Mental Health Parity: Position Statement on Insurance Discrimination Against Individuals with Mental Illness
Our nation has made significant strides in the treatment and understanding of mental illness. However, individuals suffering from mental illness still confront prejudice and ignorance about their condition, motivation and abilities. NASMHPD believes that enhanced insurance coverage promises to improve the treatment, prospects for recovery and ability to live a meaningful life for every individual suffering from a mental illness. By enabling more Americans with mental illness to lead productive lives, our nation will benefit. NASMHPD strongly supports efforts to end discrimination against people with mental illness wherever it occurs and provide parity insurance coverage for mental illness.
Despite growing understanding that appropriately managed mental health benefits can be highly cost-effective, most private insurance remains inadequate. Ninety-eight percent of all plans limit outpatient care, and 80-85% limit inpatient care. Approximately 50% of private plans impose a 30 to 60 day limit on hospitalization. Three quarters of health plans impose dollar or visit limits for outpatient care. Limits should be based on medical necessity as determined by the appropriate management of care, rather than arbitrary limits that do not recognize the state of today's mental health care.
In 1996, Congress took the first concrete step toward ending discrimination in health insurance coverage against those with mental illness as a matter of national policy. Effective January 1, 1998, the Domenici-Wellstone parity law:
- will prohibit private group insurance plans of employers with more than 50 employees from utilizing annual or lifetime benefit limits for mental health that are not equivalent to those affecting other illnesses, and
- will apply equally to plans governed by the Employee Retirement Income Security Act (ERISA) and state insurance regulation.
Our nation will learn a great deal more about the impact of appropriate mental illness coverage if the new law is properly implemented. The Department of Health and Human Services must strictly adhere to the intent of Domenici-Wellstone when drafting its regulations. For example, while the law protects employers against premium increases exceeding 1%; this protection must be carefully implemented to avoid rendering the parity requirement ineffective. HHS must provide adequate oversight to ensure that premium estimates are properly calculated and should also work with State Mental Health Agencies and Departments of Insurance to develop data on the impact of the Domenici-Wellstone partial parity law and the impact of mental health parity insurance coverage in general. In addition, HHS should document the cost shift from the private to the public sector that results from the absence of a general parity requirement.
The new partial parity requirement takes important steps toward the future. It will benefit many individuals who would otherwise lose insurance coverage due to arbitrary annual and lifetime caps on mental health benefits. For other Americans, its impact rests not so much on the immediate impact as on the groundwork that has now been laid for future improvements.
NASMHPD believes that the new parity law provides important opportunities. Some of the goals the law can help achieve include:
- Eliminating the stigma surrounding mental illness;
- Improving understanding of and providing additional data about the costs and benefits of improving private sector mental health benefits;
- Reducing the cost shift to state and federal taxpayers created by insufficient private sector coverage;
- Providing additional data analyzing the public and private sector expenditure burden for mental health care;
- Laying the groundwork for eliminating additional discriminatory insurance practices, including arbitrary day, visit and dollar limits;
- Contribute to the integration of public and private resources and treatment efforts.
Enactment of the "Domenici-Wellstone" parity proposal was a critical first step toward providing adequate and appropriate insurance coverage for mental illness, maximizing opportunity for recovery. Congress acted after several states and Fortune 500 companies determined that an adequate and appropriate mental health benefit can be affordable and cost-effective. NASMHPD supported Domenici-Wellstone because it is appropriate, fair and fiscally responsible. Important advances in psychotropic medications and other therapies the use of a flexible continuum of care have both reduced the cost of caring for many patients and increased prospects for successful recovery. Governmental policies should reflect these new understandings.
By prohibiting arbitrary annual and lifetime benefit limitations on mental health coverage, Congress made an emphatic statement that economic discrimination against people with mental illness should end. NASMHPD agrees that such discrimination has no place in our society. Not only does such discrimination hamper the ability of individuals to fight their illnesses, but it shifts to taxpayers the costs of caring for thousands of adults, adolescents and children with severe mental illness.
Much of the misunderstanding about mental health treatment costs stems from outdated information. In recent years, mental health care delivery has undergone revolutionary changes. The understanding about and ability to treat effectively mental illnesses is leagues beyond what existed as recently as five years ago. In many cases, the ability to diagnose and treat mental illnesses exceeds the ability to treat non-mental health-related maladies. In addition, states and providers now seek to provide a full continuum of care to patients. Such care includes case management, intensive outpatient treatment, crisis intervention, supportive housing, hospitalization, partial hospitalization, day treatment, residential treatment centers and other medical and clinical options. Approximately 75% of the private mental health care market consists of managed care, compared to 35% in 1990. While this increase in managed care must be monitored, it provides important opportunities to improve and more fully integrate the care people receive. Properly managed care can increase the cost-effectiveness of mental health care and ensure that individuals with psychiatric disabilities receive timely, appropriate care.
As of December 10, 1996, Maine, Maryland, Minnesota, Rhode Island and New Hampshire had already enacted parity laws. Texas and North Carolina require parity for public employees. Other states are considering various forms of parity legislation. However, the ability of states to combat discriminatory mental health benefit limitations is limited. Because federal preemption prevents states from regulating plans governed by the Employee Retirement Income Security Act, the vast majority of working men and women will only be protected by nationwide standards. Consequently, NASMHPD believes that continued national and state efforts to provide parity must occur.
Approved by the NASMHPD on December 10, 1996.