Mental Health Benefits Financed by Employers

Article excerpt

Mental health benefits financed by employers

Although most employer-financed health insurance plans cover mental disorders, benefits have traditionally been more restricted than for other illnesses. Coverage for mental disorders is usually for shorter periods and maximum dollar benefits are often lower. Also, plans commonly pay a smaller share of mental health care expenses.

These differences are more pronounced for outpatient mental health care. Coverage of mental health care in a hospital is the same as for other types of hospital care for four-tenths of the employees in medium and large private firms; outpatient mental health care is almost always subject to stricter limits than other illnesses.

Several reasons are commonly advanced for treating mental health care differently than other types of medical care. One reason is that mental disorders are not as easy to define as other illnesses.1 Also, mental health problems can be subjective, with treatment continuing for an indeterminant period than when confinement is caused by other illnesses. These characteristics are often extended to outpatient care, when treatment may be highly elective on the part of the health insurance subscriber.2

This article is based on data from the Bureau of Labor Statistics' 1985 survey of benefits for full-time employees in medium and large firms. A sample of approximately 1,500 establishments yielded information on the detailed provisions of more than 2,200 health insurance plans either fully or partially financed by employers. The statistical universe covers 43,000 firms employing more than 23 million people.3

Mental health care coverage

Prior to the 1940's, treatment for mental disorders was usually provided only in State mental hospitals. Most general hospitals had little, if any, psychiatric facilities. Health insurance carriers, which emerged in the late 1930's, confined benefits to nonpsychiatric illnesses or disabilities. Consequently, mentally ill patients, who might require extended periods of hospitalization, were excluded.

After World War II, general hospitals opened onsite psychiatric clinics and added psychiatrists to their staffs. These developments prompted commercial insurance carriers to include hospitalization coverage for mental illness.

Another factor in the growth of mental health benefits was the adoption of State laws mandating inclusion of mental care in health insurance policies offered by commercial carriers. By 1984, more than half of the States had enacted such statutes.

Blue Cross and Blue Shield plans followed commercial carriers into the mental health care field. Historically, Blue Cross and Blue Shield organizations had very few member hospitals with psychiatric facilities, but they began to expand their coverage because of greater integration of psychiatric and medical care.4 By 1971, all Blue Cross and Blue Shield plans provided mental health coverage in their hospital and medical benefits.5

In the 1950's, outpatient mental health coverage was introduced by commercial carriers; by the late 1960's, it was widespread in plans funded both by commercial insurers and Blue Cross and Blue Shield. Initially, this coverage provided the same level of benefits as for nonpsychiatric ailments. Soon, however, insurers placed limits on outpatient mental care to avoid paying for treatment that might continue for an indefinite period.

The pattern set in the 1950's remains very much in evidence. Outpatient mental health care generally has special limitations on coverage, while for some employees, inpatient mental care has the same coverage as for other ailments. In almost all health plans, coverage has been expanded to include some outpatient mental health care.6

An overview of coverage patterns, 1980-85

The 1980-85 employee benefit surveys document the extent to which health insurance participants in medium and large firms have coverage for mental disorders. …