Circa 2004
Current estimates are that 44 million Americans—15 to 18 percent of the population, including nearly 10 million children—experience significant symptoms from a diagnosable mental illness. In addition, mental health interplays with many physical ailments. It is estimated that 50 to 70 percent of visits to primary care physicians are for medical complaints stemming from psychological factors. Yet many Americans who try to get mental health treatment are shocked to find their insurance coverage for medical illness does not apply for psychiatric and psychological care. Increasingly through the 1980s and 1990s, managed health care plans like HMOs and PPOs began to treat mental health benefits separately from other health coverage through what are called mental health carve-outs.
Carve-outs allow insurance plans to turn mental health benefits over to separate companies, called managed behavioral care plans, to decide the terms of who gets coverage under what circumstances. Managed behavioral health plans attempt to lower costs through a variety of limits. These include higher copayments for mental health care than for medical or surgical care; session limits restricting the number of times patients can visit mental health providers and the number of days they can be hospitalized; and coverage for only a select group of mental health diagnoses, regardless of the symptom severity of other conditions. In the aftermath of 9/11, Americans may have found themselves in mental health carve-outs with no coverage for post-traumatic stress disorder. Other frequent exclusions include such serious problems as anorexia and bulimia, sleep disorders, childhood emotional and behavioral disorders and substance dependence.
Studies of the effects of mental health carve-outs show that some managed behavioral health plans do provide coverage meeting guidelines for appropriate clinical care, but others do not. For example, one study assessed whether hospitalized depressed patients received followup care within 30 days of discharge. In one plan, 92 percent of patients received prompt follow-up, but in another only 32 percent did. In aggregate, evidence suggests that mental health carve-outs lead to increased use of medications and decreased access to psychotherapy. Additionally, mental health carve-outs have been associated in some studies with poorer outcomes for the most seriously ill patients, who with more limited access lose continuity of physician care, are more likely to discontinue critical psychiatric medications and experience higher rates of arrest and incarceration.
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Until the past few years, research indicated that the biggest factor preventing Americans from seeking mental health care was the perceived stigma surrounding mental illness and mental health services. According to a recent survey, however, problems with insurance coverage and costs have now supplanted stigma as the largest obstacle. A report from the U.S. Surgeon General indicates that only one-third of people with diagnosable mental illness receive treatment.
These results are troubling in light of evidence that untreated mental illness presents a dramatic economic and social cost for both the public and for U.S. businesses. In the United States, major depression is the leading cause of disability, and globally four of the ten leading causes of disability are mental illnesses. One three-year study of a large U.S. corporation showed that psychological problems were responsible for 60 percent of employee absences. The indirect costs of mental illness in the United States include lost productivity, lower earnings due to illness and social costs, and are estimated to exceed $113 billion annually.
Consequently, cutting mental health benefits can increase overall medical costs. At one large Connecticut corporation, a 30 percent reduction in mental health services was linked to a 37 percent increase in medical care use and sick leave, thus costing the corporation more money rather than less. Health plans with the greatest barriers to mental health services have higher rates of psychiatric disability claims, and companies with easier access to mental health services have fewer disability claims. Similarly, health care costs for persons with untreated alcoholic and drug addiction are 100 percent higher than for those who receive treatment.
These costs are juxtaposed with demonstrable benefit from mental health treatment. According to the National Mental Health Association, the success rate for treating clinical depression is over 80 percent. Similarly, recent research done by the National Institute on Drug Abuse confirms that substance abuse treatment reduces use by 40 to 60 percent and significantly reduces criminal activity. Studies have also found that overall medical costs decrease for consumers using behavioral healthcare services. For example, when the Kennecott Copper Corporation provided mental health counseling for employees, its hospital, medical and surgical costs decreased 48.9 percent.
