A BRIEF HISTORY OF MENTAL HEALTH PARITY POLICY

The following is an excerpt from: The History of U.S. Federal Mental Health Policy, also posted on this blog.

The 1980's saw employers’ mental health insurance costs rise an average of 60 percent per year (England and Vaccaro, 1991; Washington Business Group on Health, 1996). The resulting typical benefit design--matching the minimums set fourth in the federal HMO Act and its amendments--was patently discriminatory. 

Compared to benefits for physical health therapies, benefits for behavioral health therapies typically had higher deductible, copayment and coinsurance requirements; lower limits on the number of outpatient visits and hospital days covered in a given year; and more austere care management guidelines. This remained the case even though it has never been clear whether managed behavioral health care produces more savings than is created by the initial expense reduction from imposing managed care on a system or population anew. (See Goldman et al. 1998, for example.)

The Mental Health Parity Act of 1996 (P.L. 104-204), which was signed by President Bill Clinton, began to correct these inequities by prohibiting disparate annual or lifetime limits on coverage for mental health and general health care. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, which was signed by President George W. Bush and included in the Emergency Economic Stabilization Act of 2008 (PL 110-343), took this even farther. Primarily, it prohibits the discriminatory practices noted above. Moreover, in contrast to most state parity regimes, the Act extends parity requirements to all conditions in the latest issue of the Diagnostic and Statistical Manual of Mental Disorders (currently in its 5th edition), including addiction. Additionally, out of network parity is made compulsory.

Importantly, the Mental Health Parity and Addiction Equity Act (or MHPAEA) does not mandate mental health coverage. Instead it sets benefit parameters which are only in force IF mental health coverage is offered. Also worthy of note are two categories of exemptions. The first is of businesses with fewer than 50 employees. The second exemption applies to business that can show an actuarially certified 2 percent increase in healthcare costs in the first year, or a 1 percent annual increase thereafter (P.L. 110-343).