In This Issue
- Feature: Improving Mental Health Coverage
- Background Basics on Mental Illness
- The Last Word
SOURCE: AP/Steve Pope
Mental health conditions are much more widespread than many Americans believe. One in four adults in America, approximately 60 million people, experiences mental illness in any given year. While many adults experience only brief periods of mental illness, 1 in 17 adults and 1 in 10 children have a serious, lifetime disorder such as schizophrenia, depression, or bipolar disorder.
The historical stigma of the disease, among other factors, has resulted in a system in which it is hard for many Americans to receive the mental health care they need. In a given year, just one-third of adults and half of children who have a mental illness receive mental health care for their condition. This is a serious gap in care, as research continues to show that most mental disorders are as treatable and manageable as general medical conditions.
After 20 years of lobbying for legislation to require insurers to cover mental health care under the same conditions as medical health care, Congress passed a mental health parity bill to help ensure that mental health benefits are on par with medical benefits. Yet the mental health care system is at best a patchwork of public programs that vary by state and region. In 2001, public programs financed 63 percent of total mental health spending in America, compared to just 45 percent of all health care spending. Medicaid and other state and local programs together provided 81 percent of that public funding for mental health care.
While the mental health parity bill is a critical step in moving private insurers toward covering mental health care, many individuals will continue to rely on the public safety net. Therefore, any attempt to expand mental health coverage in the United States must recognize the serious challenges those with mental illness face in receiving the treatment they need to live normal lives. Reform not only must build on mental health parity requirements; it should also support individuals and their families living with mental illness by making community-based services easier to access and afford. Unfortunately, without significant government change, navigating the confusing and inefficient system will continue to be difficult for those with mental illness.
For further reading
Richard A. Friedman, “Media and Madness: For better and worse, the news media and entertainment industry shape public opinion about mental illness,” The American Prospect, June 23, 2008.
"Mental Health Treatment: It’s Commonly Accepted Yet Not So Easy To Obtain Or Understand," Medical News Today, July 4, 2008.
Mental illness: The facts
Untreated mental illnesses are linked with substantive losses of productivity and human capital. The economic cost of untreated mental illness is staggering—over $100 billion on untreated mental health disorders and $400 billion on addiction disorders each year. In the labor market alone, it is estimated that up to one-third of days lost to illness are related to mental rather than physical disorders. Yet, in 2006 only 6.7 percent of all U.S. health care spending was devoted to treatment of mental disorders.
Serious mental illness is defined as a severe and long-lasting disorder that disrupts social functioning, including schizophrenia, bipolar disorder, other severe forms of depression, panic disorder, and obsessive-compulsive disorder. Americans suffering from serious mental illnesses often lack treatment options, are more likely to suffer from chronic medical conditions, and die up to 25 years earlier from treatable conditions.
Barriers to care
Despite the high number of individuals suffering from mental health disorders and the high cost to the economy, less than one-third of adults and half of children will receive any treatment for their illness. Those fortunate enough to have access often receive insufficient care due to the shortage of treatment facilities offering quality and affordable support. Racial and ethnic minorities are particularly at risk of problems related to access to adequate mental health treatments. Further delays in treatment also often stem from the fear of being denied health coverage in the future due to what insurance providers deem an “expensive” pre-existing condition. Still, financial concern remains the greatest barrier to care, either because of a lack of coverage by providers or high out-of-pocket costs for individuals.
History of insurance coverage for mental health
Access to health care is often equated with lack of health insurance coverage. Yet too often individuals with employer-based coverage are limited or even prohibited from obtaining treatment. In the 1950s, when coverage for mental illness became included as part of medical contracts, insurers were concerned that intensive or long-term psychotherapy would significantly increase premium costs. To alleviate their anxiety, carriers began to exclude or impose limits on coverage for mental health services. These restrictions were implemented and largely unchecked in part because of the existence of stronger public support mechanisms in place for those suffering with mental illness.
Insurance coverage for mental illnesses differs substantially among states, employers, and health care plans. Mental health benefits are generally not as comprehensive as medical and surgical benefits. Insurance coverage for mental illnesses often requires higher deductibles and co-payments, but with greater caps on treatments.
Role of legislation in mental health parity
The current mental health treatment system has been referred to as the "de facto" mental health system largely because of the patchwork system that has developed in the absence of planned leadership. An array of public and private providers offers treatments that vary according to severity and one’s ability to pay. Congress passed the Paul Wellstone Mental Health Parity Act in 1996 to address disparities in treatment and coverage for people with mental illness. This legislation, lauded by mental health advocates, ensured that annual and lifetime limits of health insurance coverage for severe mental illnesses reflect the guidelines set for physical illnesses. The Parity Act did not mandate coverage of mental illness; rather it only required that if an insurance company offered coverage for treatment of mental illness, the coverage had to be the same as that for physical ailments. Further, some compromises were made that allowed employers to shift costs to employees through premiums and co-payments and exempted employers with less than 50 employees and self-insured companies’ plans.
