Law Equalizes Mental Health Coverage

Oct. 8, 2008 - A new law could boost insurance coverage for many Americans in need of mental health and substance abuse treatment.

The big economic bailout passed by Congress and signed by the president last week had an attachment. Part of the bill said insurance companies must now cover mental health and substance abuse services on "parity" with medical and surgical treatments.

Under the bill, which goes into effect in 2010, group insurance plans that cover mental illness already must now equalize its value with medical and surgical coverage. The number of covered visits, the cost of copays, and the total value of treatment covered each year would have to be on par.

Mental health groups, which have lobbied for the bill for more than a decade, hailed its passage as a major achievement.

David Shern, PhD, president and CEO of the group Mental Health America, called the bill's passage "a great civil rights victory."

"It recognizes that mental health disorders are every bit as debilitating, and just as treatable, as cancer and diabetes," he said.

Business groups cautioned that requiring more coverage for mental health and substance abuse treatment would raise costs on employers and patients, and those groups managed some concession in long negotiations over the bill.

The law applies exempts insurance carried by companies with 50 or fewer workers. It also excludes employers whose insurance costs go up more than 2% as a result of the law. Plans are also free to cover some mental illnesses but not others.

"It's not ideal," says Steve Ventzner, a spokesman for Mental Health America.

Most insurance plans would fall under the law because most already offer mental health coverage, Ventzner said.

"We feel pretty good about the result that we reached. It's a far cry from the last time we looked at this issue," said Neil Trautwein, a health care lobbyist with the National Retail Federation, which represents large and small retailers across the country.

Though mental health groups battled business groups for more than a decade over the law, it is unclear what impact it will have on access to mental health coverage, said Robert Laszewski, an insurance industry analyst and consultant from Alexandria, Va.

"It's going to matter to someone out there who had a restrictive plan. But across the board, it doesn't really mean a lot," he told WebMD.

Laszewski said insurers would likely aggressively manage mental health treatments under their medical necessity rules. He also pointed to a Congressional Budget Office report concluding that the law would raise insurance costs by 0.2%.

"What does that tell you about the scope of this when the day is done? [0.2% is] nothing, which means the bill really does nothing," he said.

Health insurers backed the new law. In a statement, Karen Ignani, who heads America's Health Insurance Plans, said, "Millions of Americans will now be assured greater access to mental and behavioral health coverage while continuing to benefit from the innovative programs health plans have developed to promote high-quality, evidence-based care."