TWO MORE STATES ENACT PARITY LAWS

Volume 28, Issue 483 January 22, 2007

Sarah Steverman

The number of states with some sort of mental health “parity” law rose to 42 late last year as legislators in New York and Ohio passed two bills. Parity laws require that mental illnesses be covered by private insurance to the same extent as other illnesses, though there is great variation among states in the extent to which they require insurance companies to cover mental illness.

Former New York Gov. George Pataki signed Timothy’s Law, named for a 12-year-old boy who committed suicide in 2001. The law requires that all private insurance policies have the same deductibles, number of office visits, number of inpatient visits and co-payments for mental health disorders as for other illnesses. The statute also requires that private plans provide at least 30 days of inpatient and 20 days of outpatient mental health care per year.

In Ohio, outgoing Gov. Bob Taft signed his state’s first mental health parity bill (SB 116) on Dec. 29. Passed after years of lobbying by advocates, the Mental Health Parity Act mandates that coverage provided for seven “biologically based mental illnesses,” such as schizophrenia and bipolar disorder be on par with those for physical conditions.

Many small business owners have long opposed mental health parity laws, charging that the mandates will raise premiums and make it even more difficult for them to provide health insurance. The business owners also say it’s unfair to pass mandates that apply almost exclusively to them: corporations that self-insure, individual policies, and state and federal programs are often exempt.

Advocates argue that people with mental health needs have a right to the same benefits as those with physical health needs. They also contend that mental health benefits are cost-effective because they improve worker productivity and reduce the number of missed work days. “We believe that covering mental health illnesses will…actually save costs in the long run,” said Ohio Sen. Robert Spada. In New York, advocates say parity will cost employers an additional $1.26 per employee per month.

Regardless, both laws contain provisions designed to allay small businesses’ fears. Neither state requires coverage of substance abuse treatment, nor of post traumatic stress disorder. Timothy’s Law requires the state to foot the bill for additional costs incurred by businesses with fewer than 50 employees; the Legislature allocated some $50 million to cover those costs. In addition to limiting the number of mental illnesses covered, the Ohio statute allows employers to opt out of providing parity if they can prove that the mandate has caused their health insurance costs to increase by more than 1 percent over six months.

At the federal level, the Mental Health Parity Act of 1996 offers limited parity for the treatment of mental health disorders. The statute does not require insurers to offer mental health benefits, but states that if mental health coverage is offered, the benefits must be equal to the annual or lifetime limits offered for physical health care. It also does not apply to substance use disorders, and businesses with fewer than 26 employees are exempt. Several more comprehensive parity bills have been introduced but none have been enacted.

Many states have adopted statutes that are more comprehensive than the federal law. Idaho and Wyoming are the only states that do not have any parity or mandate laws.