Mental Health Parity Act: Despite New Federal Standards, Mental Health
Benefits Remain Limited (Letter Report, 05/10/2000, GAO/HEHS-00-95).
Pursuant to a congressional request, GAO reviewed the implementation of
the Mental Health Parity Act of 1996, focusing on the: (1) extent to
which employers comply with the law and how they have revised their
health plans; (2) law's effect on claims costs; and (3) steps federal
agencies have taken to ensure compliance with the law.
GAO noted that: (1) 86 percent of the responding employers in the 26
states and the District of Columbia reported that as of December 1999
their plans were in compliance with the federal parity requirement that
annual and lifetime dollar limits for mental health benefits be no more
restrictive than those for all medical and surgical benefits; (2) GAO's
survey found that 14 percent of plans were noncompliant--a noncompliance
rate similar to Department of Labor's preliminary estimates based on
investigations of employer-sponsored plans; (3) although most employers'
plans now have parity in dollar limits for mental health coverage, 87
percent of those that comply contain at least one other plan design
feature that is more restrictive for mental health benefits than for
medical and surgical benefits; (4) in addition, many employers may have
adopted newly restrictive mental health benefit design features since
1996 specifically to offset the more generous dollar limits they adopted
as a result of the federal law; (5) about two-thirds of these newly
compliant employers changed at least one other mental health benefit
design feature to a more restrictive one compared with only about
one-fourth of the employers that did not change their dollar limits; (6)
only about 3 percent of responding employers reported that compliance
with the law increased their claims costs, and virtually no employers
have dropped their mental health benefits or health coverage altogether
since the law was enacted; (7) federal agencies have made varying
progress in performing their oversight roles under the parity law; (8)
Labor is in the process of expanding its oversight role to include not
only the complaint-driven approach used in its oversight of private
employer-sponsored health plans but also one that in the future may
include randomly selected employer investigations to gauge overall
compliance with parity and other federal standards; (9) the Health Care
Financing Administration (HCFA) reported that 4 out of 7 states
identified as not having a parity law are enforcing the federal
standards through conforming legislation or other means and that it is
still working with the three other states to assist them in enacting
similar protections; and (10) HCFA has determined that laws in 20 states
appear to fully conform to the federal standards and is still evaluating
whether laws in the remaining 24 states fully conform to the federal
standards.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-00-95
TITLE: Mental Health Parity Act: Despite New Federal Standards,
Mental Health Benefits Remain Limited
DATE: 05/10/2000
SUBJECT: Health insurance
Federal/state relations
Health insurance cost control
Insurance regulation
Employee medical benefits
Administrative law
Mental health care services
Noncompliance
Claims processing costs
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Testimony. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO/HEHS-00-95
Appendix I: Survey Scope and Methods
24
Appendix II: Summary of Survey Responses
29
Appendix III: State Laws on Mental Illness and Substance Abuse Treatment
40
Appendix IV: Comments From the Health Care Financing
Administration
62
Appendix V: GAO Contact and Staff Acknowledgments
64
Table 1: State Laws Affecting Mental Health Benefits Compared
With the Federal Mental Health Parity Act of 1996 as of
March 2000 8
Table 2: Lifetime Dollar Limits for Noncompliant Employer Plans,
1999 12
Table 3: Compliant Employer Plans Reporting More Restrictive
Limits on Mental Health Benefits Than Medical and Surgical
Benefits, 1999 12
Table 4: Selected Design Features for a Typical Employer-Sponsored Group
Health Plan, 1999 13
Table 5: Employers' Plans That Have Further Restricted Mental
Health Benefits Since 1996 14
Table 6: Estimated Cost Increases for Full Parity in Mental Health
and Substance Abuse Benefits 17
Table 7: Selected Survey Sample and Response Data 26
Table 8: Mental Health Benefits Offered Now 29
Table 9: Mental Health Benefits Ever Offered Since December 1996 29
Table 10: Number of Lives Benefits Cover 30
Table 11: Plan Insurance 30
Table 12: Plan Type 30
Table 13: Administered by a Managed Behavioral Health Care
Company 31
Table 14: Financial Risk of Administering Organization 31
Table 15: Plan Design Features for Current Plan 32
Table 16: Current Plan in 1996 33
