Bailout Bill Mandates Mental Healthcare Parity

Tuesday, October 7th, 2008
This post was written by Melanie Matthews

Built into the economic bailout bill signed last Friday by President Bush is a mandate for mental healthcare parity. By January 1, 2010, the one-third of all Americans who suffer from depression, addiction, eating disorders and other mental health conditions can expect better insurance coverage for their treatments — payments on a par with those for physical conditions. For the first time, a federal law requires equal coverage of mental and physical illnesses.

Yesterday’s New York Times provided more details on the reimbursement changes, which will require health plans, employers and providers to bring co-payments, deductibles and reimbursement for mental health conditions in line with those for physical illnesses by January 1, 2010:

Most employers and group health plans provide less coverage for mental healthcare than for the treatment of physical conditions like cancer, heart disease or broken bones. They will need to adjust their benefits to comply with the new law, which requires equivalence, or parity, in the coverage.

For decades, insurers have set higher co-payments and deductibles and stricter limits on treatment for addiction and mental illnesses.

Federal officials said the law would improve coverage for 113 million people, including 82 million in employer-sponsored plans that are not subject to state regulation. The effective date, for most health plans, will be Jan. 1, 2010.

The Congressional Budget Office estimates that the new requirement will increase premiums by an average of about two-tenths of 1 percent. Businesses with 50 or fewer employees are exempt.

The goal of mental health parity once seemed politically unrealistic but gained widespread support for several reasons:

  • Researchers have found biological causes and effective treatments for numerous mental illnesses.
  • A number of companies now specialize in managing mental health benefits, making the costs to insurers and employers more affordable. The law allows these companies to continue managing benefits.
  • Employers have found that productivity tends to increase after workers are treated for mental illnesses and drug or alcohol dependence. Such treatments can reduce the number of lost work days.
  • The stigma of mental illness may have faded as people see members of the armed forces returning from Iraq and Afghanistan with serious mental problems.
  • Parity has proved workable when tried at the state level and in the health insurance program for federal employees, including members of Congress.
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