States Falling Short in Plans to Cover Children with Severe Mental Illnesses Under Landmark Health Insurance Program

Posted on November 18, 1997

Washington, D.C. - Discrimination against children with severe mental illnesses may persist under the federal government’s new health insurance plan for children, suggests a study released today that examines existing mental health coverage in 16 states.

Conducted by the Hay Group of Washington, D.C., for the Coalition for Fairness in Mental Illness Coverage, the study looked at the degree to which states are prepared to provide adequate mental health coverage under the State Child Health Insurance Program (SCHIP), which was passed by Congress in August and became effective October 1, 1997.

Although all the states surveyed provide some level of coverage, states vary widely in actual mental health benefits offered, the study found. No state plans are providing health insurance benefits for mental illnesses equal to those provided for physical illnesses. Essential services, including inpatient hospitalization and outpatient treatment, are not provided by every plan, nor are they provided at the same levels as services for other medical conditions.

"It’s now up to the states to fulfill the promise of this important initiative that finally ends discrimination against the children of hard-working, uninsured families," said Laurie Flynn, executive director of the National Alliance for the Mentally Ill (NAMI), which is a member of the coalition that sponsored the study. "States have a moral responsibility to ensure that the coverage they select doesn’t permit our kids with serious illnesses to once again fall through the cracks."

NAMI points to study findings that many of these plans discriminate specifically against the most severely ill children. For example, one of the plans in Utah requires a 50 percent copayment after 10 days of inpatient treatment. In any given year, a child diagnosed with schizophrenia commonly requires more than 10 inpatient days.

To qualify for federal funding under SCHIP, a state must provide health insurance coverage for uninsured children that is equivalent to one of three "benchmark" plans: the Federal Employees Health Benefits Plan; a state’s health plan for employees; or the largest health maintenance organization in the state. A state may also expand benefits provided under its Medicaid program or develop its own unique plan that is actuarially equivalent to any of the benchmark options.

NAMI plans to use the report findings to advocate at the state level for adequate and equitable health coverage for children with severe mental illnesses. "Getting this important information about the various approaches out to NAMI’s grassroots is a top priority," Flynn said.

The new State Child Health Insurance Program is also subject to the Mental Health Parity Act of 1996 that requires annual and lifetime coverage limits for mental illnesses to be identical to those provided for other disorders. Uninsured children will receive additional protection under this new measure, which becomes effective January 1, 1998.

With more than 168,000 members, NAMI is the nation’s leading grassroots organization solely dedicated to improving the lives of persons with severe mental illnesses, including schizophrenia, bipolar disorder (manic-depressive illness), major depression, obsessive-compulsive disorder, and other anxiety disorders. NAMI has more than 1,140 state and local affiliates in all 50 states, the District of Columbia, Puerto Rico, and Canada. NAMI’s efforts focus on support to persons with serious brain disorders and to their families; advocacy for non-discriminatory and equitable federal, state, and private-sector policies; research into the causes, symptoms, and treatments for brain disorders; and education to eliminate the pervasive stigma surrounding severe mental illness.