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MILLIONS WITH MENTAL ILLNESSES BENEFIT FROM NEW FEDERAL RULES Implementing Law Will Cost Less Than a Cup of Coffee Per Employee, Per Year
(Alexandria, Va.; Dec. 19, 1997) Millions of Americans will be protected by new rules the Clinton administration released today telling employers how they must comply with the 1996 Mental Health Parity Act. The administration said all group health plans and all employers with 50 or more workers -- including state governments and churches -- must equalize the annual and lifetime limits imposed on mental and physical health care.
"For only the cost of a cup of coffee, businesses and insurers can treat people with mental illnesses more fairly, and for about the cost of lunch we can end this discrimination forever," said Michael M. Faenza, President and CEO of the National Mental Health Association. "As long as we have insurance discrimination, people with mental health care needs will be dumped into the public sector and taxpayers will pick up the cost. We will continue to have high rates of homelessness. People - and their productivity - will suffer needlessly."
Recent research in the Journal of the American Medical Association (JAMA) concluded that equalizing annual and lifetime payment limits for mental and physical health care will cost about $1 per plan enrollee per year, and that establishing full parity in mental and physical health treatments would cost $7 per person per year.
Insurance firms typically put a $25,000 lifetime cap on mental health care costs and a $1 million cap on physical health care; the new law prohibits such discrimination. "No other class of illnesses or class of people are singled out for insurance discrimination," Faenza said. "Mental health parity is affordable, but it is first and foremost an issue of social justice."
"We are closer to the day when mental illnesses -- and people with them -- are treated fairly and compassionately in our health insurance system," Faenza said. "President Clinton has taken a significant step in protecting people with mental illnesses against health insurance discrimination. His interpretation of the 1996 Mental Health Parity Act is in accord with the intentions of its authors, Senators Pete Domenici and Paul Wellstone."
The law states that employers could be exempt from the law if its implementation would increase their health insurance costs by more than 1 percent. Several studies suggest costs will be lower. At issue in the rule-making was whether employers could use 1997 insurance data to estimate the cost of equalizing annual and lifetime limits in health insurance, rather than use actual 1998 costs.
The Clinton administration sided with the National Mental Health Association and other mental health advocates -- against the opposition of business interests -- and said employers must make a good faith effort to implement the law in 1998. After six months, employers may "look back" and file for an exemption based on an actual cost increase greater than 1 percent. The filings for exemption and key supporting documents must be open to the public for review.
The administration will give employers a three month grace period to comply with the new law, which becomes effective on January 1, 1998. Only employers that already provide mental health parity may use 1997 data to request an exemption. The new law does not require parity in access to mental and physical health treatments or that employers provide a mental health benefit at all. Insurers can still impose unfair arbitrary limits on outpatient visits and inpatient stays, and unequal copayments for care. About twelve states already require some type mental health parity.
The National Institute of Mental Health and the U.S. Center for Mental Health Services estimate that each year 22 percent of American adults and 10 percent of American children experience some type of mental or emotional disorder. About half have significantly impaired functioning.
"Treating mental illnesses is compassionate and economically sound. Employers want their employees to function at their best. Not treating mental illnesses will not make them go away," Faenza said. "The Clinton administration deserves credit for recognizing that mental illnesses are real and common, and that treatments work and are affordable." The rules will be published in the Federal Register December 22.