Table 17: Mental Health Benefits in Any Plan 33
Table 18: Plans Covering the Most Lives in December 1996 33
Table 19: Plan Design Features in December 1996 34
Table 20: Reasons for Benefit Changes After December 1996, Part 1 35
Table 21: Reasons for Benefit Changes After December 1996, Part 2 36
Table 22: Administered by a Managed Behavioral Health Care
Company in 1996 37
Table 23: Managed Care in Current Plan Compared With
December 1996 37
Table 24: Employees' Access to Benefits 37
Table 25: Employee Eligibility for Coverage 38
Table 26: Exemption Filed 38
Table 27: Reasons Exemption Not Filed 38
Table 28: Compliance and Claims Costs 39
Table 29: Claims Cost Increases 39
Table 30: State Laws Addressing Coverage of Mental Illness and
Substance Abuse as of March 1, 2000 41
APA American Psychiatric Association
CBO Congressional Budget Office
DSM Diagnostic and Statistical Manual of Mental Disorders
ERISA Employee Retirement Income Security Act of 1974
HCFA Health Care Financing Administration
HHS Department of Health and Human Services
HIPAA Health Insurance Portability and Accountability Act 1996
HMO health maintenance organization
ICD Internal Classification of Disease
NCSL National Conference of State Legislatures
POS point of service
PPO preferred provider organization
SAMSHA Substance Abuse and Mental Health Services Administration
Health, Education, and
Human Services Division
B-283034
May 10, 2000
The Honorable James M. Jeffords
Chairman, Committee on Health,
Education, Labor, and Pensions
United States Senate
Dear Mr. Chairman:
An estimated 40 million American adults suffer from some type of mental
illness each year, 5.5 million of them suffering from a severe mental
illness such as schizophrenia or major depression. Private health insurance
plans typically provide lower levels of coverage for the treatment of mental
illness than for the treatment of other illnesses. Consequently, treatment
for patients with severe mental illness, who often require repeat
hospitalizations, can exhaust their mental health coverage.
To help address the discrepancies in coverage between mental and other
illnesses, the Congress passed the Mental Health Parity Act of 1996. The law
imposed new federal standards on mental health coverage offered under most
employer-sponsored group health plans.1 Specifically, the law prohibits
employers from imposing annual or lifetime dollar limits on mental health
coverage that are more restrictive than those imposed on medical and
surgical coverage. Although the act has been in effect for just over 2
years, questions persist about the actual cost of complying with the law and
the benefits it provides to consumers. Therefore, in preparation for the
law's September 30, 2001, sunset and possible reauthorization, you asked us
to report on
� the extent to which employers comply with the law and how they have
revised their health plans,
� the law's effect on claims costs, and
� the steps federal agencies have taken to ensure compliance with the law.
To determine employers' compliance and responses to the law, we conducted a
mail survey of 1,656 employers with more than 50 employees offering mental
health benefits. We obtained a response rate of 52 percent. Because our goal
was to measure the effect of federal--not state--parity requirements, we
surveyed employers in the 26 states and the District of Columbia that did
not have state laws that were more comprehensive than the federal Mental
Health Parity Act as of July 1999.2 The survey gathered information on how
employer-sponsored plans have changed since the Mental Health Parity Act was
enacted, what changes can be attributed to it, and the effect of the law on
claims costs. Because this survey was based on a random sample, stratified
by employer size, we weighted the results so they would be statistically
representative of all 103,000 employers with more than 50 employees offering
mental health benefits in these 26 states and the District of Columbia.
Unless otherwise indicated, the confidence intervals for our survey results
are not greater than plus or minus 5 percentage points and differences we
report are statistically significant. While large employers and those
located in the Northeast were somewhat less likely to respond to our survey
than other employers, we do not believe that this noticeably skews our
results because we did not identify significant differences in the extent to
which employers complied with the federal parity act by employer size or
location.3 Nonetheless, as with any survey based on a sample, appropriate
caution should be used in interpreting the results, given sampling and other
potential measurement errors. Appendix I provides more details about our
survey's scope and methodology, and appendix II provides summary data of the
survey responses.
