Mental Health Parity: Federal and State Action and Economic Impact (CRS Report for Congress)
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| Release Date |
Revised June 19, 2008 |
| Report Number |
RL31657 |
| Report Type |
Report |
| Authors |
Ramya Sundararaman and C. Stephen Redhead, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
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Summary:
In the 110th Congress, the Senate and House have passed different versions of expanded mental health parity legislation (S. 558 and H.R. 1424). These bills have always been strongly supported by advocates for the mentally ill and have had broad, bipartisan support in Congress. Although employers and health insurance groups opposed the legislation in the past because of concern that it would drive up costs, the provisions in S. 558 now have their support. Expanded parity legislation was introduced in the 107th, 108th, and 109th Congresses, but each time it failed to pass.
Private health insurers often provide less coverage for mental illnesses than for other medical conditions. Historically, health plans have imposed lower annual or lifetime dollar limits on mental health coverage, limited treatment of mental health illnesses by covering fewer hospital days and outpatient office visits, and increased cost sharing for mental health care by raising deductibles and copayments. The lack of parity (i.e., equivalence) in part reflects insurers' concerns that mental disorders are difficult to diagnose, and that mental health care is expensive and often ineffective. However, the 1999 Surgeon General's report on mental health concluded that mental illnesses are largely biologically based disorders, like many other medical conditions. It found that effective treatments exist for most mental disorders.
Differences in insurance coverage of mental illnesses and other medical conditions are also the result of economic factors. Studies indicate that demand response of mental health patients to reduced cost sharing is approximately twice as large as that observed in general medical care. Partly as a consequence, insurers impose higher cost sharing for mental health. Insurers have also restricted mental health coverage to protect themselves against adverse selection (i.e., the tendency for plans with generous mental health coverage to attract patients with mental illnesses that are costly to treat). Health plans frequently subcontract management of the mental health component of their benefits to specialized managed behavioral health care organizations (MBHOs). Recent studies have shown that there is no significant increase in mental health costs to the insurer when parity is implemented in the context of managed care. Despite this finding, introduction of managed behavioral health care, and passage of state parity laws, mental health coverage continues to be subject to more limitations and higher cost sharing than coverage of other illnesses. Some analysts argue that parity alone is not sufficient to guarantee equal access to quality care and equal financial protection for people with mental disorders.
Twenty-eight states have laws that mandate full-parity mental health coverage, though these laws do not apply to self-insured group plans. In 1996, Congress enacted the Mental Health Parity Act (MHPA), which is more limited in scope and does not compel insurers to provide full-parity coverage. For group plans that choose to offer mental health benefits, the MHPA requires parity only for annual and lifetime dollar limits on coverage. Group plans may still impose more restrictive treatment limitations and cost sharing requirements on their mental health coverage. On June 17, 2008, the President signed into law (P.L. 110-245) the extension of MHPA through 2008.
