Mental Health Parity Finally Becomes Law

More than ten years after the measure was first proposed, Congress finally passed a law requiring that insurance companies provide enrollees suffering from mental illness with coverage equal to the coverage they would receive for any other type of condition. The new law was included in the controversial economic bailout package passed by Congress and signed into law by President Bush on October 3, 2008. Advocates for people with special needs hailed the legislation as a "great civil rights victory" that could dramatically improve the lives of insureds suffering from mental illness.

Under the new law, which is scheduled to take effect in 2010, group health plans covering more than 50 employees must offer equal benefits for mental health patients. As discussed in an earlier SpecialNeedsAnswers article about this issue, both the House and the Senate recently passed different bills calling for mental health parity and the two chambers of Congress were having difficulty agreeing on a final form for the legislation.

As part of the compromise that finally passed, the House backed down from a provision in its bill that would have required health insurance companies to cover every disorder listed in the Diagnostic and Statistical Manual of Mental Disorders. Instead, insurers may limit coverage to specific mental conditions of their own choosing, with the caveat that all mental health coverage a company does provide must be on an equal level with coverage for other ailments. This requirement includes out-of-network coverage, meaning that if a plan allows enrollees to see non-network providers for medical care, it must do the same for those seeking treatment for mental illness.

Some advocates were originally concerned that federal legislation might preempt more stringent mental health parity requirements passed by the states. Congress addressed this worry by explicitly refusing to preempt most state laws that provide additional protections to patients. Furthermore, the federal legislation mandates parity for many substance abuse disorders, something not covered by many state parity laws. However, the federal law does preempt state legislation when it comes to a provision that allows health plans whose costs increase by more than 2 percent in the first year due to the new parity requirements to opt out of the parity system for the following year.

The law is formally titled the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. Wellstone, who died in a plane crash in 2002 while a Democratic senator from Minnesota, had for years championed legislation to end discrimination against people suffering from mental illness. Domenici, a Republican senator from New Mexico, has also been a strong supporter of mental health parity legislation. One of his daughters has schizophrenia.

For a New York Times article about the new legislation, click here.

The Washington Post also covers the new law here.

For Mental Health America's summary of key provisions in the legislation, click here.