Senate-Passed Parity Mental Health Bill Ignites Lobbying

The Senate last week passed an expanded version of a 1996 mental health parity law (S 543), legislation that has "touched off an intense lobbying campaign" on Capitol Hill, the New York Times reports (Pear, New York Times, 11/6). The bill, sponsored by Sens. Paul Wellstone (D-Minn.) and Pete Domenici (R-N.M.), would require insurers that provide mental health coverage to offer benefits at the same level as the benefits provided for physical health coverage. In addition, the legislation would ban limits on hospital stays and physician visits for mental health treatment that exceed those imposed for physical health visits and require insurers to charge the same co-payments and deductibles for both mental and physical health services (California Healthline, 8/1). The legislation would affect group health plans sponsored by employers with more than 50 employees. With new research suggesting that many mental illnesses have biological bases and can be treated with drugs, both supporters and opponents of the bill said that the proposal "stands a greater chance of enactment now than at any other time in the last decade," which has prompted their lobbying campaigns.

Employers, insurance companies and some HMOs have lobbied against the proposal, which they predict would "drive up" costs. According to a report released by the Congressional Budget Office, the legislation would increase health insurance premiums by about 0.9% and would cost the private sector $23 billion over five years. The U.S. government would lose $2.2 billion in revenue over the next five years -- $5.4 billion from 2002 to 2011 -- as a result of the bill, "because workers would receive less of their compensation in taxable wages and more in tax-free fringe benefits." Advocates for the mentally ill said that the costs "could be lower" based on results from state mental health parity laws. About three dozen states have enacted different mental health parity laws for state employees, and have found that the costs "have not been significant," with premiums rising less than 1% in most cases. In addition, Wellstone said that the legislation would "save money in the long run" through increased employee productivity and a reduction in the rate of crime committed by individuals with mental illness. However, health plans and employers have raised additional concerns.

Karen Ignagni, president of the American Association of Health Plans, said, "We believe in the importance of mental health benefits, but we oppose the Senate bill because it would interfere with the ability of employers to design and customize health benefits for their employees." The ERISA Industry Committee, a coalition of large employers, has said that bill would "lead to the misuse and overuse of mental health benefits" and would prompt many employers "to comply with the parity mandate by reducing coverage for other medical and surgical benefits, rather than by increasing coverage for mental health benefits." In addition, the General Accounting Office estimated last year that 14% of employers did not comply with the 1996 mental health parity law, which expired Sept. 30. The 1996 law required health plans to provide equal annual and lifetime benefits for mental health and physical health services. However, the Times reports that many companies set lifetime limits of $100,000 or less on mental health benefits and set higher caps for medical and surgical benefits. Many health plans also set higher co-payments and deductibles and lower limits on outpatient visits and days of hospital care for mental health services. Earlier this year, the House passed legislation that would extend the 1996 law, but would not offer the expanded benefits outlined in the Senate bill. House and Senate negotiators must reconcile the differences in conference (New York Times, 11/6).