(To request a bound copy of this report, click here.
To see a complete list of fund reports, click here.
Be sure to specify which report you want,
your name, mailing address and phone number.)
ForewordThe Milbank Memorial Fund is an endowed national foundation that supports nonpartisan analysis, study and research on significant issues in health policy. Most of the Fund's work is collaborative, involving decision makers in the public and private sectors. The Fund encourages strategic relationships through which individuals and partner institutions actively contribute their time and other resources. The Fund makes available the results of its work in reports, articles, and books, and publishes the Milbank Quarterly, a peer-reviewed journal of public health and health care policy.
Since its founding in 1905, the Fund has encouraged research and analysis that may lead to enhanced consideration of policy alternatives that a significant number of decision makers regard as achievable. The Fund does not take positions on what policies ought to be implemented, but instead encourages open, reasoned discussion of alternatives.
Parity in insurance coverage for mental illness -- providing the same benefits and same limits for mental illness as for other forms of illness -- is a controversial issue. Federal legislation enacted late in 1996 and implemented on January 1, 1998, mandates a limited parity in employee health benefit plans that cover mental illness: no lower annual or lifetime spending limits on mental illness than those on physical or surgical illnesses. Some advocacy and interest groups have praised this legislation as an important step in reducing the stigma of chronic mental illness. Others have emphasized its limitations. A few worry that parity will cause some employers to drop health coverage entirely in order to avoid unacceptable costs.
Several states and a number of firms had established parity before 1996. The Fund and the National Alliance for the Mentally Ill (NAMI) convened persons who had firsthand knowledge of its effects in June 1997. Participants in the meeting included officials of states that require parity in treating mental illness in the employee health plans they regulate, executives of both self-insured corporations that offer some kind of parity to their employees and of firms that manage behavioral health care coverage, federal officials and researchers who were assessing evidence from states and employers for its relevance in implementing the new federal parity legislation, researchers and advocates.
Several persons helped to plan the meeting, and especially to insure the representation of a variety of experiences with parity and opinions about it: Susan E. Dore of NAMI, a former member of the Maine legislature; Keith Orton of Intel, previously with U.S. West, and Thomas D. Romeo, of the University of Rhode Island, former director of the department of mental health, retardation and hospitals for that state. Laurie M. Flynn, Executive Director of NAMI, joined the Fund in convening the meeting.
Alan L. Otten then did additional reporting and drafted this publication. Otten was for many years a writer and bureau chief for the Wall Street Journal. His drafts were reviewed by participants in the meeting and others experienced in insuring and treating persons with mental illness. Several of these people reviewed at least two drafts. All of them are identified in the Acknowledgments.
Samuel L. Milbank
ChairmanDaniel M. Fox
President
AcknowledgmentsThe following persons participated in meetings and/or reviewed this report in draft. They are listed in the positions they held at the time of their participation.
Joseph Bevilacqua, Director, State Initiatives, Bazelon Center for Mental Health Law; Lynn A. Blewett, Director, Health Economics Program, Minnesota Department of Health; Jeffrey A. Buck, Director of Managed Care, Center for Mental Health Services, Substance Abuse and Mental Health Services Administration, National Institutes of Health; Garnet F. Coleman, Member, Appropriations Committee, Texas House of Representatives; Helen Darling, Manager, International Compensation and Benefits, Xerox Corporation; Richard H. Diamond, Life and Health Actuary, Maine Bureau of Insurance; Susan E. Dore, Senior Legislative Advisor, National Alliance for the Mentally Ill; William T. Emmet, Director, Alliance for the Mentally Ill of Rhode Island; Laurie M. Flynn, Executive Director, National Alliance for the Mentally Ill; Paul Fronstin, Research Associate, Employee Benefit Research Institute; Donald P. Galamaga, Executive Director, Division of Integrated Mental Health Services, Rhode Island Department of Mental Health, Retardation and Hospitals; Veronica Goff, Director, Washington Business Group on Health; William Goldman, Senior Vice President, Behavioral Health Sciences, and Medical Director, Employer Division, United Behavioral Health; Lee Greenfield, Chair, Health and Human Services Finance Division, Minnesota House of Representatives; Henry T. Harbin, President and Chief Executive Officer, Green Spring Health Services; Michael F. Hogan, Director, Ohio Department of Mental Health; Chris Koyanagi, Director, Legislative Policy, Bazelon Center for Mental Health Law; John M. Ludden, Senior Vice President, Medical Affairs, Harvard Pilgrim Health Care; Suzanne C. Mercure, Manager, Health Care Plan Management, Southern California Edison; Velvet G. Miller, Deputy Commissioner, New Jersey Department of Human Services; Keith Orton, Regional Director, Mental Health, U.S. West; Darrel A. Regier, Associate Director for Epidemiology and Health Policy Research, National Institute of Mental Health, National Institutes of Health; Randi F. Reichel, Associate Commissioner for Life and Health, Maryland Insurance Administration; Thomas D. Romeo, Executive in Residence, College of Human Science and Services, University of Rhode Island; Merrile Sing, Senior Economist, Mathematica Policy Research, Inc.; Margaret T. Stanley, Health Benefits Administrator, California Public Employees' Retirement System; Richard C. Surles, Executive Vice President, Merit Behavioral Care Corporation; Jenifer Urff, Director of Government Relations, National Association of Mental Health Program Directors; Leticia Van de Putte, Vice Chair, Insurance Committee, Texas House of Representatives.
As you read the text of this report, click for references.
Mental Health Parity: What Can It Accomplish?
In September 1996, in a surprising demonstration of strength by advocates for people with mental illness, Congress passed and the President signed the Mental Health Parity Act. It declared that companies that provide their workers with mental health benefits could not make the annual or lifetime dollar ceilings on those benefits any more restrictive than their ceilings on medical/surgical benefits.
Last year, as part of the widely heralded child health initiative that provides the states with $24 billion over five years to buy health insurance for uninsured children, the White House and Congress stipulated the same requirement for insurance bought with the allotted money and also prodded the states to provide acceptable levels of mental health services for those children.
Also during 1997, eleven states passed legislation to bring their state laws into conformity with the new federal Mental Health Parity Act, but, more importantly, a handful of other states enacted laws requiring most companies subject to state regulation and having employee health insurance plans to provide mental health benefits close or equal to those being provided for medical or surgical problems -- not just annual or lifetime ceilings but also deductibles, copayments, the number of covered doctor visits and hospital days, and all other coverage details. By the end of the year, ten states had such laws; three states provided full mental health parity in their health plans for public employees. Mental health parity bills were proposed in 1997 in more than two dozen other state legislatures; almost certainly, more states will enact parity laws in the coming year or two. Many of these laws and bills cover only certain biologically based mental illnesses -- a point of dispute within the mental health community.
A presidential commission drawing up a proposed "Consumer Bill of Rights" seriously considered including mental health parity as one of those rights, but the commission was trying to get unanimous or near-unanimous agreement on all its recommendations, and opposition from business representatives on the commission killed the parity plank. A preamble to the commission report, however, applauds the Mental Health Parity Act and other recent legislation that helps individuals with mental or physical disabilities and declares that "further steps should be taken" to help "vulnerable groups."
A number of larger national corporations and large public employers have overhauled their health plans to provide benefits for the treatment of mental illnesses and substance abuse problems that are more consistent with those for medical/surgical illnesses. And the National Institute of Mental Health, part of the federal government's National Institutes of Health, has been studying the ramifications of all these changes going on in the public and private sector.
Talked about and urged for a number of years, "mental health parity" -- nondiscrimination in health benefits between mental and physical health problems -- has suddenly become a much hotter topic. What does it seek to accomplish, and just what is it actually accomplishing?
