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Managing America: Health & Safety

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Week Ending September 21, 2007

S.558 A bill to provide parity between health insurance coverage of mental health benefits and benefits for medical and surgical services.

The bill increases access to mental health benefits for Employee Retirement Income and Security Act beneficiaries by requiring group health plans that provide medical and surgical benefits and mental health benefits ensure that financial requirements for the mental benefits (including substance abuse treatment and including in and out of network coverage) are no more restrictive than those of medical and surgical benefits. The bill requirements would not apply to plans that do not include mental health benefits or employers who employ fewer than 50 employees.

The financial limitations to be considered include deductibles, copayments, coinsurance, out-of-pocket expenses and annual or lifetime limits on coverage. Group health plans would not be permitted to establish separate cost sharing requirements that are only directed at mental health benefits.

Treatment limitations for mental health benefits such as limits on the number of visits, days of coverage and similar restrictions must also be equal to other coverage in terms of frequency of treatment and other limits on the scope of coverage.

Group health plans, however, are not prohibited from negotiating separate reimbursement or provider payment rates and service delivery systems for different mental health benefits, managing the providing of mental health services to provide medically necessary treatments as a means to contain costs and improve quality of care, or taking into consideration similar treatment settings or treatments when applying the mental health provisions in a policy. A group health plan may elect to be exempt from the requirement for the following plan year if it is projected that it will experience increased actual total cost of coverage with respect to medical, surgical and mental benefits that exceed 2% of the actual total plan costs during the first plan year and more than 1% in subsequent years.

The bill comes from the insight that mental disorders are a leading cause of disability in the US but has a high rate of successful treatment. The bill estimates that 26.2% of Americans 18 and older suffer from a diagnosable mental disorder in any given year (57.7 million nationwide). 217 million days of work are lost yearly due to productivity decline related to mental illness and substance abuse disorders at a cost to employers of $17 billion.

The bill would guarantee mental health parity to 87.4 million employees who are self-insured and 31 million covered by insurance.

Congress required in 1996 legislation that health plans could not treat mental health differently from medical illnesses with regard to annual and lifetime limits on coverage, but beneficiaries still faced the restrictive financial requirements and treatment limitations that this bill aims to overcome.

A study is required in 2 years to evaluate the impact of the bill on the cost of and access to health insurance coverage, the quality of health care, the impact on benefits for mental and substance abuse coverage, the impact on State mental benefit laws and the impact on the business community and Federal government.

The Departments of Labor and Health and Human Services are authorized to audit health plans for compliance.

The bill would result in higher premiums paid for employer-sponsored health benefits, the CBO concludes. Those higher premiums would result in more employee compensation paid as a nontaxable employer-paid premiums rather than in taxable wages.

Sponsor:  Senator Pete Domenici (R-NM)

Vote: Passed Senate by Unanimous Consent September 18, 2007

Cost to the taxpayers: “Federal income and payroll tax revenues would decline. The Congressional Budget Office (CBO) estimates that the proposal would reduce Federal tax revenues by $1 billion over the 2009-2012 period and by $3 billion over the 2009-2017 period. Social Security payroll taxes, which are off-budget, would account for about 35 percent of those totals,” CBO said.

Earmark Certification:   Not applicable to this bill

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