Historic mental health parity law passes
Phillip Lubitz is the director of advocacy programs for NAMI New Jersey (National Alliance on Mental Illness).
PND: Can you explain what the new Mental Health Parity and Addiction Equity Act of 2008 says?
PL: The new mental health parity bill affects insurance coverage for the treatment of mental illness and substance abuse for health plans that are regulated by federal law. It says that, for those plans covering more than 50 employees, mental illness must be treated under the same terms and conditions as any other illness. These plans in the past have only had to provide parity in terms of lifetime and annual dollar limits. When this bill goes into effect next October, there will need to be parity in terms of visit limits and copayments for the treatment of mental illness. Parity is also required for out-of-network provider coverage. There’s a sizable number of people who have had limited mental health coverage and, for many of them, this law is really a god-send. It’s going to bring us into the 21st century and provide mental health treatment on par with treatment of any other illness.
PND: A law like this has been advocated for quite some time. How did it pass now?
PL: We’ve been trying to expand coverage for the past 12 years since the passage of the original act in 1996, and a bill generally has had bipartisan support in both houses. It previously had been held up by the House leadership, and when that leadership changed, that removed one of the barriers. There was a real move this year in particular to get this over the final hurdle. Public perception of mental illness has changed over the years. Stigma was one of the main limiting factors in people receiving treatment. Over the past dozen years legislators have become more aware of mental illness as a biological illness, the same as any other illness. They also understand the economic consequences of untreated mental illness a lot better. There was an accumulation of evidence that the cost of providing mental health parity was considerably less than initially anticipated.
Preemption of state law was another issue – the degree to which state law would supersede the federal law. I think there was some concern that a federal law might preempt stronger state laws. There was considerable discussion about that. In the end, the federal parity requirements act as a floor for state laws and don’t preempt state law. The federal law also allows states to regulate how plans define mental illness.
The bill had passed in both the House of Representatives and the Senate but there were some fiscal concerns that had to be resolved. There was some belief that passing this law would result in less tax revenue coming into the Treasury and they had to come up with a way of equalizing that loss. In the interim, the national bailout rescue plan took center stage. Because the parity bill had already passed, and had originated in the House of Representatives, it became a vehicle for attaching the $700 billion Emergency Economic Stabilization Act.
PND: Is New Jersey law stricter – more favorable to patients – than the new federal law?
PL: The federal law is more inclusive than the New Jersey law. New Jersey doesn’t address company size. It covers all plans, including individual plans, but the state’s law applies only to biologically-based mental illnesses – including but not limited to schizophrenia, psychotic disorders, bipolar disorder, major depression, obsessive compulsive disorder and childhood autism. New Jersey law excludes just about everything else. Right now there’s a dispute about the coverage of eating disorders. Recently, Aetna agreed to cover eating disorders under New Jersey’s parity provision. Blue Cross Blue Shield has not. One of the other major illnesses that tends to be excluded is post-traumatic stress disorder. The majority of disorders that children are diagnosed with had been excluded as well, like attention deficit disorder, conduct disorders, explosive disorders. I don’t think alcohol and substance abuse is included in New Jersey’s current mental health parity law. The federal law adds coverage of all of these things for those individuals who are covered under plans that are regulated under federal law.
PND: What are some limitations of the new law?
PL: It doesn’t cover plans of 50 employees or less. My understanding is that it only applies to ERISA plans, and not commercial health plans, although about 40 to 50 percent of people in New Jersey are covered by ERISA plans, including self-insured plans and public employee plans. Any group plan that sees a two percent increase in the cost of benefits during the first year, or a one percent increase in any subsequent year can seek an exemption from the mandate. The Congressional Budget Office estimates the total cost of the new coverage will increase by 0.4 percent. The law also does not apply to the individual health insurance market.
PND: The federal law does not mandate that health plans offer mental health coverage. How important a concern is that?
PL: It hasn’t really been raised as a concern. I think there’s a general understanding that some sort of mental health coverage is important in this day and age. I think employers are in general agreement that mental health coverage is an important coverage that results in a more productive workforce. You’re more than paid back, when you look at productivity. The World Health Organization looks at mental health illness as the number one cause of reduced productivity.
PND: What are specific mental health care challenges faced by New Jerseyans?
PL: Because of stigma, a large number of people still don’t seek treatment. That’s a huge challenge. The availability and reimbursement of practitioners continue to be problems. I think this law will have an impact on that, but it’s a very tough economic environment for practitioners. Although we’ll have parity, there’s still a concern that practitioners are not going to be adequately reimbursed for the services they are providing. This law could start to increase availability of practitioners, but the experience in other places has been that utilization management becomes more prevalent and stricter. For example, when full parity passed in Vermont, an unintended consequence was that utilization decreased.
It’s particularly important that primary care physicians understand the provisions of the new law. Typically, they are the primary prescribers for people with mental illness. The more familiar they can become with the presentation of mental illness, the better off patients in the state of New Jersey will be. For many people, especially because of the stigma of mental illness, they don’t seek out mental health professionals. They’re likely to see their personal physician, though. If they’re ever going to be diagnosed or enter treatment, it’s really going to be a function of their personal physician understanding the presentation of various mental illnesses and acting as a conduit for that person to enter mental health treatment. The new law allows for better coverage of the treatment. It certainly makes treatment more available, from a financial standpoint – you don’t have some of those limitations that in the past have discouraged people from entering treatment. Prior to passage of this law, physicians might have been reluctant to diagnose or recommend treatment for their patients because they knew that insurance companies wouldn’t cover these ailments. This law now allows them to act on their clinical judgment for the benefit of their patients, and have them enter treatment.