To identify steps the federal agencies have taken to ensure compliance with
the Mental Health Parity Act, we interviewed officials from the Department
of Health and Human Services' (HHS) Health Care Financing Administration
(HCFA) and the Department of Labor's Pension and Welfare Benefits
Administration. To determine the extent to which states have passed
conforming laws and regulations, we requested the National Conference of
State Legislatures' (NCSL) Health Policy Tracking Service to develop a
summary of each applicable state law. We conducted our work between June
1999 and March 2000 in accordance with generally accepted government
auditing standards.
Most employers responding to our survey reported that they are complying
with the federal mental health parity law, but because of its narrow scope
and reductions in mental health benefits that the employers have made to
offset the required enhancements, compliance may have little effect on
employees' access to mental health services. Eighty-six percent of the
responding employers in the 26 states and the District of Columbia reported
that as of December 1999 their plans were in compliance with the federal
parity requirement that annual and lifetime dollar limits for mental health
benefits be no more restrictive than those for all medical and surgical
benefits. Our survey found that 14 percent of plans were noncompliant--a
noncompliance rate similar to Labor's preliminary estimates based on
investigations of employer-sponsored plans. In contrast, in 1996 before the
parity law was enacted, only about 55 percent of responding employers
reported offering parity in dollar limits. Many responding employers cited
the federal Mental Health Parity Act as a significant or primary reason for
changing the dollar limits in their health benefit plans.
Although most employers' plans now have parity in dollar limits for mental
health coverage, 87 percent of those that comply contain at least one other
plan design feature that is more restrictive for mental health benefits than
for medical and surgical benefits. For example, about 65 percent of plans
restrict the number of covered outpatient office visits and hospital days
for mental health treatment further than those for other health treatment.
In addition, many employers may have adopted newly restrictive mental health
benefit design features since 1996 specifically to offset the more generous
dollar limits they adopted as a result of the federal law. About two-thirds
of these newly compliant employers changed at least one other mental health
benefit design feature to a more restrictive one compared with only about
one-fourth of the employers that did not change their dollar limits.
While most employers have not examined changes in their plans' claims costs,
the federal parity law appears to have had a negligible effect on claims
costs. Only about 3 percent of responding employers reported that compliance
with the law increased their claims costs, and virtually no employers have
dropped their mental health benefits or health coverage altogether since the
law was enacted. In addition, published estimates of the cost of federal
parity are typically less than 1 percent. More comprehensive parity laws as
enacted by some states are generally estimated to have higher but modest
cost increases of about 2 to 4 percent.
Federal agencies have made varying progress in performing their oversight
roles under the parity law. Labor is in the process of expanding its
oversight role to include not only the complaint-driven approach used in its
oversight of private employer-sponsored health plans but also one that in
the future may include randomly selected employer investigations to gauge
overall compliance with parity and other federal standards. HCFA has not yet
fully determined the nature and extent of its oversight responsibilities.
Before it can exercise an oversight role, it must first identify states that
are not enforcing the federal standards. HCFA initially identified seven
states that appeared not to have a parity law. As of May 2000, HCFA reported
that four of these states are enforcing the federal standards through
conforming legislation or other means and that it is still working with the
three other states to assist them in enacting similar protections. HCFA has
determined that laws in 20 states appear to fully conform to the federal
standards and is still evaluating whether laws in the remaining 24 states
fully conform to the federal standards.