Congress took a partial step to address the inequity in the insurance coverage for mental health in 1996 with the passage of the Mental Health Parity Act, although the act was somewhat of a misnomer, as its limited scope did not remove most of the inequalities in mental health coverage. It did not require insurance companies to offer mental health benefits, but it mandated that if they choose to, they cannot place lower total lifetime limits for mental health payments than for physical health payments. Before its passage, the average lifetime mental health benefit cap was $60,000, compared with an average lifetime physical health benefit cap of $1,000,000. Nevertheless, plans may still place other discriminatory limits on mental health care, such as more restrictive caps on annual and lifetime hospital days. Additionally, whereas most medical insurance plans protect enrollees from catastrophic loss by limiting the total out-of-pocket costs for physical health care, most mental health carve-outs have no such protection. The 1996 parity legislation did not address inequities in copayments, deductibles or number of visits allowed. Furthermore, it specifically excluded substance abuse treatment, it exempted businesses with 50 or fewer employees, and it exempted plans that estimated the legislation would cause a one percent or greater increase in health care premium costs.
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Since 1996 a broad coalition of legislators, public advocacy groups, virtually every medical and psychological society throughout the country, and both the Clinton and Bush administrations have called for the passage of further legislation to correct the remaining inequities. Several versions of a more comprehensive bill, the Mental Health Equitable Treatment Act (MHETA), have been introduced. This past session’s bill, named the Paul Wellstone Mental Health Parity Act after the late-senator from Minnesota and long-time mental health champion, was introduced by Senators Pete Domenici (RNew Mexico) and Edward Kennedy (D-Massachusetts) and Representatives Patrick Kennedy (D-Rhode Island) and Jim Ramstad (R-Minnesota).
Had it passed, MHETA would have required health insurers that choose to provide mental health coverage to use the same co-payments, deductibles, and access to providers for mental health benefits as for medical and surgical benefits, without arbitrary differences in the duration of treatment covered. Substance abuse treatment was specifically excluded from the scope of the bill, and the exemption for small businesses was retained. Despite support from a supermajority of 243 House cosponsors and 67 senators, the bill was not allowed to come to the floor for debate in either chamber due to opposition from influentials such as House Speaker Dennis Hastert (R-Illinois); House Majority Leader Tom DeLay (R-Texas); Senate Majority Leader Bill Frist (R-Tennessee); and Senate Health, Education, Labor and Pensions Chairman Judd Gregg (R-New Hampshire).
Opponents cite concerns about the cost of full parity and the notion that it would force insurance companies to cover what they consider fringe mental illnesses of the worried well like fetishism or caffeine withdrawal, because these diagnoses are listed in the standard diagnostic reference for mental disorders called that Diagnostic and Statistical Manual, Fourth Edition (DSM-IV). The Bazelon Center for Mental Health Law charges that these arguments are scare tactics; insurance companies are not “forced” to cover treatments for freckles, corns, baldness, premature graying, flatulence, or first-degree sunburns even though those conditions are listed in a similar widely used diagnostic classification tool for medical disorders known as the International Classification of Disease (ICD-X). Passage of MHETA would still allow insurance companies to limit care for both mental health and physical health diagnoses only to services deemed medically necessary, and all currently used preauthorization and utilization review techniques could be retained to ensure against misuse. Nevertheless, Senators Frist and Gregg have stated that they could support parity legislation only if its scope were limited to severe diagnoses such as schizophrenia, major depression and bipolar disorder, and if it exempted health plans estimating more than a one percent increase in insurance premium costs.
The Congressional Budget Office has estimated that implementing parity would raise health care costs by less than one percent; however, as the insurance industry has seen a 14 to 18 percent annual rise in health insurance premiums in recent years without mental health parity, opponents admit that they are prepared to fight what they consider to be any additional mandates. Parity advocates, conversely, are concerned that inaccurate cost projections might allow health plans unfair exemption from parity provisions if the one percent optout provision were included. Consumers such as Paul Raeburn, former senior writer and editor for Business Week and author of Acquainted with the Night: a Parent’s Quest to Understand Depression and Bipolar Disorder in His Children, argue that one class of illnesses should not be singled out in response to increasing costs. In his personal account of his struggles to gain treatment for his children (excerpted in this issue of ABILITY Magazine on page 20), Raeburn argues facetiously, “How about some other proposals…why not single out something else. Lower the reimbursement for heart attacks in people who are overweight or who smoke…eliminate the coverage for lung cancer, which is almost always fatal, why throw money down that hole? Not one of these proposals makes any sense. Nor does it make any sense to single out psychiatric illnesses for second-class treatment.”
