States expand coverage for mental illness; focus on conditions with biological basis

Mental health advocates are celebrating a banner year, with governors in six states recently signing legislation that expands private-sector coverage for mental health care. They credit their successes to years of grass-roots lobbying, but also give the nod to the current tight labor market and recent advances in understanding the biological bases of mental illness.

"If this were 10 years ago, I’d be singing a different song," says Susan Dore, a senior legislative advisor with the National Alliance for the Men tally Ill (NAMI) in Arlington, VA. "We certainly anticipated some wins this year, but I’m surprised it’s this good. And we’re not done."

NAMI is tallying victories in Montana, Virginia, Indiana, New Jersey, Oklahoma, and Nebraska. (See chart detailing legislation, inserted in this issue.) They generally have focused on coverage for serious mental illnesses with a biological underpinning, such as schizophrenia, schizoaffective disorder, major depression, bipolar disorder, obsessive-compulsive disorder, and autism. Advances in medical science that define the causes of such biologically based illnesses and their treatments have made it easier to argue for coverage for these conditions, Ms. Dore says.

In fact, in choosing among two federal mental health parity proposals pending in Congress, NAMI has put its efforts behind a bill—SB 796, sponsored by Sen. Paul Wellstone (D-MN) and Sen. Pete Dominici (R-NM)—that specifically limits parity to biologically based mental health conditions.

"We’ve always been comfortable with the list because we know our folks have the train wreck’ illnesses," Ms. Dore says. Moreover, NAMI expects research into mental illness to expand the number of illnesses that are considered biologically based. "In that sense, it’s open-ended," says Andrew Sperling, NAMI’s director of public policy.

Major insurers maintain their opposition to mandates, no matter how popular or well-intended.

"We can write a policy today and give our clients any kind of insurance coverage they want," says Susan Laudicina, director of state services research for the Blue Cross and Blue Shield Association in Chicago. "Should that choice be made in a state house for them?"

Mental health parity mandates merely reflect what private-sector employers already are doing to expand coverage for mental conditions, says NAMI’s Ms. Dore. While no hard data bear out her contention yet, Roland Sturm, PhD, senior economist for RAND in Santa Monica, CA, takes up the question in a Health Affairs article scheduled for publication this fall.

While mental health parity legislation typically is categorized as offering comprehensive or disease-specific parity, Nebraska this year has offered a third, hybrid option. A bill signed in late May offers parity for all mental health illnesses, but only after the consumer assumes a substantial deductible. It’s an approach NAMI calls "catastrophic parity."

"This is a new breed because it assumes you will spend a few thousand dollars first, and then says after that, no out-of-pocket," Ms. Dore says.

Indiana’s measure also varies from the conventional parity model passed in other states. Because Indiana’s requirement for mental health parity takes effect only if the employer chooses to offer mental health benefits, it is not, strictly speaking, a benefit mandate. Never theless, Ms. Dore says it will serve the same purpose.

"The likelihood of a company greater than 50 offering zero mental health benefits is extremely remote," she says. "This is a good bill."

Next on the horizon for mental health advocates is expansion of parity legislation to cover substance abuse. While most of the state and federal action focuses on mental health, Rep. Jim Ramstad (R-MN) in late May re-introduced a bill in Congress that would expand coverage mandates for substance abuse services.

The cost of adding comprehensively managed substance abuse services to health benefit packages is modest, says RAND’s Mr. Sturm. He’s calculated that removing an annual $10,000 benefit limit for substance abuse services increases annual insurance costs by about $.06 per member per year, while removing an annual benefit limit of $1,000 increases such costs by about $3.40 per member per year.

Contact Mr. Sturm at (310) 393-0411, ext. 6164, and Ms. Dore at (207) 784-6400. Mr. Sturm’s analysis of the costs of substance abuse parity is found in: Sturm R. How expensive are unlimited substance abuse benefits under managed care? J Behav Health Serv Res 1999; 26:203-210.