Unfortunately, parity cannot be fully examined without also examining the impact of managed care; in the current situation, the two are inextricably linked -- medically, economically, and politically -- and must be discussed together. Managed care's ability to hold down health costs has made parity somewhat more acceptable to many employers and legislators, and parity proponents are happy to take advantage of this fact. Yet parity proponents are often far from happy about the way managed care actually works in many mental health areas.
The following discussion does not argue for or against parity, but simply attempts a balanced look at the subject.
Rising Costs for Treating Mental IllnessDuring the late 1970s and 1980s, as businesses' health care costs started mounting, employers found that costs for treating mental illness and substance abuse among their workers and the workers' families were rising far faster than costs for other health problems -- almost double the rate, according to some estimates. Much of this resulted from costs in just a few areas such as residential detoxification and long-term psychotherapy, but, in reaction, many employers and insurers began to reduce mental health and substance abuse benefits across the board.
Employers cut back in a variety of ways. They raised the deductibles the workers themselves had to pay before health plan benefits kicked in; reduced the number of hospital days or outpatient visits covered by the plan each year; raised the percentages workers had to pay for each visit or hospitalization; and lowered the annual and lifetime ceilings on the total amount the plan would pay for any member. All these provisions became increasingly less generous compared to those available for medical or surgical problems -- for example, pneumonia, diabetes, a broken arm.
By the early 1990s a typical health plan under managed care covered only thirty inpatient days a year for mental illness, compared to 120 to 365 days for other illnesses, and covered no more than twenty outpatient visits, compared to unlimited visits for physical problems. The patient with a mental or addiction problem had to pay a far greater share of the costs of each clinic visit or hospital bill than did one with a medical or surgical problem, and the typical plan had a relatively low $50,000 lifetime ceiling on mental health or substance abuse benefits, compared to a $1 million ceiling or no ceiling on other illnesses. Many mental disorders were excluded from any coverage at all.
According to Bureau of Labor Statistics reports, 58 percent of the men and women who had some sort of employer-provided health coverage in 1981 had inpatient coverage for mental illness comparable to that for physical illness, and 10 percent had comparable outpatient coverage.
In short, workers and their families were paying more and more of the costs of mental illness and substance abuse problems out of their own pockets. Nor was there usually any cap on how much they would have to pay themselves, as there frequently was for other health problems.
A long illness -- and many mental and substance abuse problems take a very long time to overcome -- could force workers and their families deeply into debt to pay therapist and hospital bills not covered by health insurance, obliging them to drain college or retirement savings or take out a second mortgage on their homes.
"The most valuable type of insurance coverage is coverage of catastrophic costs, not up-front costs," observes Richard G. Frank, professor of health economics at Harvard University. "Mental health benefits, with their low annual and lifetime limits and high cost sharing, stand this theory on its head."
The rapid rise in mental health costs was one reason employers moved to an unequal benefit structure. Another was what employers and insurers perceived as the occasional abuse of mental health and substance abuse services. They claimed that some patients remained hospitalized for as long as insurance picked up most of the bill and then were discharged the day insurance coverage ran out. Others were seeing psychotherapists month after month because they were dissatisfied with relationships with their boss or their spouse or child. Were these really "mental health" problems to be covered by health insurance?
Almost certainly, yet another reason for the cutbacks in mental health and substance abuse benefits was that much of the public, including many employers, lacked understanding of and sympathy for people with mental illness or addiction problems. Some employers believed that people with chronic mental health or addiction problems should be the responsibility of state or local governments. Many Americans believed that many problems called mental illness really were not health problems at all but rather the result of improper lifestyles or lack of self-control -- that alcoholics and drug addicts or persons who complained about anxiety, unhappiness, and even depression often could help themselves if they only wanted to and really tried; why help them when they would not help themselves? Others argued that too little was known about treating mental illness and substance abuse, so why waste good money trying to treat these problems?
"Why should purchasers pay for programs where the professionals don't agree about assessment and treatment?" demands the benefits manager of a large utility.
Advances in Treatment and Their AdvocatesDuring all these years, however, researchers in psychiatry and neuroscience were proving these notions far off base. They were demonstrating that many mental illnesses had a biological basis. Moreover, physicians were learning not only how to better diagnose depression and other mental disorders but how to treat them with an improving rate of success. Many people with mental illnesses or substance addictions could, when properly treated, rapidly return to productive work and resume a full role in society.
Many groups -- including the National Alliance for the Mentally Ill, the National Mental Health Association, community mental health centers, and associations of psychiatrists, psychologists, and other mental health professionals -- became increasingly vocal in denouncing the unfairness in the benefit structure and in pushing for improved health insurance coverage. More and more, ordinary people were hearing and repeating horror stories about employees or their dependents who were forced to enter state mental hospitals when they bumped up against the annual dollar limit in the company health plan or about working couples obliged to moonlight to help pay the costs of their adolescent's drug treatment. Families and friends took up the cause of mental health parity.
The magnitude of the mental health problem was certainly impressive enough. According to the National Advisory Mental Health Council, a group of experts advising both the National Institute of Mental Health and the Congress, mental disorders, many relatively brief in duration, affect about 22 percent of the adult population in any year; serious mental disorders affect over five million adults in any year, between 2 percent and 3 percent of the adult population.
(Note: A person may have more than one diagnosis at the same time, so the percentages for each individual diagnosis cannot be added together to obtain the total percentage of the population that suffers from a severe disorder.)
States and Corporations Initiate ParityDuring the 1970s and 1980s many states enacted health care mandates of one sort or another that set various minimum requirements for insurers that intended to sell health insurance plans in their states. These mandates outlined particular types of services for which coverage was required (child immunization, for example), the types of practitioners entitled to reimbursement, and any restrictions that could be placed on proposed coverage. State mandates did not apply to companies that self-insure, since the federal Employee Retirement Income Security Act of 1974 (commonly called ERISA) bars the states from regulating self-insuring firms. Most large multistate companies chose self-insurance for a variety of reasons. As mandates proliferated, smaller companies elected to self-insure in order to reduce their costs.
A particular mandate might be enacted in every or almost every state, while another might see enactment in only a few. One insurance company official estimates that there are now close to 1,300 mandates around the country. Maryland, for example, has 50 of them. Many of these early mandates stipulated that at least some minimal mental health benefits be included in the health insurance plans being offered, but none required anything resembling parity.
But all this time mental health advocates in the states were becoming better organized politically and promoting legislation to require parity. Starting in the early 1990s, several states pioneered in requiring full mental health parity from those employers subject to state regulation. From 1993 to 1995, five states -- Maryland, Minnesota, Maine, New Hampshire, and Rhode Island -- passed laws requiring mental health benefits comparable to those for other illnesses.
Several other states chose to provide parity for public employees only. In 1991 Texas enacted parity coverage for serious mental illness and substance abuse problems for teachers and employees of state and local governments, and North Carolina instituted a similar system for its teachers and government workers. Ohio contracted for a virtual parity plan for its state employees, while the Massachusetts Group Insurance Commission, the agency responsible for health benefits for Massachusetts state workers, negotiated a contract with them that came very close to parity.
During this period of the late 1980s and early 1990s, a number of large employers were moving in the same direction. They had begun to believe studies indicating that workers with severe depression or other mental illnesses, or with alcohol or drug addiction, were costing their companies heavily in absenteeism, poor productivity, disability benefits, even at-work violence. Earlier and more extensive treatment of these problems might actually save the employers money in the long run.
