Close Loopholes in Mental Health Parity Law
by Government Relations Staff
CLOSE LOOPHOLES IN THE MENTAL HEALTH PARITY LAW
Congress should pass the mental health parity bill, proposed by Senators Pete Domenici, Edward Kennedy and Michael Enzi (S. 558), to completely end insurance discrimination against mental health coverage. Congress should support the efforts of Representatives Patrick Kennedy and Jim Ramstad as they work to advance parity in the House. These bills require full parity for all aspects of plan coverage, including day/visit limits, dollar limits, coinsurance, deductibles and out-of-pocket maximums.
The Mental Health Parity Act of 1996 prevents larger health plans from imposing lifetime and annual dollar limits on mental health benefits that are different from those imposed on medical/surgical benefits. Because the current law does not provide full parity for all aspects of coverage, the GAO found that 87% of those employers that comply with the law have reduced other aspects of their mental health coverage, such as day and visit limits. S. 558 and its House counterpart will close the loopholes in the 1996 Act and go further by ensuring parity for substance abuse services as well.
The Congressional Budget Office projects that parity legislation would raise average costs just 0.4% (S. 558, 2007). This cost is low because the legislation recognizes that health plans already use preadmission and other care review techniques for the delivery of cost-effective mental health services. The cost increase is shared between the employer and employee, with the employer typically paying a third of the total.
Employers are already paying the cost of untreated mental disorders.
• Workplace stress each year costs U.S. industry $300 billion in terms of absenteeism, turnover, diminished productivity and direct medical, legal and insurance fees.
• Indirect costs of poor employee health, such as absenteeism, disability and lost performance at work, are two to three times higher than the direct medical costs. On-the-job productivity loss estimates range from less than 20% of a company’s total health-related costs to more than 60%.
• Total cost of presenteeism (productivity loss resulting from real on-the-job employee health problems) is estimated to be more than $150 billion a year. “Presenteeism appears to be a much costlier problem than its productivity-reducing counterpart, absenteeism,” said the editor of Harvard Business Review.
Behavioral health problems have a large yearly cost to employers and the nation.
• Anxiety: Total cost $42.3 billion; 88% of the cost per worker suffering from anxiety is attributable to decreased productivity.
• Depression: Total cost $83.1 billion; $26.1 billion (31%) in direct medical costs, $5.4 billion (7%) in suicide related mortality costs, and $51.5 billion (62%) in workplace costs.
• Substance Abuse: Total cost $246 billion -- $148 billion for alcohol, $98 billion for drugs. Lost productivity accounts for $162 billion of the total cost.
Some employers understand this mind-body connection and support mental health parity in their health plans. A 2005 National Business Group on Health guide encourages employers to adopt mental health parity, given the clinical evidence of a mind-body connection and parity’s low cost implications. Some employers are moving in the right direction, but most are not due to stigma and misplaced fears of adverse selection. Only Congressional passage of a full parity bill can completely end mental health discrimination.
LACK OF MEDICARE PARITY A SIGNIFICANT BARRIER TO CARE
Medicare beneficiaries in need of mental health treatment services face financial discrimination that contributes to their inability to receive needed care. Members should cosponsor and pass outpatient mental health coinsurance parity as proposed by Representatives Tim Murphy and Grace Napolitano (H.R. 1571) and Senators Olympia Snowe and John Kerry (S. __). Outpatient parity is also part of a broader Medicare bill by Representative Pete Stark (H.R. 1663).
Medicare reimburses 80% of the cost for most services, but only 50% for the outpatient mental health services of a psychologist, psychiatrist, clinical social worker or psychiatric nurse. For a typical outpatient psychotherapy treatment session, the cost to the patient would be approximately $50, when it should be about $20 without the limitation. For many elderly and disabled people this difference makes it extremely difficult or impossible to secure needed care.
This higher out-of-pocket expense is a barrier to cost-effective outpatient psychological services, particularly for the great majority of beneficiaries who do not have expensive Medigap insurance to pay the difference.
In addition to the discriminatory 50% mental health requirement, Medicare also has a discriminatory lifetime cap on inpatient psychiatric facility days, but no cap on other inpatient services.
Importance of Access to Quality Mental Health Care for the Elderly and Disabled
The mental health needs of the nation’s elderly are great. According to the U.S. Surgeon General, 37% of seniors in primary care settings display symptoms of depression. In addition, older people have the highest rate of suicide of any age group, accounting for 20% of all suicide deaths. Approximately 17% of adults over 65 suffer from addiction or substance abuse, particularly alcohol or prescription drug abuse. For Medicare beneficiaries receiving Social Security Disability Insurance mental illness represents the single largest diagnostic category (27%).
The need for mental health services for the nation's elderly will increase significantly as the baby boom generation ages. Many will face stress due to physical health problems and limitations. Changes such as retirement or relocation to a different community can disrupt seniors' intellectual and social activities—factors that the Surgeon General recognized as important for maintaining mental health in later life. The loss of family members and friends will test coping abilities as well as affect overall wellbeing.
Psychological intervention can improve quality of life, mental health, and potentially reduce overall medical costs for this population. For those with dementia, psychological services can alleviate or control many of the serious emotional/behavioral problems that accompany this disorder.
Research shows that lack of quality and timely mental health treatment can lead to increases in medical costs associated with misdiagnosed conditions, inappropriate treatment or overmedication. For example, patients suffering from untreated depressive and anxiety disorders often do not respond well or quickly to medical and physical rehabilitation and recover more slowly after medical interventions such as surgery.
Government Relations Office
APA Practice Organization
April 2007
Parity.pdf
(86.48 Kb)
