Mental Health Parity Act Passes Congress

Published December 1, 2008

Mental health legislation served as the vehicle for the highly publicized $700 billion Troubled Asset Relief Program passed by Congress and signed into law by President George W. Bush (R) at the beginning of October.

House Resolution 1424, the “Paul Wellstone Mental Health and Addiction Equity Act” (named after the late Senator Paul Wellstone (D-MN), who fought for so-called mental health parity during his legislative career), amends the 1974 Employee Retirement Income Security Act to require businesses with 51 or more employees who offer mental health coverage as part of their group health plans to cover mental health at the same level as physical health.

The legislation does not require employers to offer mental health coverage but requires parity, including total coverage and the size of copayments, if that coverage is offered.

The Senate made HR 1424 the vehicle for the financial bailout package for two reasons.

First, the U.S. Constitution requires all budget legislation to originate in the House of Representatives. Having passed the House on March 5 and been added to the Senate legislative calendar on March 8, HR 1424 met that requirement.

Second, the Senate attached the bailout legislation to the mental health parity bill to provide an incentive for House Democrats who originally voted against the bailout legislation to change their votes. The Mental Health and Addiction Equity Act was extremely popular among House Democrats, with 221 voting in its favor this spring.

The legislation, which will take effect on January 1, 2010, requires the U.S. Department of Labor to submit biannual reports to Congress on group health plan compliance.

Unintended Consequences

Andrew Sperling, director of legislative advocacy for the National Alliance on Mental Illness, called the legislation “the culmination of a 15-year effort” in a release.

But some experts say the new parity law will have unintended consequences that could include increasing the number of uninsured Americans.

“Congress just voted to increase the cost of insurance, and—by extension—the number of uninsured Americans,” said Michael Tanner, senior fellow at the Cato Institute. “The Congressmen who voted for this should be forever disqualified from whining about the plight of the uninsured.”

Coverage Cuts Likely

Analysts say the additional burden imposed by the legislation may cause employers to drop mental health coverage from their employee health plans.

Paul Gessing, president of the Rio Grande Foundation, said, “The Mental Health Parity Act will unnecessarily drive up the cost of health insurance. More expensive health insurance means that more businesses will increase their insurance premiums or drop their insurance altogether, resulting in an increase in the number of uninsured.”

“The problem with mental health parity is that mental illnesses do not have objective standards for diagnoses like physical illnesses,” said Devon Herrick, Ph.D., a senior fellow at the National Center for Policy Analysis. “Thus, fraud and abuse are likely to become a problem, leading employers to seriously consider dropping mental health coverage altogether from their group plans.”

“Employees will have less access to mental health benefits,” Gessing predicted, “all because the federal government thought it should use more regulation to ‘fix’ something that isn’t broken.”

“Supporters of the mental health parity measure claim that millions of people who suffer from mental illnesses but never had the coverage to get treatment will benefit from this new mandate,” said Greg Scandlen, director of Consumers for Health Care Choices at The Heartland Institute. “Yet the Congressional Budget Office claims the expanded coverage will cost employers only pennies on the dollar per policy.

“Both things cannot be true,” Scandlen continued. “Then again, when have the folks in Washington correctly estimated the cost of their high-minded, unintended-consequence-riddled programs?”

Jeff Emanuel ([email protected]) is research fellow for health care policy at The Heartland Institute and managing editor of Health Care News.

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HR 1424, the Paul Wellstone Mental Health and Addiction Equity Act::