Opponents argue that increased coverage offered by parity reduce the price paid by consumers and create a moral hazard that consumers will take advantage of greater affordability and availability of benefits to overuse their benefits, even though there may be significant cost increases to the insurer—and ultimately to themselves.10 Businesses argue that mandated benefits affect the labor market by lowering wages, since wages would fall in order to offset the rising cost of employee benefits. Increased moral hazard, they say, could lead benefit costs to spiral out of control.
Parity proponents counter that untreated mental health disorders increase direct and indirect costs borne by businesses and society through premature mortality, absenteeism and lost productivity due to illness and family care giving, and governmental public assistance and disability claims. Actuarial projections and a growing body of research evidence even suggest that, with managed care in place, mental health insurance coverage may be increased without significant cost increases.2
Effective January 1, 2010, the 2008 Mental Health and Addiction Equity Act:
• Applies to employers with 50 or more employees (the previous small employer exemption remains in place).3
• Requires group health plans that provide MH/SA benefits to do so at parity with medical/surgical benefits.
• Eliminates deductibles, co-payments, or out-of-pocket limits that apply only to MH/SA benefits.
• Corrects “out of network” disparities, stating that plans must offer “out of network” MH/SA benefits at parity with medical/surgical benefits.
• Requires that when states have existing parity requirements, they must now apply the stronger of the two (federal vs. state) parity definitions. In other words, states may not “reduce” their existing parity requirements to comply with the new federal requirements.
The United States is on the verge of creating equality among illnesses, yet questions of cost and cause cloud the issue. Insurers need to review the results that disagree with their contention that parity will increase costs. If managed effectively, costs to payers will either remain static or actually decrease. Science will undoubtedly find biological correlates to mental illness and substance abuse, so it is only a matter of time until MH/SA conditions are recognized as biologically-based illnesses. In many ways, the real issue remains the fear and stigma that accompany mental illness. The net result of full mental health and substance abuse parity—if the regulations are a step forward from the 1996 Act—will be a victory for every constituency.
Stephen A. Odom, MS, MFT, is CEO of Southern California Recovery Consulting in Newport Beach, CA.
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