Private health insurance plans typically provide lower levels of coverage
for the treatment of mental illness than for the treatment of other
illnesses. Issuers of coverage--employers and health insurance
carriers--often limit mental health coverage through the use of plan design
features that can be more restrictive for mental health benefits than for
medical and surgical benefits.4 Commonly found are (1) lower annual or
lifetime dollar limits on what the plan will pay for mental health benefits,
(2) lower service limits for mental health benefits such as the number of
covered hospital days or outpatient office visits, and (3) higher
cost-sharing features for mental health benefits such as deductibles,
copayments, or coinsurance. In the absence of a requirement that benefits
for mental and other health coverage be equal, an employer plan might cover
unlimited hospital days and outpatient visits and impose a lifetime limit of
$1 million for medical and surgical coverage. For mental health services,
that same plan might cover only 30 hospital days and 20 outpatient visits
per year and impose a $50,000 lifetime limit.
Issuers provide more limited mental health coverage primarily because of
cost concerns. Limits on hospital days, outpatient office visits, and annual
or lifetime dollar amounts may reflect issuers' concern about the high costs
associated with long-term, intensive psychotherapy and extended hospital
stays. An issuer may also restrict mental health benefits to protect itself
from adverse selection. That is, a plan with relatively generous mental
health benefits is more likely to attract a disproportionate number of
individuals with a high demand for mental health care services, thus driving
up the claims and premium costs of the plan. In response to growing concern
about perceived inequities in health insurance coverage for mental health
treatment, the Congress passed the Mental Health Parity Act of 1996.5 The
act amended the Employee Retirement Income Security Act of 1974 (ERISA) and
the Public Health Service Act to require that annual and lifetime dollar
limits for mental health coverage be no more restrictive than for all
medical and surgical coverage.6 To achieve parity in dollar limits, a plan
may impose a dollar limit that does not distinguish between mental health
and all medical and surgical coverage, impose a dollar limit on mental
health benefits that is no lower than the limit on all medical and surgical
benefits, or eliminate dollar limits entirely.7 The law contains several
exemptions. It does not apply to
� plans sponsored by an employer with 50 or fewer employees,
� group plans that experience an increase in plan claims costs of at least 1
percent because of compliance, or
� coverage sold in the individual (nongroup) market.
Furthermore, the law does not require any plan to offer mental health
coverage, does not cover substance abuse treatment, and does not prevent a
plan from imposing more restrictive service limits (hospital days or
outpatient visits) or cost-sharing provisions on mental health coverage than
on medical and surgical coverage. The law became effective for group health
plans for plan years beginning on or after January 1, 1998. Without
legislative action, the act will sunset on September 30, 2001.
During the past decade, most states also passed laws regulating mental
health benefits.8 As of March 2000, NCSL reported that laws in effect in 43
states and the District of Columbia addressed mental health coverage in
employer-sponsored group health plans.9 More than half, or 29, of the state
laws are more comprehensive than the federal parity law by requiring parity
not only in dollar limits but also in service limits or cost-sharing
provisions. Sixteen of these states require full parity. That is, they
mandate that mental health coverage be included in all group plans sold, and
they require parity in all respects, including dollar limits, service
limits, and cost sharing. Laws in six states essentially parallel the
federal law. Laws in eight states and the District of Columbia are more
limited and might not conform to the federal law, merely requiring, for
example, that plans containing mental health benefits include a nominal
amount of coverage (less than $1,000 annually) for inpatient or outpatient
mental health care. Seven states have no laws addressing mental health
benefits. (See table 1.)
Table 1: State Laws Affecting Mental Health Benefits Compared With the
Federal Mental Health Parity Act of 1996 as of March 2000
Scope of state law State
No law Alabama, Idaho, Iowa, Michigan, Oregon,a Utah,
Wyoming
More limited than the California,c District of Columbia, Illinois,
federal lawb Massachusetts, Mississippi, North Dakota, Ohio,
Washington, Wisconsin
Meets federal lawd Alaska, Arizona, Florida, New Mexico,e South
Carolina, West Virginia
Arkansas, Colorado, Connecticut, Delaware,
Georgia, Hawaii, Indiana, Kansas, Kentucky,
Louisiana, Maine, Maryland, Minnesota, Missouri,
Exceeds federal lawf Montana, Nebraska, Nevada, New Hampshire, New
Jersey, New York, North Carolina, Oklahoma,
Pennsylvania, Rhode Island, South Dakota,
Tennessee, Texas, Vermont, Virginia
Note: Our survey population included all 21 states and the District of
Columbia identified in the table as having no law, a law more limited than
the federal law, or a law that meets the federal law. We also surveyed
employers in 5 states identified in the table as exceeding the federal law.