In the late 1980s Digital Equipment Company, as part of a move to tighten management of its health care costs, also liberalized its benefits. It announced its goal was to provide its workers and their families with whatever care was necessary and appropriate to keep them well and set out a series of standards it expected health care plans to meet, with annual or more frequent reports required on how they were complying. Digital's "Standards for HMO Performance" have now expanded to a 54-page volume, and, says a Digital official, "We believe this provides real mental health parity."
A handful of other large employers -- telecommunications companies, computer firms, large service companies -- were also gradually removing annual and lifetime limits and otherwise liberalizing coverage of both mental and physical illnesses. They were nonetheless able to cut costs by tightening management.
Efforts to legislate better mental health and substance abuse benefits, however, were still encountering strong opposition in Congress and in state legislatures. Insurance companies and major employer and small business groups as well as HMOs led the fight against parity and other expansion of benefits.
Opponents of parity argued that business costs and worker premiums would inevitably rise, often considerably. Some employers and trade associations -- along with doctrinaire conservatives -- also saw the proposed parity laws simply as another attempt by government to get its foot in the door, another step toward steadily expanding government mandates and regulation of health care benefits and business pay practices.
The Difficulty of Evaluating ParitySo who is right in this ongoing debate? With several states and a number of companies having more than a little experience with parity or near-parity in health benefits, the facts should be easy to establish. Guess again.
The states that early enacted parity laws have tried to collect accurate data, but state regulators do not always get all the information they need from health care providers. "Because of the multipayor system, it's difficult for states to keep track of health care spending for every type of service, not just mental health benefits," says Lynn A. Blewett, director of the Health Economics Program in the Minnesota Department of Health. "For one thing, states don't have the right to collect data from self-insured plans, and in our state that's about 46 percent of the privately insured market."
The fact is that the states have large gaps in their information about numbers of people covered, costs, and other key elements of mental health care. Their task is further complicated by constant and rapid changes in the health field -- new benefit designs, the accelerating growth of managed care, the creation and expansion of new provider groups, hospital consolidation, health plan portability, intricate information systems -- that make it more difficult to isolate and measure the factors that affect access and costs of health care.
Much the same difficulties exist for researchers trying to obtain information from businesses. Many major companies refuse to answer questions about their health care experience, claiming the data is "proprietary" and that they need to maintain secrecy for future negotiations both with labor and with health insurers and health care providers. Others insist they are not trying to be secretive but that providing data to academics, reporters, and other information-seekers could be a full-time job for several people and is simply too expensive. "We don't collect the data the way they want, we don't store it that way," says the benefits manager of a major international company. "It all involves staff time and money."
In many cases, large nationwide companies do not actually know just how extensive parity may or may not be in their companies, since they have employees enrolled in a variety of health plans with different mental health benefits. The federal government deals with almost 400 plans for federal workers; Digital deals with 80 HMOs.
"Accountable systems of care are the key to removing the economic anxieties that stand in the way of parity, and competent data systems are the bedrock of accountability," says William Goldman, senior vice president for behavioral health sciences and medical director, United Behavioral Health. "But competency doesn't come cheap, especially up front."
Declares a government-sponsored study by specialists from Mathematica Policy Research, Inc. -- a study ordered by the federal Substance Abuse and Mental Health Services Administration specifically to provide more definitive answers to questions about parity's impact: "For two reasons, many informants could not say exactly if, or by how much, parity raised MH/SA (mental health/substance abuse) costs or service use. First, data on the subject were sometimes confidential. Second, because MH/SA expenditures are generally a small portion of a health insurer's total premiums, many insurers do not allocate resources to collect these data. . . . Even when changes in MH/SA expenditures were known, informants reported that other factors, such as competition, could have larger effects on premiums than parity. These other factors made it difficult to precisely determine the role of parity."
And one other factor more than any other makes it almost impossible to determine what the real impact of mental health parity has been and will be -- in terms of coverage, costs, and other essentials. In the 1980s managed care began entering the medical scene in a major way. Instead of the traditional indemnity system, in which workers pretty much used whichever doctor or hospital they wanted and employers paid all or most of the bills, the employers, beset by rising health costs and overutilization across the board, began to turn over to insurers or to special groups of doctors the job of riding herd on health care usage.
These "health maintenance organizations" began to rein in health care costs by negotiating discounted fees with a network of doctors and requiring their members to use these doctors; by requiring advance authorization for the use of specialists, surgical procedures, and other hospitalization; and by strict case management and other methods of "utilization review." Managed care's cost controls were particularly effective in the mental health area, though these controls often provoked outraged charges that mental health practitioners in these groups and the mental hospitals associated with them were providing far less service than their patients actually required. Regardless of parity, patients had lost their freedom to use whatever mental health or substance abuse services they wanted.
Parity and Managed Behavioral Health CareThen, in the late 1980s and even more in the early 1990s, there developed managed care companies that specialized in "behavioral health" disorders -- mental illness and substance abuse -- and employers and insurers or their HMOs began to subcontract or "carve out" the management of behavioral health problems to these specialty companies. Presumably, through practitioners particularly experienced in mental health and substance abuse problems and through intensive case management, these specialized "managed behavioral health care organizations" would provide better (and hopefully, cheaper) diagnosis and treatment of mental health and substance abuse problems than would the generalists in ordinary HMOs and other provider groups. Some of these managed behavioral health care companies were in fact subsidiaries of major health insurers such as Cigna, Aetna, United HealthCare and Blue Cross and Blue Shield plans.
Though the figures are somewhat in dispute and constantly changing, the latest estimates place almost 170 million Americans in managed care of one type or another. Almost two thirds of these Americans, about 150 million people, are served by behavioral health care carve-outs.
And here is where the complications come in assessing the simultaneous impact and record of parity and managed care: In almost every instance the adoption of mental health parity had been relatively recently preceded by, or was accompanied by, or will be closely followed by, a switch to some form of managed health care.
In fact, one impact of parity is to encourage the introduction of managed care anywhere it does not already exist. Doctors, benefit managers, and others agree that without managed care, costs for treating mental illnesses or substance abuse under a parity mandate will rise, often dramatically. If managed care is not in place before parity, it will be there soon after. "Parity without managed care is possible, but very costly," says David Nace, vice president and chief medical officer of Human Affairs International. The executive of another managed behavioral health care company declares, "Parity without managed care is giving a blank check" to providers.
Why does the explosion of managed care, and particularly managed behavioral health care, complicate the task of assessing the impact of mental health parity? Because, expert after expert asserts, when you have managed care operating and parity is then introduced, or when you have parity newly on the statute books and managed care is then introduced, it becomes practically impossible to disentangle the impact of each -- on utilization, costs, and treatment patterns. Identifying the effects of particular changes is difficult throughout the health care system, but it seems especially tricky in the current situation in mental health services. If usage patterns change or costs rise more slowly than expected, how much is due to managed care and how much to parity?
"You won't really know the true effect of parity except where it is added after managed care has been in effect for a few years," declares one benefits specialist. Another says, "As we gain experience, we can learn more about the true cost of parity, but that is still far down the road."
A recent report from the National Advisory Mental Health Council states that information about the way parity and managed care affect mental health costs and usage is thus far both "inconsistent and inconclusive."
The Promise and Limits of Federally Mandated ParityYet, even if one cannot produce precise answers, it might be possible to attempt some rough preliminary report card on mental health parity. Clearly, there have already been or very soon will be positive results for the mentally ill and their families in the form of expanded access to care. Equally clearly, the legislative gains are not likely to be nearly as comprehensive as mental health advocates hope.