In states that have enacted comprehensive parity legislation, cost analyses suggest that mental health parity is often cost-saving. In Minnesota, Blue Cross/Blue Shield’s insurance premiums fell by five to six percent after one year’s experience under the state’s comprehensive parity law. In North Carolina, mental health expenses have decreased each year since the state enacted parity for state and local employees in 1992. According to the National Mental Health Association, when savings for general medical services and indirect costs are considered, providing mental health coverage commensurate to physical health coverage for all U.S. children and adults would actually amount to a net annual savings of $2.2 billion.
Some observers of the parity debate have suggested that underneath the concerns about cost, residual stigma and misunderstanding about mental illness continue to play a major role in maintaining differential treatment of mental health benefits. In a press conference this past session, Speaker Hastert’s response to a question about parity was, “What mental health condition is at parity with a broken leg?” The Speaker later explained that he was “being facetious,” but many viewed his original comment as a slip (Freudian?) demonstrative of remaining prejudices.
Representative Ramstad, who publicly acknowledges his recovery from alcohol dependence, has specifically separated parity for mental health benefits from parity for substance abuse treatment in the bills he has sponsored. He cites the greater suspicion and stigma surrounding substance abuse treatment, despite its clearlydemonstrated cost-savings. “I think there is a bigger stigma and lack of enlightened views toward addiction diseases than there is toward mental health, although some of that still exists with respect to mental health. There are people who don’t think that depression needs treatment—you just go to church or to synagogue, take your vitamins, do your laps and you should be fine. They don’t understand the nature of the illness.”
Ramstad, already a member of the House Bipartisan Disability Caucus, a working group of legislators striving to raise awareness for Members of Congress and their staffs about issues affecting people with disabilities, also founded the new Addiction, Treatment, and Recovery Caucus, which he co-chairs with Patrick Kennedy. The caucus has around 40 members and aims to promote awareness and dispel myths about chemical addiction and to increase support for greater access to treatment. “I have been a recovering alcoholic for 23 years,” Ramstad explains, “and I have people coming up to me and saying, ‘You know we really respect you, Jim, for your own personal recovery, but we don’t believe that it’s a disease. We think it is a moral failure.’”
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Knowing that inclusion of substance abuse benefits might jeopardize passage of mental health parity legislation, authors of the Paul Wellstone Mental Health Parity Act excluded substance abuse treatment from the legislation, but did include a study to show the cost-effectiveness of treatment. Ramstad explains, “It’s a foot in the door if we get mental health parity passed along with the study. All of the studies—the Rutgers study, the California study, the Minnesota study, the RAND Corporation study, the Columbia University study—show that for every dollar that you spend for chemical dependency treatment, you save 12 dollars in costs, whether it’s prison cells or health care costs.”
Ramstad is frustrated that opponents in Congress and the business community won’t look at the empirical data about cost-effectiveness of mental-health treatment. “I love the people in the Chamber of Commerce—they are good people—but they are really off-base on this issue. They believe it’s going to be very costly to business, and they don’t have any real studies, any academic studies to justify what they are asserting in terms of cost increases. They have these phonied-up, overnight studies done by Ajax Research, Inc., or whatever. It’s not doing a lot to enhance the public discourse on the issue.”
With wide bipartisan support for MHETA, supermajorities in both chambers of Congress, support from the White House, broad consensus from Americans that they want and are willing to pay for more equitable mental health coverage, and positive cost-effectiveness experiences for mental health parity at the state level, the question remains why key House and Senate leaders continue to stand in the way of a comprehensive mental health parity bill. Senator Frist’s office initially agreed to respond to several questions from ABILITY Magazine regarding his remaining objections to MHETA and the bill’s failure to reach the Senate floor for a vote, but even with repeated calls no reply was received. The unfinished dilemma of mental health parity will have to wait for the next Congressional session.
by Gillian Friedman, MD
