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INTRODUCTION

During the last 10 years, 23 states have enacted legislation intended to increase insurance coverage for mental illness. This move toward "parity," or equal coverage for both physical and mental health ailments, follows more than 20 years of diminishing mental health coverage in the private insurance market. In 1993, only 16 percent of employees had similar coverage of inpatient care for mental health and medical; only 4 percent had similar coverage for outpatient care. The trend away from parity started in the 1970s when insurers began to impose limits and cost sharing because mental health costs rose twice as fast as medical costs.

The pressure for parity comes from the need for mental health services and a concomitant drop in funding to meet those needs. During the last 10 years, there has been a 50 percent drop in the portion of our nation's health care dollars that are spent on mental health and substance abuse services. This is the result of cost-cutting measures---such as lowering the limits on mental health coverage in insurance policies---on the part of employers and insurance plans and moving patients into managed care. Advocates for parity call it a civil rights issue and label such cost-cutting discrimination. The growing body of research, showing that mental health disorders are biological and treatable, is used to support the view that there is no reason not to provide equal coverage for such disorders. Employers and insurers maintain that mandating parity raises insurance premiums for all those covered, even though only a small minority benefit. Economists calculate that each time the cost of insurance goes up, more employers stop offering health coverage, and ranks of the uninsured swell.

According to the U.S. Surgeon General, one in five adults will experience a mental health disorder every year. For two-thirds, the condition will be temporary. However, 7 percent of adults and 5 percent to 9 percent of children have serious mental health problems that last for more than a year and about half of those have a chronic illness. Families that are struggling with mental illness that do not have parity in mental health coverage can experience very high out-of-pocket costs or simply be unable to afford the care they need.

Some states addressed the parity issue in response to loopholes in the law Congress enacted in 1996. The Health Insurance Portability and Accountability Act mandated that insurance plans that provide mental health coverage include the same annual or lifetime dollar limits for both mental and physical health. However, companies responded by stating limits in terms of the number of visits or inpatient days rather than in dollars. At the federal level, President Clinton has ordered that all insurance plans participating in the Federal Employee Health Benefits Program have mental health parity by 2001.

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