Let us start with the federal law. The Mental Health Parity Act of 1996 (actually an amendment to an appropriation bill for the Veterans Administration) was sponsored by Republican senator Pete V. Domenici of New Mexico and Democratic senator Paul D. Wellstone of Minnesota and is most commonly referred to as the Domenici-Wellstone amendment. It is a narrowed version of a much broader Domenici-Wellstone parity proposal that the Senate had approved earlier in the year as part of the Kassebaum-Kennedy health portability law, but that broader proposal fell by the wayside in the House-Senate conference due to House Republican opposition. The provision finally enacted, which took effect January 1, 1998, simply states that if companies employing more than 50 workers offer any mental health benefits at all, those benefits cannot have annual or lifetime dollar ceilings lower and more restrictive than those placed on medical and surgical benefits.
Sounds simple -- but as with most laws, there are catches. The law does not require any company to offer mental health benefits if it does not already offer them. It does not apply to substance abuse benefits and would allow lower ceilings to continue there. It does not prevent a company from making up the cost of removing the annual or lifetime ceilings by reducing other mental health benefits -- for example, increasing the deductibles or copayments or reducing the number of therapist visits or hospital days covered -- and several benefit managers think that is what many employers will actually do. (The earlier Domenici-Wellstone proposal that was sidetracked by House Republicans would have required companies with mental health plans to make all mental health benefits equal to medical and surgical benefits, including copayments, deductibles, and limits on treatment visits and hospital days.)
The new law does not prevent a company from cutting its annual or lifetime ceilings on medical and surgical benefits in order to avoid raising its mental health ceilings (though most benefit specialists regard this as highly unlikely, risking too great a storm of protests). And the law not only exempts small firms (those that have two to 50 workers) -- an exemption that the National Alliance for the Mentally Ill (NAMI) calculates could cut out 40 to 50 million workers -- but also exempts any company that can show that liberalization of the mental health benefit ceilings has increased its health costs by 1 percent or more.
After lengthy wrangling -- and over the objections of many business spokesmen -- federal agencies charged with implementing the new law ruled that the 1 percent exemption could not be claimed prospectively but only on the basis of actual business experience after operating for at least six months under the new requirements. Federal officials estimate that a maximum of 30,000 employee health plans, involving about 11 million workers and dependents, might experience such cost increases -- only about 10 percent of the plans affected by the Mental Health Parity Act.
Some of the largest companies had already removed annual and/or lifetime ceilings not only on mental health benefits but also on substance abuse when they made the transition to managed behavioral health care. Most companies, however, still have ceilings on mental illness that are lower than those on other illnesses, and there is no question that now, under the new federal law, they will have to raise or remove those ceilings unless they qualify for exemption as small businesses or under the 1 percent rule. This will be a clear and significant gain for families who incur large mental health treatment costs that previously would have exceeded the limits in their companies' plans. According to research by Roland Sturm, a Rand Corporation economist, children and adolescents tend to have particularly high inpatient costs for mental illnesses -- their hospital stays are on average far longer than adults'. As a result, he says, they and their families are likely to benefit most from the raising or removing of the ceilings.
"Parity is aimed at eliminating limits," observes Harvard's Richard Frank. "You may have to pay a little more per visit, but that's not what bankrupts families."
Moreover, many benefits specialists say they are urging employers to use the need to comply with Domenici-Wellstone as an opportunity to evaluate their entire mental health and/or substance abuse benefit structure. "We're encouraging them to use this as an opportunity to evaluate their entire plan," says Mercer's Michael Jeffrey. Some employers are almost sure to take the occasion to expand other mental health and substance abuse coverage.
For instance, several consultants suggest that some companies, relying on managed care to control costs by limiting treatment visits to those "medically necessary," will liberalize some current restrictions. They may opt to remove present limits on the number of visits allowed each year or to eliminate provisions that require workers to pick up an increasing percentage of the charges as the number of visits increases.
As an example of the kind of pressure to change that can come in the wake of the removal of the annual and lifetime benefit ceilings, consider this letter from the federal government's Office of Personnel Management to the various organizations managing health care for federal workers: "While not required by law," the OPM writes, "we would like to see movement away from contractual day and visit limitations and high deductibles to improve access to appropriately managed care."
Parity Advocacy in the StatesThe federal law gave new impetus to mental health advocates to push for legislation at the state level, which helped account for the increase in state parity enactments and proposals in 1997. "The federal parity law legitimizes advocates at the state level," observes Henry Harbin, president and chief executive officer of the managed behavioral health care company, Green Spring Services, Inc.
Prior to its enactment, only five states had parity laws: Maryland, Minnesota, Maine, Rhode Island, and New Hampshire. By the end of 1997, however, five more states had enacted laws that went beyond the federal law and provided or came close to providing broad parity for persons enrolled in plans subject to state regulation. These states were Arkansas, Colorado, Connecticut, Texas, and Vermont. Moreover, Indiana had joined Texas and North Carolina in providing complete parity in their plans for public employees. State parity laws, though, vary widely from state to state in coverage and other key elements; there is no single model law that all states are adopting. (See Table.)
Much the same reservations expressed about the reach of the federal law also apply to most state laws enacted thus far. Their coverage is not nearly as extensive as mental health advocates would like. "Most state parity laws are limited in scope or application," declares the Mathematica survey ordered by the federal government.
For one thing, it bears repeating that state laws do not cover self-insured companies exempt under ERISA. Nationally, about 60 percent of employers are in self-insured plans. Minnesota, for example, estimates that almost half of the state's privately insured market is exempt under ERISA.
Moreover, to reduce opposition, many state laws include an exemption for small businesses. The definition of how small is small varies from state to state, though the most common test is 50 or fewer. "If you add together the large firms exempt under ERISA and the small companies exempt under state law, then the state parity laws affect a relatively small number of people," says an official of one large managed behavioral care company.
Other concessions also had to be made to reduce business opposition and win votes from on-the-fence state legislators. Rhode Island's law allows plans to put a limit of 90 days on continuous hospitalization for mental health treatment. To pass Maryland's parity law in 1993, mental health advocates had to agree to allow health plans to set a sliding scale of copayments for outpatient visits for mental illness and substance abuse services.
In order to make a start toward general parity last year, Texas mental health advocates had to accept coverage for only mental health and not substance abuse (in contrast, the Texas plan for state and local government employees covers both) and to permit health plans to limit patients with mental health problems to 45 days a year of inpatient treatment and 60 outpatient visits. "We're on the road to parity -- we're wending our way there -- but we're not quite there yet," says Christine Devall, a Texas mental health activist. A Missouri law that some parity advocates claim as a parity law requires only that insurers "offer" policies with parity in benefits but does not require them to actually "provide" these benefits, as other parity laws do.
Even in states where managed care has been long and widely established, officials concede they are not all that sure about the numbers of people covered by their parity laws. Maryland has a long history of health mandates and managed care, and yet a Maryland official who ought to know says,
"I can't give you any precise figure" as to the number of Marylanders covered by parity.
In Minnesota, which has a similar history, an official offers only that "I can make an estimate that won't be too far off." The Rhode Island Department of Business Regulation "estimates" that the state parity law covers about 30 percent of the state's total population.
Nor do parity laws guarantee adequate benefits: They simply require the same benefits as for medical/surgical illnesses. If the medical/surgical benefits are inadequate, then the level of benefits for mental illness or substance abuse will be inadequate too. As the National Advisory Mental Health Council puts it, "Parity with a poor physical health benefit produces a poor mental health benefit as well."
