Q I thought that when the new Mental Health Parity Act went into effect next month, many of the economic problems that parents of children with mental illnesses have been facing in terms of paying for treatment would finally come to an end.
Over the past few weeks, however, I've been reading newspaper reports that suggest that the Mental Health Parity Act may be applied in such away that it may not really make a difference in many cases. What's going on?
A At present, many health insurance policies provide for a different yearly- and lifetime-benefit maximum for the treatment of mental and physical illnesses. I recently reviewed a traditional health insurance policy, for example, that provided for a million dollars in coverage for the treatment of physical illnesses such as cancer or heart disease, but that limited coverage for the mental illnesses to a $90,000 lifetime maximum.
That lack of "parity"--of equality of benefits for the treatment of both mental and physical illnesses--can obviously create serious economic problems for individuals with mental disabilities and their families, particularly in cases in which the maximum benefit for the treatment of mental illness has been reached.
A step forward
The Mental Health Parity Act, a federal law passed in October 1996 and scheduled to go into effect in January 1998, is an important step forward The act is limited in scope: It does not affect deductibles or co-payments, does not require that health insurance policies offer coverage for the treatment of mental illness, and applies only to large group plans. However, it does prohibit differences in coverage for the treatment of mental and physical illnesses in terms of both yearly- and lifetime-benefit maximums.
In addition, the Act represents the first acknowledgment by the federal government of the importance of parity. However, the Mental Health Parity Act included one provision that generated a great deal of concern at the time the law was passed. That provision stated that if a company could demonstrate that the application of the Act resulted in increased costs of one percent or more, the company might be exempt from the Act's requirements.
The news reports you refer to in your letter refer to the discussions regarding the federal regulations that will govern the application of that one percent exemption. My expectation --and the expectation of many other people, I think--was that the one percent exemption provision would come into effect only if the actual costs of applying the Mental Health Parity Act were one percent or more in a particular case, and only after extensive review of the data by the federal government. …