New Federal Report Reconfirms Affordability of Equal Health Insurance Coverage for Mental Illnesses

Posted on July 15, 1998

Washington, D.C. - The latest federal report on the costs of health insurance for mental illnesses, issued today by the National Advisory Mental Health Council, tells us, once again, that mental illnesses can be covered in health plans the same as other illnesses without breaking the bank. We cannot, in good conscience, allow families struggling with mental illness to continue one day longer without the protection afforded to others with equally debilitating physical illnesses.

The report, Parity in Financing Mental Health Services: Managed Care Effects on Cost, Access and Quality, concludes that full parity increases total healthcare costs less than 1 percent a year under managed care. The study also finds that plans implementing parity in conjunction with managed care could actually reduce costs substantially – by as much as 30 to 50 percent.

In addition to once again documenting that parity is affordable, this new study also provides us with new insight into how managed care is changing the ways adults and children with serious brain disorders access treatment. For example, the study finds a wide range of variability with respect to key access and quality measures in managed care plans that specialize in serving people with severe mental illnesses. The study also finds that limited access to treatment has the potential to increase costs through increased absenteeism, decreased productivity, and performance problems.

Despite the reassuring findings of this report, we are dismayed that most insurers still place severe restrictions on services for mental illnesses and impose unrealistic spending caps for treatment needs. Some offer no coverage at all.

Furthermore, it appears that protections for employees who desperately need insurance for the treatment of mental illness have eroded to an alarming degree. The Hay Group, an actuarial and benefits consulting firm in Washington, DC, recently released a study that showed that behavioral healthcare benefits have been slashed 670 percent more than general healthcare benefit costs over the past 10 years (1988-1997). And while the value of general healthcare benefits has declined 7 percent in that period, the value of behavioral health care has declined 54 percent.

Enactment of parity legislation at the federal and state level sent a strong message that discrimination against people with mental illness must finally end. In total, 19 states have enacted laws that prohibit health insurance discrimination against people with mental illness: Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Indiana, Maine, Maryland, Minnesota, Missouri, New Hampshire, North Carolina, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, and Vermont. In addition, the federal Mental Health Parity Act of 1996 requires all group health plans with 50 or workers to have equal annual and lifetime dollar limits for mental and physical illnesses.

While we have made great progress in pursuing parity legislation, much more needs to be done. This latest independent study – from the government’s foremost scientific institution – is proof, once again, that the arguments of parity opponents regarding cost, quality and access are simply wrong.