Another coverage problem is the fact that many state parity laws specify that parity and its expanded benefits will be available only for specifically enumerated "biologically based" illnesses. These usually include most of the following: schizophrenia, major depression, paranoia, and pervasive developmental disorder/autism, and such other disorders as schizo-affective, bipolar affective, panic, delusional, and obsessive-compulsive.
This leads to a substantial schism within the mental health community: whether parity should cover only "severe" mental disorders -- in effect, the biologically based ones -- or all mental illness. The federal law went with the broader definition, and some state laws do too.
But many employers and their associations worry that the broader definition opens the door to possible abuse by people whom some specialists refer to as "the worried well" -- men and women who may not have one of the specifically enumerated disorders but nonetheless feel the need for professional help to cope with some disturbing difficulty in their daily life -- their business is not going well, their spouse is dying, their children are into drugs. Making mental health benefits available for these sorts of problems, many employers argue, could really boost costs and premiums.
To bolster their point, some benefit managers are seizing on a series of reports by Michigan University professor Steven J. Katz and colleagues from several other universities that compares mental health service usage in the U.S. and the Canadian province of Ontario.
The considerable opposition in state legislatures to the broader definition of mental illness has forced many mental health parity advocates to go for the specifically enumerated, biologically based approach as one more likely to win over more state legislators and therefore be easier to enact. Anyway, says Susan E. Dore, a former Maine state legislator who is now senior legislative advisor for the National Alliance for the Mentally Ill, "The population that exceeds most annual or lifetime caps and has the most difficulty paying copayments is the population [that suffers] the biologically based illnesses." She says that when the cost data for this group prove that parity is not all that costly -- as she is sure the data will -- these figures can then provide the arguments for extending parity beyond the enumerated illnesses.
Those who favor the broader definition, however, argue that not only are there severe disorders that are not yet defined as biologically based and therefore do not make the list -- such as post-traumatic stress disorder or multiple personality disorder -- but that there are also many mental illnesses that may be clinically less serious than those that get enumerated but are far more common and can be just as destructive to a person's ability to work and carry out family and social responsibilities. They maintain that the only sensible course is to cover mental illness generally and leave it to the doctors and other practitioners to decide, case by case, whether and what medical treatment is necessary and appropriate, just as it is left to the practitioners to decide what must be done for cataracts or cancer.
Anyhow, demands United Behavioral Health's Goldman, "If a major depression is biologically based, how can a moderate depression not also be biologically based?"
Moreover, the proponents of the broader definition declare, if parity benefits are not provided for these other mental health problems, many ill people may not seek help, making for bigger problems and higher costs later, or they will consult primary care physicians, who may be less experienced in dealing with mental illnesses. Most health economists say that mental health treatment is one of the most price-sensitive areas in the entire medical field and that mentally disturbed people often do in fact put off seeking help if they face high costs to get it.
Other Limits of Parity CoverageMany specialists in the mental health field also deplore the fact that the federal Mental Health Parity Act and most state laws do not apply to substance abuse treatment. Only three states with parity laws cover substance abuse as well -- Maryland, Minnesota, and Vermont.
Some employers and legislators refuse to recognize alcoholism or drug addiction as diseases that can be treated and cured. "Employers are readier to accept the argument that they are getting something for their money" with treatment of mental illness than with treatment for drug and alcohol addiction, where they see much recidivism, says Ronald Bachman, a Coopers & Lybrand consultant. Yet, experts say, mental illness and substance abuse are closely intertwined in a substantial proportion of cases, one causing or aggravating the other, and both good medicine and sound economics demand that they be treated together. This is particularly true for adolescent addicts, they declare.
"Most of the folly of mental health parity laws is that they don't apply to substance abuse," says John M. Ludden, senior vice president for medical affairs of Harvard Pilgrim Health Care. "Many people with major mental illnesses have substance abuse problems as well. And proper treatment of substance abuse is something we can do relatively effectively in a relatively short period of time."
Finally, of course, neither the federal parity law nor the state parity laws do anything for the millions of uninsured workers and their families. Many people with serious mental illness or with alcohol or drug problems are indeed men and women who have no health insurance at all and must rely on public systems, often poorly funded and poorly staffed.
And yet, as with the federal law, the state laws do provide expanded access and larger benefits for many people. "And," says NAMI's Susan Dore, "parity laws do something that mental health advocates and the legislators who voted for these bills see as vital public policy. Embedded in the equal coverage laws is the assumption of equality, with the same right as other consumers to litigate for better services." Agrees Henry Harbin of Green Spring: "There is no question that parity expands access -- it offers better benefits and offers them to people who have not had them before."
Parity and CostsIf the impact of parity on mental health coverage is open to debate, parity's impact on costs is even less clear. The cost estimates for the original broad Domenici-Wellstone proposal, the one that never made it into law, ranged from a 2.5 percent increase predicted by a firm hired by a mental health coalition to an 8.3 percent to 11.4 percent increase projected by the Watson Wyatt Worldwide consulting firm working for an association of major pension plans.
Parity advocates, however, insist that most of these predictions are way out-of-date, based on parity's impact on indemnity plans that had little control over spending. Now with managed care, they say, cost increases will be nonexistent or minimal. They claim that all the evidence thus far points to a conclusion that parity barely increases overall costs and possibly even lowers them -- and almost certainly lowers them if one factors in the indirect savings to employers from reduced absenteeism and higher productivity as workers who had mental or substance abuse problems return to work sooner in improved health.
A recent nationwide survey by Mercer/Foster Higgins benefit consultants found that as a result of benefit cutbacks and tighter management, mental health and substance abuse spending had dropped to 3 percent of employers' total medical plan outlays in 1997, compared to about 10 percent in 1988.
Certainly the most recent government estimates and reports from managed care companies and state health officials suggest that mental health costs are not about to skyrocket as a result of federal and state parity laws. The Congressional Budget Office, which had forecast a 4 percent increase for the original broad Domenici-Wellstone proposal, estimated that the finally enacted provision would result in a cost increase of only four-tenths of 1 percent. Moreover, it said, after many employers reduce other mental health benefits to compensate for the cost of removing the dollar ceilings, the law would increase employer costs only sixteen hundredths of 1 percent.
The federal law's removal of annual and lifetime limits will not bring "much more than a 1 percent rise in premiums . . . and probably a lot less," says Ian Shaffer, executive vice president and chief medical officer of Value Behavioral Health.
Minnesota, which mandates parity on copayments, deductibles, and other insurance elements as well as on lifetime limits and which also covers substance abuse, has seen no significant increase in premiums since parity went into effect -- but Minnesota also already had extensive managed care. In the year after the parity law went into effect, a major Minnesota health plan said the parity law would increase premiums only 26 cents per member per month, and the Minnesota Department of Employee Relations put the cost of the mandate at only a 1 percent to 2 percent increase in premiums for state employees. A Rhode Island behavioral managed care company claims its costs have increased less than 25 cents per member per month, and state officials estimate mental health costs rising overall only one third of 1 percent.
The first year that Maryland's parity law was in effect, one managed care company saw a small increase in costs; costs fell back the second year to the pre-parity level. Another Maryland company reported increased costs of less than 1 percent.
When the Massachusetts Group Insurance Commission in July 1993 put in a managed behavioral health care carve-out for state employees, it removed annual dollar limits on outpatient care and reduced the copayments required from workers. In the first year, outpatient costs dropped 20 percent.
In fact, parity advocates say, the best argument for more parity is the experience where it has already been introduced. Supporters of last year's parity law in Texas claim that the experience of the state employee system there helped sell the new law to the legislature and governor. About three-fourths of the public employees are under a managed behavioral health care plan that provides mental health and substance abuse benefits equal to those for medical/surgical problems. Not only has there been no increase in costs, despite parity, but mental health and substance abuse costs were cut almost in half over four years. North Carolina parity advocates are telling legislators that the state's health care plan for teachers and government employees offers full parity and yet has seen mental health costs fall 20 percent since 1992.
