Mental Health Parity and Health Insurance Reform

According to the American Psychological Association, nearly 90% of Americans have never heard of the Mental Health Parity law which requires equal benefits for medical, mental health and substance abuse treatment for most group health insurance plans. Forty-five percent did not even know if their health insurance covered mental health services.

The final regulations for the 2008 Paul Wellstone & Pete Domenici Mental Health Parity & Addiction Equity Act took effect January 1, 2011. Previously, many people seeking mental health treatment were shocked to find that their benefits for mental health and substance abuse were less than for medical. Most policies required higher co-pays or co-insurance, limits on the number of services per year, fewer days in the hospital, more intrusive authorization, and an additional deductible to satisfy. Plans that allowed subscribers to go out-of-network for medical services often restricted access for mental health providers to in-network providers.

The law now requires group health insurance plans and self-insured employers to provide equal benefits for physical health, mental health and substance abuse treatment. This translates into one deductible for all services, the same co-pay as for primary care doctors, and similar limits on number of visits, days of coverage, and annual and lifetime dollar amounts. Out-of-network services must be available if covered for medical benefits. However, the law did not cover plans for companies with less than 50 employees or most plans for individuals.

The healthcare reform bill passed in 2010 (aka the Patient Protection & Affordable Care Act) provides additional protections for persons needing mental health or substance abuse treatment. It extended parity to group plans with fewer than 50 employees and to individual plans which will be available through state exchanges by 2014.  Other provisions that took effect for all policies issued or renewed after September 23, 2010 include no more lifetime dollar limits for most health insurance benefits. (Annual limits will be prohibited starting in 2014.) Children under age 19 with preexisting conditions can no longer be excluded from health insurance coverage. The same protection will be extended to adults in 2014. Adult dependent children can now be covered under their parents' plans up to age 26.

Taken together, the two laws have significantly improved access to mental health services for the majority of children and adolescents:

• Pre-existing conditions - Teenagers first diagnosed and treated for depression as a child can not be excluded for coverage for subsequent episodes of depression when their parents change health insurance plans. Nor can the treatment of mental illness in childhood disqualify anyone for health insurance coverage as an adult.

• Lifetime caps on benefits - Children treated for severe mental illness in a residential facility will be less likely to max out their benefits before treatment is completed. This should lead to fewer parents having to give their child up to foster care after exhausting their private health insurance benefits and financial resources so that Medicaid (and taxpayers) will pick-up the bill.

• Coverage for dependent children up to age 26 - Parents will be able to afford life-saving treatment for their young adult child struggling with serious mental health conditions such as mood disorders, eating disorders, addiction, or schizophrenia. Research has established that early intervention and treatment is essential to prevent lifelong disability, suicide, or death from related causes.

To bring it home to dollars and cents, here's a story about how mental health parity has helped a teenager and his family afford treatment (Kaiser Health News):

For the Bryan family of San Antonio, the new laws are already making a difference. Their 17-year-old son, Kevin, has had bipolar disorder since he was a child. But as he went through adolescence, Kevin became increasingly paranoid and out of touch with reality, says his mother, Chris. About three years ago clinicians determined he suffered from schizoaffective disorder, a diagnosis that led to a change in his medication and a doubling of his outpatient therapy visits to twice a week. 

Unfortunately, the health plan covered only 52 outpatient therapy sessions annually, so by August or September of each year, the Bryans were paying $60 out-of-pocket each time Kevin had an appointment, or roughly $3,000 a year. "I kept making the point to the insurer that it was cheaper to cover his visits than to have him wind up in the hospital," says Chris Bryan, but nothing changed. 

Under the new parity provisions, and the annual cap on visits was lifted. Now, when Kevin visits his therapist, his parents are responsible only for a $15 co-payment. He is responding well to treatment and considering going to college next year. 

Now that parity has or will be extended to nearly all Americans with health insurance, there will be more success stories like Kevin's. For more information from the American Psychological Association see:

Resources on the Mental Health Parity Law