White House May Dilute Mental Health Benefit Rules

Article excerpt

WASHINGTON -- New rules being drafted by the Clinton administration could allow many employers to exempt themselves from a landmark law intended to expand health insurance benefits for millions of Americans with mental illnesses, federal officials and mental health advocates said.

When President Clinton signed the bill, the Mental Health Parity Act, on Sept. 26, 1996, he said it was "morally right" to "require insurance companies to set the same annual and lifetime coverage limits for mental illness" and physical illness.

"No more double standards," he said then. But 10 weeks before the law takes effect, the administration has become embroiled in a bitter dispute over how to enforce it. The White House is trying to satisfy both mental health advocates and employer groups, and that may be impossible. At the moment, the mental health groups are unhappy and are trying to persuade the administration to limit use of the exemption. The law, passed last year with Clinton's support, seeks to curb discrimination in insurance. It says that group health plans may not impose lower limits on mental health benefits than on medical and surgical benefits for treating cancer, heart disease and other physical illnesses. Such disparities are extremely common. A typical employer- sponsored health plan may have a lifetime limit of $1 million on regular medical benefits, but $50,000 on mental health benefits. The law allows an exemption if the new mental health benefits increase the cost of a group health plan or coverage by 1 percent or more. But the law does not define cost, nor does it specify how the exemption process will work. Administration officials said they hoped that most employers would find it easier to comply with the law than to seek exemptions. While administration officials had not made final decisions, they said the new rules would probably allow employers to obtain exemptions by estimating their future costs using 1997 data. Chris Jennings, a White House aide who coordinates health policy for Clinton, said, "We will not set up a new government bureaucracy to review and approve every plan that wants an exemption." Rather, he said, employers can hire actuaries to assess whether their costs will increase at least 1 percent. The administration's approach has infuriated advocates for the mentally ill, psychiatrists, psychologists and some state health officials, who say it will eviscerate the 1996 law. Shelley S. Stewart, deputy director of federal relations at the American Psychiatric Association, said that employers should be required to comply with the law throughout 1998 before being allowed to seek exemptions. "If employers abide by the law," she said, "they will find that it is not as costly as they expect." Sen. Paul Wellstone, a co-author of the 1996 law, said the idea of allowing companies to get exemptions by estimating the costs of compliance was "in direct contradiction to the spirit and letter of the legislation passed last year." In an interview Monday night, Wellstone, a Minnesota Democrat, said: "I know exactly what we intended. This is the law of the land, and companies should live under it. If companies want to come back after a year, and if they can show us empirical evidence that their costs have gone up by X percent, then and only then should they be able to get any kind of exemption. These exemptions should not become a big loophole." But employers, insurers and managed-care companies insist that they should be able to get exemptions based on projections of their 1998 costs. …