One of the most favorable findings for the parity advocates comes in the Mathematica report commissioned by the federal government's Substance Abuse and Mental Health Services Administration.
Another widely reported study -- and one specifically cited by the federal officials administering the Mental Health Parity Act -- is a report from Roland Sturm and colleagues at the Rand-UCLA Research Center on Managed Care for Psychiatric Disorders.
"If you want parity and are willing to take managed care, costs are not going to go through the roof," says Sturm. "If you stick with fee-for-service, no managed care, they will."
Yet it is hard to believe that liberalizing benefits is not going to increase costs at least somewhat in the long run. "Each mandate is discussed as though it is being proposed in a vacuum -- that it will increase premiums only 1 percent or 2 percent," says R. Lucia Riddle, vice president for government relations of the Principal Financial Group. "But we get hit with a number of mandates, and those costs do add up." She says one recent study estimated that about 30 percent of every premium dollar in state-regulated plans is attributable to mandates -- an estimate that some mental health activists contend merely shows that without mandates, insurers and employers wouldn't provide many needed services.
The Mathematica report calculates that full parity for mental health and substance abuse services will initially increase family coverage premiums 3.6 percent on average, with mental health care accounting for most of the increase. Cost increases have been, and will continue to be, lowest in systems with tightly managed care, the report says.
However, the researchers cautioned that their calculations and predictions are, unfortunately, based not on any statistical analysis of actual experience over a substantial period of time but rather on the best judgment of people involved in providing mental health and substance abuse services plus the use of an updated actuarial model.
The Employee Benefit Research Institute declares that parity is bound to increase costs, though the utilization controls of managed care can possibly save enough to restrain these increases for a while. It also warns that if parity does increase employer costs and brings increases in workers' premiums, "we can expect continued erosion in employment-based health insurance coverage." Already research shows that increasing numbers of workers are refusing to sign up for employer-offered health insurance; a study by two economists at the federal Agency for Health Care Policy and Research found that even as more workers were being offered health insurance coverage at work, the proportion taking up the offer dropped -- to 80.1 percent in 1996 from 88.3 percent in 1987.
"And what happens to the fight for parity when health care costs start rising sharply again?" asks EBRI's Paul Fronstin. "People will say that the prices are rising because of these and other mandates."
In September 1997 the government announced that companies covering federal workers and their families were increasing premiums an average of 8.5 percent for 1998. The most recent national surveys by Mercer and other benefit analysts find employers and insurers predicting that health costs will rise considerably more sharply in 1998 and 1999 than in the years 1995 to 1997, when cost increases were moderate.
Once again, the complicating factor is the difficulty of disentangling the impact of managed care from the impact of parity. Every important study thus far shows managed care bringing down costs, at least temporarily, for all health services, not just for treatment of mental illness or substance abuse.
The recent report of the National Advisory Mental Health Council reveals the difficulty of deciding the relative weight to give managed care and parity.
Yet, at another point, the report concedes that "because in all cases to date parity was implemented in conjunction with managed care, it is difficult to assess the effects of parity alone." And at another point it says that the savings from managed care offset any increase in costs associated with improvements from parity.
"Once managed care and parity have been in place for a while, we'll get a better idea of the cost of parity," says the head of one managed behavioral health care company, "but there's little doubt there will be costs."
Some parity advocates have begun to worry that eventually, in its effort to hold down costs and maintain profits, managed care may end up undertreating adults and adolescents with mental illnesses and thus in effect defeat the intent of parity laws. Parity, they point out, requires mental health benefits to be equal to those offered for other illnesses, but it does not require that the patient receive a specific number of treatment visits or hospital days. "With managed care, parity may not be sufficient," says Chris Koyanagi of the Bazelon Center for Mental Health Law.
Managed care and liberalized outpatient benefits under parity are accelerating trends that were already evident. The most dramatic changes in the treatment of mental illness and substance abuse have been much greater use of medication and a steady movement away from long-term hospitalization. The constant development and introduction of more effective antidepressants, antipsychotics, and other new medications have made it possible for many more people to be treated in intermediate facilities or outpatient centers rather than hospitals, reduced the amount of time people who do need to be hospitalized actually have to spend there, opened the way for fewer therapist visits for people being treated as outpatients, and permitted ever-larger numbers of people to lead relatively normal and productive lives.
Employers, workers, practitioners, and others involved in mental health and substance abuse care generally report that while there has been only a small drop or even a small increase in the number of people receiving inpatient care, there has been a very pronounced drop in the average length of time they stay there. Reduction in hospitalization, the most expensive mental health benefit, is one of the key steps managed behavioral health care companies take to reduce costs, particularly for substance abuse treatment. The new medications have played a major role in reducing long-term hospitalization, but so has the increased use of partial hospitalization, residential treatment centers and recovery or halfway houses, along with such newer services as community treatment teams and in-home services for children.
Does Parity Have a Future?At the same time that managed care makes it possible to introduce parity with less worry about runaway costs, it ironically tends also to make parity somewhat less meaningful. Many officials of managed behavioral health care companies and a number of benefit consultants and corporate benefits managers say that benefit design is now far less important than it used to be because of the controls in use by managed care. Many limits spelled out in benefit plans -- on the number of covered days in hospital or the number of covered outpatient visits, for example -- have become anachronisms, it is maintained; what counts is what medication or number of visits or days in hospital the managed behavioral health care company allows as medically appropriate and necessary.
"The trend in managed care," says Human Affairs International's Nace, "is to allow arbitrary limits to be lifted, and to go instead to what's medically necessary, what's appropriate, what's essential, what works. So we don't need arbitrary caps." Says Harvard's Frank: "Managed care drives a wedge between nominal benefit, what the plan design provides, and the effective benefit, what the patient actually gets."
But quite a few company officials and benefit specialists disagree. Because mental illness may be so poorly defined, they say, and because some treatments are of doubtful effectiveness, limits are still needed. If these are not spelled out, they contend, it is much harder to combat abuse of the system.
"Many people seeking mental health benefits really aren't severely ill, and it's difficult to get them to do what's needed when insurance coverage is practically unlimited," as it is under many indemnity plans, one well-known benefits manager says. "You may have an adolescent just going through a difficult period, and as long as [the family] can keep him in the hospital at no cost to [themselves] and 100 percent cost to the company, it's difficult to get their attention." Or, she says, "If you don't have some sort of cost sharing, people don't come to the therapist, don't work with the therapist."
Confidentiality, always a problem in health care, may become an even greater one because of the interplay between managed care and parity. Almost all research shows that when a service becomes newly available or becomes available more cheaply, it is heavily used, and presumably the expanded access provided by parity means more people will be using mental health services. But managed care usually requires prior authorization for patients to see specialists, and thus information about a person's mental illness resides in yet another data bank, ready to be seen by the wrong people. People who were already reluctant to have the boss or anyone else know about their depression or their kid's drug addiction may be even more unwilling to seek help if they know that more people have access to the information. Managed care companies maintain that they are building secure firewalls around their files, but many computer specialists challenge this claim.
The was-it-managed-care or was-it-parity argument enters into still other aspects of mental health care besides cost and coverage. Some advocates, for example, claim that the possibility of higher costs as a result of parity will encourage managed behavioral health care companies to try to head off those increased costs by earlier intervention in mental illness and substance abuse cases or even by increased efforts at prevention.
