Mental health parity bill under attack

The Senate in October passed the mental-health parity provision as part of a $396 billion appropriations bill for labor, education and health and human services. But the House’s spending bill did not include any parity measure. A House-Senate conference committee as of last week was working on a compromise, but the provision’s inclusion in the final appropriations bill was in doubt at press time.

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The Senate’s proposed law is an effort to prohibit employers from imposing far stricter rules for coverage of mental-health costs than are applied to other medical or surgical coverage. It would apply only to employers that already offer their employees some form of mental-health benefits. Businesses with 50 or fewer employees would be exempt.

If passed, the measure could affect the health plans – and health-care costs – of dozens of Rhode Island’s largest employers, requiring them to beef up coverage for depression, substance abuse and other mental ailments for thousands of workers in the state.

”It would have a tremendous impact,” said James McNulty, a Rhode Islander and president of the National Alliance for the Mentally Ill. McNulty has traveled to Washington, D.C., several times in recent months to lobby for the parity legislation.

Rhode Island passed its own mental-health parity law in September. But that legislation – and similar parity laws in other states – only applies to plans offered by health insurers.

Larger employers that have self-insured health plans, on the other hand, are exempt from the law via the federal Employee Retirement Income Security Act of 1974 (ERISA), which regulates how companies administer benefits to workers. ERISA rules preempt state laws, so large companies that operate in multiple states can bypass a patchwork of conflicting requirements.

Rhode Island’s biggest employers, including many hospitals, financial-services firms and manufacturers, offer ERISA health plans and are exempt from Rhode Island’s new parity law. While some company plans already offer a degree of parity between coverage for mental and physical illnesses, many do not, McNulty said.

”Some large employers do offer parity despite the fact that they are not mandated to do so,” McNulty said. “But for the vast majority of businesses, their mental-health benefits just aren’t enough.”

Kennedy has taken a lead role in the House’s effort to attach an amendment to its appropriations bill that would include mental-health parity. He has spoken at committee hearings and solicited signatures from House members in support of the provision.

If the parity provision is left out of the final appropriations bill, Kennedy and other supporters will “push hard for hearings next year,” said Mike Zamore, Kennedy’s policy advisor.

Kennedy points to recent reports from the U.S. Surgeon General and the World Health Organization that make no distinction between physical and mental illnesses. And he said businesses save money in the long run by preventing mental afflictions from snowballing into other problems.

”Untreated mental illness costs businesses money in a big way,” Kennedy said. “Rather than paying for it in lost productivity and missed work days, we need to treat the root cause. It’s totally inconsistent for mental illnesses to be treated differently.”

Although the legislation has bipartisan, majority support in both the Senate and the House, lobbyists for large employer groups and the insurance industry have pleaded with the House-Senate committee to closely examine the cost issue.

The committee now is debating the addition of a cost exemption for businesses that could prove their health insurance costs would go up by a certain percentage – possibly between 1 and 2.5 percent – if they were to comply with the proposed law.

The Congressional Budget Office estimates that employers would incur extra costs of less than 1 percent of total health-care expenditures if the Senate version of the bill passes.

Still, that 1 percent increase would cost U.S. businesses $23 billion over five years, according to the CBO estimate. And with health-care costs already climbing by double-digit percentage every year – along with a recession that is cutting into corporate profits – employers are loath to shoulder extra health-care expenses.

Opponents claim the mandate could prompt many large employers to either reduce coverage of medical benefits to bring them in line with mental-health coverage. Or, employers could drop mental-health benefits altogether, thus avoiding the mandate.

”It’s more than likely that the cost of the additional requirements will be borne by employees in the form of higher cost sharing on premiums or lower overall benefits,” said Paul Dennett, vice president of health-care policy at the employer-backed American Benefits Council, which is opposed to the legislation.

Ultimately, an individual employer’s cost increase would depend on its existing health plan, Dennett said: If a company’s health benefits already offer similar coverage for mental and physical illnesses, the cost increase would be negligible. But if it has tight restrictions on mental-illness coverage compared to physical illness, broadening the plan for all employees could cost big money.

Employer groups also say the law is an attempt to dictate how companies administer employee benefits – a discretion that should remain in the private sector, opponents say.

“Most of these companies have generous mental-health benefits and would prefer to keep their benefit designs voluntary rather than mandated by the government,” said Steve Wojcik, director of public policy for The Washington Business Group on Health, which also has lobbied against the law.

Mike Colias can be reached via e-mail at colias@pbn.com