Why Did The Mental Health Parity Act Refuse To Address The Insurance Needs Engendered By Substance Abuse Disorders?

ONE80CENTER respects and continues to support the Mental Health Parity Act of 1996, but we also believe that more needs to be done to truly give teeth to the law and make it effective. Even with later updates implemented by the Paul Wellstone and Pete Domenici Mental Health and Addiction Equity Act (MHPAEA), substance abuse disorders remain the second-class citizens of the country of mental health. Although MHPA was a landmark bipartisan act that received unprecedented support from both Republicans and Democrats, it was devoid of truly revolutionary help while ignoring completely addiction and alcoholism as valid examples of mental health problems.

Republican Senator Pete Domenici

Signed into law by President Clinton in 1996, the Mental Health Parity Act ended decades of discrimination. The act legislated against the long-held practice by insurance companies of providing less coverage for mental illnesses or brain disorders when compared with equally serious physical disorders. The reason physical is in italics is because it was passed off as gospel for so very long that mental illnesses were a personality problem based in individual weakness as opposed to the reality of an actual illness of the body. At ONE80CENTER, we believe that addiction and alcoholism are real diseases, allergies of the body and neural imbalances that have both genetic and environmental components.

However, what was revolutionary about MHPA in 1996 is that it equated both annual coverage limits and lifetime coverage limits of mental health benefits with medical and surgical benefits. In other words, prior to the Mental Health Parity Act, typical caps caps for mental illness coverage are $50,000 for lifetime and $5,000 for annual, as compared with $1 million lifetime and no annual cap for other physical disorders. From the perspective of ONE80CENTER, a major problem with the original body of the law is that it failed to cover treatment of substance abuse or chemical dependency. In addition, the original law applied only to employers that offer mental health benefits; it did not mandate such coverage.

No Coverage For Substance Abuse Disorders

Another problem was that the original law integrated many cost-shifting mechanisms, such as adjusting limits on mental illness inpatient days, prescription drugs, outpatient visits, raising co-insurance and deductibles. What was even more disturbing was how the law allowed insurance companies to modify the definition of medical necessity. For example, in certain outpatient treatment cases, costs actually increased on account of the Mental Health Parity Act. Outpatient treatment was not classified as a medical necessity. Is a sober living outpatient or inpatient under such a definition?

The law also had a small business exemption that excluded businesses with 50 employees or less. Finally, if a business found that the parity implementation led to a 1% or more rise in costs, the law actually allows them to exempt themselves from the provisions. After the law went into effect, the White House and the Office of Management and Budget (OMB) ruled that employers must first comply with the law in 1998 and develop a cost history of at least six months before seeking an exemption. The regulations required employers using the exemption to notify all plan participants and the appropriate enforcement government and institutional authorities.

Immediately after MHPA was enacted, insurers and employers began finding ways to circumvent the legislation by imposing maximum numbers of provider visits and caps on the number of days an insurer would cover for inpatient psychiatric hospitalizations. Another problem was the law had little or no effect on mental health coverage by group insurance plans. By emphasizing cost sharing, higher co-pays, deductibles, and out-of-pocket maximums were used by insurers to neuter the law.

Insurance & Treating Co-Occurring Disorders

Later, the Mental Health Parity Act was largely superseded by the Paul Wellstone and Pete Domenici Mental Health and Addiction Equity Act (MHPAEA), which was passed as rider legislation on the Troubled Asset Relief Program (TARP). Ironically, President George W. Bush, a conservative Republican, signed the MHPAEA into law in October 2008. Prior to MHPA and similar legislation, insurers were not required to cover mental health care and as a result access to treatment was limited, underscoring the importance of the act.

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) was enacted in October of 2008. Although the main purpose of MHPAEA was to fill the loopholes left by the MHPA, it did not go far enough. The act requires health insurers as well as group health plans to guarantee that mental health benefits are not more restrictive than the insurer’s restrictions for medical and surgical benefits. MHPAEA forced the removal of the loopholes and circumventing measures, but the act only applies to insurance plans for public and private sector employers with over 50 employees.

What was most intriguing to the clinical staff at ONE80CENTER was that MHPAEA mandated that insurers define and make available specific criteria for medical necessity when it comes to mental health and substance abuse disorder benefits. The act made sure to include substance abuse disorders on a level ground with other mental health issues. Although it did not go far enough to guarantee treatment for substance abuse disorders for Americans with insurance coverage, the MHPAEA definitely was an improvement over the original deficiencies of the Mental Health Parity Act.