Primary prevention, which might involve antismoking and antidrug education or grief counseling for children and adolescents in the schools, is still rarely done by managed care plans but may become more common as a way of avoiding higher treatment costs later. One barrier to wider primary prevention efforts, however, is that they increase a managed care company's immediate costs without any prompt payback. The National Committee for Quality Assurance has just begun requiring that all managed behavioral health care companies seeking accreditation carry on some primary, secondary, or tertiary prevention initiative.
Early intervention -- which is essentially secondary or tertiary prevention -- seems more in keeping with the way managed care goes about its business: identifying people at risk and working to head off problems or recurrence of problems. A health care counselor listening to a worker bemoan his increasingly tight economic bind may see a depression in the making and take steps to help the worker handle it. An adolescent coming in for a regular medical checkup may display symptoms that enable a nurse or doctor to spot the early stages of a drug habit. The idea is to catch problems when they are small, before they become bigger, more difficult to treat -- and more expensive to treat.
Many behavioral health care specialists tell employers that making the first few treatment visits free or very cheap is a cost-effective approach to mental illness or substance abuse. As previously noted, medical economists believe demand for mental health care is particularly price-sensitive and that if the costs of seeking help seem too high, people with mental health or substance abuse problems find it easier to rationalize delay in seeing the doctor than do people with medical or surgical problems. On the other hand, low or no copayments on the first few visits can encourage them to seek early help.
"Managed care pushes to early identification and early intervention, particularly with depression," one medical specialist says. "And depression is the big one -- it can be recognized early and effectively treated." But parity also probably helps move things in this direction by making treatment less economically burdensome on the patient seeking treatment.
A related parity fight may be pushing employers to put more money into prevention and early intervention: worker efforts to get equal disability benefits for mental illness. Workers who have used up their health benefits frequently seek to qualify for disability status under employer group disability plans. While most such plans pay physically disabled workers a significant portion of their regular salary until the workers reach 65 and qualify for social security, the plans usually pay mentally disabled workers only for two years, and it is difficult to qualify for benefits. The federal Equal Employment Opportunity Commission and several lawsuits by mentally disabled workers have questioned whether this practice does not violate the equal treatment mandated by the Americans with Disabilities Act. Several benefit consultants suggest that employers, faced with paying disability benefits for many years to workers with mental illness, may want to try to minimize the likelihood that workers with mental illness have to go on disability. (Disabled workers, whether disabled mentally or physically, can apply for social security disability benefits, of course, but the standards for proving disability are much tougher under social security than under most employer plans and the benefits much less.)
A frequently heard argument for mental health parity is that it helps remove the "stigma" of mental illness -- the idea that healthy people look down on people with mental problems, and that many of the mentally ill themselves feel ashamed and are reluctant to admit their condition and seek help. "Benefit limits are an institutionalization of stigma," one mental health advocate asserts. By saying that all illnesses should have the same health benefits, he argues, parity laws are also saying that mentally ill people are no more to blame for their illness than those who break a leg or develop cancer. "When you read the plan, there's no footnote or asterisk saying people with mental illness are different from other sick people," says an official of a managed behavioral health care group. "Benefit design is equal for medical and mental."
But a few experts worry that by focusing special attention on mental illness or chemical dependency, the parity laws reinforce feelings among some of the public that there is something different and perhaps even suspect about these people, something that sets them apart. Even if this were true though -- and she does not think it is -- "most advocates believe the advantages of obtaining coverage far outweigh any possible adverse stigma effects," says the Bazelon Center's Koyanagi.
For the mental health advocates, one of the most important pluses of recent and current controversy over parity is its educational value. The congressional and state legislative hearings, the speeches by key officials, the publicity the advocates pour out, and the newspaper editorials written as the measures near voting -- all have informed the general public about the problems of mental illness and substance abuse, the biological roots of much of it, the new drugs that have been developed to treat them, and the high rates of success in treating and controlling many mental problems.
The debate over the comprehensive Clinton health care plan in the 1993-1994 Congress included some discussion of mental health care, but this was generally lost in all the other controversies swirling around the President's proposal. It was the more narrowly focused congressional debate on the Domenici-Wellstone amendments that undoubtedly made many senators, congressmen, reporters, and others think seriously about the issue for the first time. Senator Domenici, one of the Senate's most respected members, repeatedly reminded colleagues that "mental illness is not due to sinful behavior. It is not due to a weakness of character." Senator Wellstone talked of his brother who has battled mental illness most of his life. Senator Alan Simpson of Wyoming, one of the most conservative Senators, eloquently recalled the suicide of his wife's mentally troubled niece. Senator Kent Conrad related the attempted suicide of a disturbed young receptionist who worked in his office when he was North Dakota tax commissioner.
The Domenici-Wellstone amendment "really had more PR value than policy value," one mental health lobbyist declares. "It gave the problem visibility." Public opinion polls show Americans becoming steadily more knowledgeable about mental illness and substance abuse -- and more sympathetic to those struggling with these disorders.
Rob Gabriele, senior vice president of the National Mental Health Association, mentions another aspect: "Regardless of the outcome, the fight helps to educate buyers that the cost is minimal." Similarly, Green Spring's Henry Harbin says that "we have found that the net result of all these [state] laws and of Domenici-Wellstone is that we now are invited in to discuss with businesses their plans to comply. And once we are at the table, there is a new opportunity to offer better expanded coverage than the letter of the law requires."
The publicity also alerts workers and their family members to look at what their health plans provide in mental health or substance abuse benefits, the kind of mental health benefits other workers may have won, what kind of benefits they might seek in new negotiations, and what kind of laws they can look to for help.
Employers, consumers, managed care companies, consultants, and mental health advocates agree on the need for more and better data on how mental health and substance abuse services are being provided and used and for better systems for measuring the quantity, quality, and cost of care. The parity battle, with all the dispute over access and costs, underlines the need for this sort of information.
Though there is growing consensus among experts that the most serious mental illnesses can be diagnosed with a high degree of certainty -- many say with almost the same degree of certainty as medical or surgical problems -- and though there is increasing agreement on the most appropriate and effective methods of treating many of the more serious illnesses, there continues to be considerable division and debate about how accurately the less serious mental problems can be diagnosed and treated. "There are just too many shadow areas," says a psychiatrist in one managed behavioral health care firm.
There is also considerable debate on whether or just how well the quality of care can be measured. Is it how long the sick person has to wait for an appointment, whether he likes the doctor, the type of treatment used? Some practitioners insist that quality is so difficult to assess that it will continue to defeat all efforts to measure it.
Yet, more people in the mental health field seem to be coming around to the view that quality of care will somehow eventually be measured, hopefully with close to the same degree of reliability as medical or surgical treatments are measured. After all, "the medical side has the exact same problems," Harbin points out.
There is still greater disagreement on the allied question of how well "outcomes" or "success" can be measured. "What constitutes a successful outcome in treating depression?" asks Greg Greenwood, vice president of Inroads Behavioral Health Service, Inc., a subdivision of Blue Cross and Blue Shield of Texas, Inc. "Is it a happy worker, or nonrecurrence within six months, or nonrecurrence within 12 months?"
Others, though, believe progress or success in treating a patient with paranoia, depression, or some other mental illness can be measured with a high degree of certainty. "There is more outcomes research on the treatment of depression than on any other medical diagnosis," says Goldman of United Behavioral Health. "Depression is not only the most common mental health diagnosis but one of the most common diagnoses in all of medicine."
