorders and alcohol and drug abuse.
Frank B. McArdle, a health policy expert at Hewitt Associates, a benefits consulting firm, said the law would force sweeping changes in the workplace.
“A large majority of health plans currently have limits on hospital inpatient days and outpatient visits for mental health treatments, but not for other treatments,” Mr. McArdle said. “They will have to change their plan design.”
Federal officials said the law would improve coverage for 113 million people, including 82 million in employer-sponsored plans that are not subject to state regulation. The effective date, for most health plans, will be Jan. 1, 2010.
The Congressional Budget Office estimates that the new requirement will increase premiums by an average of about two-tenths of 1 percent. Businesses with 50 or fewer employees are exempt.
The goal of mental health parity once seemed politically unrealistic but gained widespread support for several reasons:
- Researchers have found biological causes and effective treatments for numerous mental illnesses.
- A number of companies now specialize in managing mental health benefits, making the costs to insurers and employers more affordable. The law allows these companies to continue managing benefits.
- Employers have found that productivity tends to increase after workers are treated for mental illnesses and drug or alcohol dependence. Such treatments can reduce the number of lost work days.
- The stigma of mental illness may have faded as people see members of the armed forces returning from Iraq and Afghanistan with serious mental problems.
- Parity has proved workable when tried at the state level and in the health insurance program for federal employees, including members of Congress.
Dr. Steven E. Hyman, a former director of the National Institute of Mental Health, said it was impossible to justify insurance discrimination when an overwhelming body of scientific evidence showed that “mental illnesses represent real diseases of the brain.”
“Genetic mutations and unlucky combinations of normal genes contribute to the risk of autism and schizophrenia,” Dr. Hyman said. “There is also strong evidence that people with schizophrenia have thinning of the gray matter in parts of the brain that permit us to control our thoughts and behavior.”
The drive for mental health parity was led by Senator Pete V. Domenici, Republican of New Mexico, who has a daughter with schizophrenia, and Senator Paul Wellstone, the Minnesota Democrat who was killed in a plane crash in 2002. Mr. Wellstone had a brother with severe mental illness.
Prominent members of both parties, including Betty Ford, Rosalynn Carter and Tipper Gore, pleaded with Congress to pass the legislation.
Representatives Patrick J. Kennedy, Democrat of Rhode Island, and Jim Ramstad, Republican of Minnesota, led the fight in the House. Mr. Kennedy has been treated for depression and, by his own account, became “the public face of alcoholism and addiction” after a car crash on Capitol Hill in 2006. Mr. Ramstad traces his zeal to the day in 1981 when he woke up in a jail cell in South Dakota after an alcoholic blackout.
The Senate passed a mental health parity bill in September 2007. The House passed a different version in March of this year.
A breakthrough occurred when sponsors of the House bill agreed to drop a provision that required insurers to cover treatment for any condition listed in the Diagnostic and Statistical Manual of Mental Disorders, published by the American Psychiatric Association.
Employers objected to such a requirement, saying it would have severely limited their discretion over what benefits to provide. Among the conditions in the manual, critics noted, are caffeine intoxication and sleep disorders resulting from jet lag.
Doctors often complain that insurers, especially managed care companies, interfere in their treatment decisions. But doctors and mental health advocates cited the work of such companies in arguing that mental health parity would be affordable, because the benefits could be managed.
Pamela B. Greenberg, president of the Association for Behavioral Health and Wellness, a trade group, said providers of mental health care typically drafted a treatment plan for each person. In complex cases, she said, a case manager or care coordinator monitors the patient’s progress.
A managed care company can refuse to pay for care, on the grounds that it is not medically necessary or “clinically appropriate.” But under the new law, insurers must disclose their criteria for determining medical necessity, as well as the reason for denying any particular claim for mental health services.
Andrew Sperling, a lobbyist at the National Alliance on Mental Illness, an advocacy group, said, “Under the new law, we will probably see more aggressive management of mental health benefits because insurers can no longer impose arbitrary limits.”
The law will also encourage insurers to integrate coverage for mental health care with medical and surgical benefits. Under the law, insurers cannot have separate cost-sharing requirements or treatment limits that apply only to mental illness and addiction disorders.
The law comes just three months after Congress eliminated discriminatory co-payments in Medicare, the program for people who are 65 and older or disabled.
Medicare beneficiaries pay 20 percent of the government-approved amount for most doctors’ services but 50 percent for outpatient mental health services. The co-payment for mental health care will be gradually reduced to 20 percent over six years.
The mental health parity law was forged in a highly unusual consensus-building process. For years, mental health advocates had been lobbying on the issue.
Insurers and employers, which had resisted earlier versions of the legislation, came to the table in 2004 at the request of Mr. Domenici and Senators Edward M. Kennedy, Democrat of Massachusetts, and Michael B. Enzi, Republican of Wyoming.
Each side had, in effect, a veto over the language of any bill. Insurers and employers, seeing broad bipartisan support for the goal in both houses of Congress, decided to work with mental health advocates. Each side gained the other’s trust.
“It was an incredible process,” said E. Neil Trautwein, a vice president of the National Retail Federation, a trade group. “We built the bill piece by piece from the ground up. It’s a good harbinger for future efforts on health care reform.”