The Body or The Mind? Insurance Parity for Mental Health

Posted on Mar 14, 2013 by Ailee Slater (G+)

A broken arm or a broken heart - which is worse? Probably the arm, but, what about a broken limb versus severe, chronic depression? That question is a little tougher: both ailments may require a hospital stay, prescription drugs, and follow up visits to a physician. It's hard to compare mental and physical health, which may explain the push in recent years to give mental health care the same insurance rights afforded to caring for physical health.

Equalizing physical and mental health coverage is often known as parity. In 2014, mental health parity should get a boost thanks to provisions within Obama's Affordable Care Act. The ACA mandates that, starting next year, more types of insurance plans will be required to cover the cost of mental health care at the same rate as they do physical care; however, this increase in mental health parity has some legislators and insurers concerned - what are the benefits of increasing mental health care, and will more access to mental health services prove a financial burden to insurance companies? A good way to answer that question is by looking at the history of mental health parity legislation. The first parity law wasn't passed until 1996; before that time, insurers had little obligation to cover mental health issues. Whereas minimum requirements from the government obligated insurance companies to cover a certain amount of hospital stays and prescription drug benefits for physical ailments, a person in need of anti-psychotic medication might have to cover the entire cost of those drugs out of pocket. In 1996, however, everything changed.

The government signed into law the Mental Health Parity Act, or MHPA. This legislation required that all large group insurance plans equalize annual and lifetime dollar limits for mental and physical health care. An annual or lifetime limit refers to a cap on insurance coverage; once a patient reaches the limit, the insurer will no longer cover the cost of that care. With the Mental Health Parity Act of 1996, insurance companies had to offer the same financial limits, and therefore promises of care up to that point, for both physical and mental care services. Although the MHPA was a great step forward in terms of improving insurance coverage for mental care, many supporters of mental health parity argued that the legislation didn't do enough. The MHPA didn't give parity to treatment of substance abuse; the bill didn't include small insurance plans; and some insurance plans made up for the financial burden of higher coverage limits by imposing larger co-pays and deductibles for mental health services. In 2008, a supplementary parity bill was passed - The Mental Health Parity and Addiction Equity Act (MHPAEA).

This new act included more insurance plans in its scope, and mandated that along with equal treatment limits, similar financial requirements and calculations must be applied to the cost of physical and mental care. Therefore, when determining the appropriate co-pay for anti-depressants, heart medication, knee surgery or psychiatric tests, an insurance company must use the same criteria to calculate the patient's out-of-pocket cost; regardless of whether the service is physical or mental. The MHPAEA of 2008 also included substance abuse treatment as a part of mental health care, so that any medical or surgical need occurring as a result of substance abuse could be covered at the same rate as treatment for a physical issue. Just last month, a report was released from the Health Care Cost Institute looking at the mental health spending and service usage of the United States from 2007 to 2011. Although the study noted that the influence of the MHPAEA upon results was inconclusive, researchers did find that during these four years, inpatient services for mental health increased, and the per capita cost of mental health care for an average insurance company increased as well. After the passage of the MHPAEA in 2008, out-of-pocket spending from patients for mental health care decreased in terms of percentage.

That report from the Health Care Cost Institute indicates that mental health parity, most likely along with other social and medical factors, is encouraging people in the U.S. to seek more mental health services. This increase in care seems to be costing insurers money, but unfortunately, there is still no firm research as to the ultimate cost of increasing mental health parity further, as the Affordable Care Act intends to do in 2014. In fact, some experts argue that mental health parity will actually reduce costs. Judith Bentkover, academic director of the Executive Master of Health-Care Leadership Program at Brown University, has argued that better services for mental health will be a major financial benefit to the country.

In her essay published last year, Bentkover points out that untreated mental illnesses cost the United States billions of dollars every year in lost wages, homelessness and incarceration. Limiting mental health coverage, according to Bentkover, will only continue the cycle of shame and lack of treatment for mental illness. Increasing parity, on the other hand, will lead to a more healthy populous, and financial benefits to boot. Still, plenty of lawmakers fear the parity regulations of Obamacare, small as they may be in comparison to the 1996 and 2008 mental health parity laws, are just another health care policy destined to create a federal bureaucratic mess and cost the U.S. health system more money. After all, the MHPAEA was passed in 2008 and insurers and lawmakers are still discussing the nuances and definitions of that  legislation. With congress and the president currently involved in heated budget negotiations, there are many provisions of the original Affordable Care Act that suddenly seem less likely to become law; at least, not yet. Lawmakers and health care experts who have fought for years for mental health parity can do little more than hope that come 2014, further parity for mental health care will indeed be achieved.