Despite all these differences, almost everyone supports efforts to try to develop "report cards" for collecting data on plans and providers and "standards" for evaluating and comparing the way mental health services are being provided in different organizations and different settings. And this, too, despite the near certainty that more reporting and more measuring will involve considerable additional costs.
Surveys are being developed or are already in use that ask questions about services for persons with mental illness. These surveys include HEDIS (Health Plan Employers Data and Information Set), PERMS (Performance Measures for Managed Behavioral Health Care Programs), and FACCT (The Foundation for Accountability). Some surveys are being advanced by established accrediting agencies, others by medical trade associations, HMOs, and similar medical groups, and still others by consumer groups. The state of Maryland issues "report cards" on HMOs, based on patient surveys and other information. The federal government's Center for Mental Health Services, part of the Substance Abuse and Mental Health Services Administration, is testing in a large number of states a consumer-oriented "report card" on mental health and substance abuse services.
After many months of struggling, the American College of Mental Health Administrators has just come up with a proposed set of "core values" and another set of "core indicators" for assessing the quality of behavioral health care and hopes that these may eventually lead to widely used measures for judging the quality of care and allowing comparisons between different providers. Most behavioral managed care companies are well along in developing their own data collection and evaluation systems.
Some major companies, such as Xerox and GTE, provide their workers with copious data designed to allow them to begin to rate their health plans' record on all kinds of health care, and other business groups provide rankings of local practitioners based on reports of patient satisfaction, use of preventive care, and other factors. The federal government's Medicare administrators are planning to release comparisons of several hundred HMOs, based on the appropriateness of their treatment of various illnesses.
All this activity, though, does not keep some critics from complaining that most efforts so far do not focus sufficiently on "outcomes" -- how the person's health changes after treatment, how long it takes him or her to return to work or school, how well he or she performs the job after returning, what the recidivism or readmission rates are.
"The idea of standards is like motherhood -- everyone's for them," says Leon Wanerman, vice president and deputy medical director of United Behavioral Health. "But I don't see them as being of much use yet. So far they focus on methodology rather than substance."
But even while conceding that most surveys and report cards are still comparatively primitive instruments, defenders declare that each new version is more sophisticated and worthwhile than the last and that it will not be all that long before they can be a major help to health care providers, employers, and workers. Even the process surveys, it is said, provide some basis for comparison.
"The work is in more than its infancy -- it's at least in its adolescence," says Michael Hogan, director of the Ohio Department of Mental Health. Similarly, Harvard's Frank says that "in terms of measurement, we are way ahead of where we were three years ago, and even further ahead of where we were five years ago."
Persisting Issues in ParityParity will continue to be a contentious issue. Here are a few questions that still need answering:
- Should the burden of severe chronic mental illness be viewed differently than similar chronic physical illnesses?
How can experts get a better handle on how much mental health services actually cost? What will be the indirect cost savings for employers from increased productivity and reduced absenteeism? Who should bear most of the heavy cost of treating severe mental illnesses? How much should be borne by the ill person and his or her family, the employer and fellow workers through their insurance plan, private social agencies, some level of government? Should the main effort be to get parity for all mental illnesses or only specifically enumerated "biologically based" illnesses? Are there further steps that mental health advocates should take to ensure that in a managed care environment the mentally ill actually get all the treatment that is necessary and appropriate? What should be the goal of mental health treatment? When we talk of doing what is "medically necessary," necessary for what? What criteria should be used to determine whether treatment of mental illness is medically necessary? How will we measure whether treatment has been successful? What role, if any, should government play in the measurement process? In view of the high degree of co-occurrence, should parity laws include substance abuse treatment as well as treatment for mental illness?
[Return to Table of Contents]
[Return to text]
ReferencesBazelon Center for Mental Health Law. 1996. Paying for Parity -- A Review of Costs in Two States with Health Insurance Laws Mandating Equal Coverage of Mental Health Care. Washington, D.C.
Buck, J., and B. Umland. 1997. Covering Mental Health and Substance Abuse Services. Health Affairs 16(4):120-6.
Cooper, P.F., and B.S. Schone. 1997. More Offers, Fewer Takers. Health Affairs 16(6): 142-9.
Federal Employees Health Benefit Program. 1997. Office of Personnel Management. Letter 97-7 to Insurance Carriers. Washington, D.C.
Foster Higgins. 1995. Survey on Employer-Sponsored Mental Health and Substance Abuse Benefits. New York, N.Y.
––– . 1996. National Survey of Employer-Sponsored Health Plans. New York, N.Y.
Frank, R.G., C. Koyanagi, and T.G. McGuire. 1997. The Politics and Economics of Mental Health "Parity" Laws. Health Affairs 16(4):108-19.
Frank, R.G., T.G. McGuire, and J.P. Newhouse. 1995. Risk Contracts in Managed Mental Health Care. Health Affairs 14(5):50-64.
Fronstin, P. 1997. Issues in Mental Health Care Benefits: The Costs of Mental Health Parity. Issue brief no. 182. Washington, D.C.: Employee Benefit Research Institute.
Goff, V., and S. Berger. 1997. Creating a Consumer and Family-Oriented Health Care System. Washington, D.C.: Washington Business Group on Health.
Interim Rules for Mental Health Parity. 1997. Federal Register 62 (245): 66943.
Katz, S.J., R. Kessler, R.G. Frank, P. Leaf, and E. Lin. 1997. Mental Health Care Use, Morbidity, and Socioeconomic Status in the United States and Ontario. Inquiry 34:38-49.
Maryland Health Care Access and Cost Commission. 1997. Annual Report on Expenditures and Utilization. Annapolis.
Mercer/Foster Higgins. 1997. National Survey of Employer-Sponsored Health Plans. New York, N.Y.: Mercer.
National Advisory Mental Health Council. 1997. Parity in Coverage of Mental Health Services in an Era of Managed Care. An interim report to Congress. Washington, D.C.: Department of Health and Human Services.
National Institute of Medicine, Committee on Quality Assurance and Accreditation Guidelines for Managed Behavioral Health Care. 1996. Managing Managed Care -- Quality Improvement in Behavioral Health. Washington, D.C.: National Academy Press.
President's Advisory Commission on Consumer Protection and Quality in the Health Care Industry. 1997. Quality First: Better Health Care for All Americans. Final report to the President of the United States. Washington, D.C.
Sabin, J. E., and N. Daniels. 1994. Determining "Medical Necessity" in Mental Health Practice. Hastings Center Report (6): 5-13.
Sing, M., S. Hill, S. Smolkin, and N. Heiser. 1998. The Costs and Effects of Parity for Mental Health and Substance Abuse Insurance Benefits. DHHS pub. no. (SMA) 98-3205. Washington, D.C. Prepared by Mathematica Policy Research under contract.
Sturm, R. 1997. How Expensive Is Unlimited Mental Health Care Coverage under Managed Care? Journal of the American Medical Association 278:1533-7.
Umland, B. 1997. Foster Higgins National Survey: Trends in Behavioral Benefits. Behavioral Healthcare Tomorrow (June): 57-60.
Watson Wyatt Data Services. 1995. 1995-96 Survey Report on Employee Benefits. Bethesda, Md.: Watson Wyatt Worldwide.
(To request a bound copy of this report, click here.
To see a complete list of fund reports, click here.
Be sure to specify which report you want,
your name, mailing address and phone number.)Milbank Memorial Fund
645 Madison Avenue
New York, NY 10022
© 1998 Milbank Memorial Fund. This file may be redistributed electronically as long as it remains wholly intact, including this notice and copyright. This file must not be redistributed in hard-copy form. The Fund will freely distribute this document in its original published form on request.
Printed in the United States of America.
ISBN 1-887748-18-0
      |