Since the initial passage of the Mental Health Parity Act in 1996, 46 states have implemented their own versions of mental health parity legislation. As the primary payers of mental illness treatments, state and local governments have a vested interest in parity laws as mental health patients increasingly rely on underfunded and overutilized public programs. While various state-based approaches to parity have sought to reduce both public and consumer spending on mental health services, it is clear that a large majority of individuals living with mental illnesses remain largely underserved in their own states and across the United States.
Congress acted again, on October 3, 2008, passing H.R. 1424, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. This bill builds on the 1996 Parity Law to expand insurance coverage and increase financial and treatment parity for mental illness and substance abuse. It also removes the cost-sharing loophole in the 1996 law that allowed insurers to charge higher premiums, coinsurance rates, deductibles, and out-of-pockets expenses for mental health care than those for medical and surgical health care.
Mental Health Parity Act of 2008 is a significant improvement
|Key provisions of the Mental Health Parity Act of 1996||Changes made by the Mental Health Parity Act of 2008||Outcomes|
|Exempted small businesses (fewer than 51 employees) and self-funded "ERISA" plans||Keeps small business exemption, but expands parity to include ERISA plans||No change for workers in small firms.
Expands parity for 82 million individuals in ERISA plans not subject to state parity laws.
|Subject to reauthorization||Removes Sunset provision, making the parity legislation permanent||Stabilizes coverage for individuals with mental illnesses|
|Covered severe mental illness||Expands definition of mental illness to include substance and alcohol abuse||Extends coverage for substance abuse, the second leading cause of disability in North America|
|Required parity in setting lifetime and annual spending limits for physical and mental illnesses||Ensures parity in financial requirements (deductibles, co-payments, out-of pocket expenses), and treatment limitations (number of visits, days of coverage, etc.)||Increased financial parity and coverage for treatment of mental illness|
There is some concern that the influx of people receiving treatment through expanded coverage will increase insurance costs and insurers will pass on the expense to all consumers in the form of higher insurance premiums. To address cost concerns, the bill exempts specific insurers from the parity requirements if their total costs increase by more than 2 percent in their first year or 1 percent each subsequent plan year. Because the Congressional Budget Office estimates that costs will increase by about 0.4 percent as a result of the parity bill, there is little expectation that insurers will need to request this exemption.
Gaps in mental health parity
The Mental Health Parity Act of 2008 has focused national attention on the issue of mental illness and the devastating effect it can have on our most vulnerable populations. While the legislation is a significant step in the right direction, it still does not address the lack of insurance coverage for mental illness. Health care reform, which will continue to be at the forefront of the national debate, must include a discussion of mental health coverage and delivery.
NAMI and the National Council, Coverage for All: Inclusion of Mental Illness and Substance use Disorders in State healthcare Reform Initiatives, June 8th, 2008.
NPR, “Bailout Bill: What Are the Changes?” October 2, 2008
Thomas R. Insel, M.D., “Assessing the Economic Costs of Serious Mental Illness,” American Journal of Psychiatry (June 2008).
Can market-based medicine cure mental illness?
|Point||Counterpoint||The Bottom Line|
|Federal law mandating equal coverage for mental illness is unnecessary and will increase insurance premiums for everyone.||Comprehensive mental health parity legislation prevents insurance discrimination against people with mental illness.||People with mental illness are more likely to be uninsured and forgo treatment because of cost.
The cost of untreated mental illness is estimated to be more than $100 billion each year due to increased hospitalizations, homelessness, and incarceration.
Federal law ensures parity for nearly 82 million people that work for self-insured employers exempt from state parity laws.
|Mental health care is best paid for through Health Savings Accounts that provide incentives for individuals to seek out the most cost-efficient treatment options.||Health Savings Accounts are government subsidies for the private insurance industry, and do not expand coverage or treatment options for the mentally ill.||Health Savings Accounts have high deductibles and offer tax subsidies that provide the most benefit to high-income, healthy individuals.
Like current insurance coverage options, the benefits offered by Health Savings Accounts vary according to different plans, and they have a low take-up rate.
|A shift to an individual market where consumers shop for a plan that best suits their needs would assure equitable mental health coverage and reduce costs through competition.||An individual market would preclude those people with the most serious mental illness from coverage based on an uninsurable pre-existing condition.||Some states that have successfully expanded coverage for people with mental illness have mental health parity legislation that is more comprehensive than federal legislation.
Additionally, the largest cost savings have been in states that include standards for managed care organizations in mental health parity legislation.
The Last Word
“Although the mentally ill have high accident and suicide rates, about 3 out of 5 die from mostly preventable diseases. We’re going in the wrong direction and have to change course.” – Joseph Parks, director of psychiatric services for the Missouri Department of Mental Health and lead author of "Morbidity and Mortality in People with Serious Mental Illness," in a USA Today article.
"Time will tell what the ultimate cost will be. We definitely think it’s in the greater interest of both employers and employees alike, and we think this is a responsible approach to extend mental health parity and mental health coverage." – Neil Trautwein, vice president and employee-benefits policy counsel at the National Retail Foundation, on the Mental Health Parity Act of 2008.