We included Nevada and Tennessee because their more comprehensive laws
became effective after our sample was selected. We included Kansas and
Pennsylvania because, although they require that mental health benefits be
included in most coverage sold, they otherwise mirror the federal parity law
by requiring parity only in dollar limits. Finally, we included New York
because of unclear statutory language and HCFA's initial determination that
the state may not be enforcing the minimum federal standards.
aA law more limited than the federal law becomes effective July 2000.
bState law does not require parity in dollar limits but may mandate mental
health benefits, impose minimum service levels, or place limits on
cost-sharing features for mental health benefits.
cA law that exceeds the federal law becomes effective July 2000.
dState law requires parity in dollar limits but not in services or cost
sharing.
eA law that exceeds the federal law becomes effective October 2000.
fLaw requires parity in dollar limits and also imposes parity in services or
cost sharing or mandates that mental health benefits be included.
Source: GAO review of data compiled by NCSL.
Appendix III describes the laws in each state that affect the terms and
conditions of mental health and substance abuse benefits.
Enforcement authority for the Mental Health Parity Act is divided among
federal agencies and the states. Labor is responsible for ensuring that
private sector employer-sponsored group health plans comply with the law--an
extension of Labor's regulatory role under ERISA.10 In states that do not
adopt and enforce statutes or regulations that meet or exceed the federal
parity standards, HCFA is responsible for directly enforcing the federal
standards on carriers.11 The agency is authorized to impose a civil monetary
penalty on carriers of up to $100 per day per violation for each individual
affected by a carrier's failure to comply.12 In states that have standards
conforming to the federal parity law, state insurance regulators have
primary enforcement authority over insurance carriers.13
Mental Health Benefits
Most employers responding to our survey (86 percent) reported that they
comply with the federal parity standards, although the 14 percent that do
not comply represent 9,000 to 13,000 employers in the 26 states and District
of Columbia we surveyed. However, of the plans that do comply, 87 percent
contain one or more other design features such as office visit limits or
hospital day limits that restrict mental health benefits to a greater extent
than medical and surgical benefits. In addition, employers that newly
adopted the federal standards were much more likely than other employers to
also restrict mental health benefits by changing other plan features,
suggesting an attempt to mitigate the effect of the parity law. Finally,
other changes in the health care market besides parity laws also can affect
mental health benefit designs, such as the increasing use of managed care
techniques.
Employers report that they are largely complying with the federal mental
health parity law. That is, where employers' plans impose annual or lifetime
dollar limits, the limits are at least as generous for mental health
benefits as they are for all medical and surgical benefits. Eighty-six
percent of employer plans we surveyed reported compliance with the federal
parity requirement as of December 1999, representing about 68,000 to 74,000
employers in the 26 states and the District of Columbia we surveyed.14 In
contrast, 14 percent reported that they were noncompliant, representing
about 9,000 to 13,000 employers in the 26 states and the District of
Columbia.15 Both HCFA and Labor officials found the 14 percent noncompliance
rate comparable with their own assessments. For example, on the basis of a
preliminary review of its findings, Labor recently determined that 12
percent of about 200 employers it investigated were out of compliance with
federal parity standards. In contrast, in 1996 before the parity law was
enacted, only about 55 percent of employers had parity in the annual and
lifetime dollar limits for mental health and medical and surgical
benefits.16 When asked why employers changed their annual or lifetime dollar
limits, more than 75 percent (plus or minus 8.6 percent) of those responding
cited the federal Mental Health Parity Act as a significant or primary
reason for the change. Among the employer plans in our survey that were not
in compliance with the federal parity law, most had lifetime limits for
mental health coverage that did not exceed $100,000, as shown in table 2.
Table 2: Lifetime Dollar Limits for Noncompliant Employer Plans, 1999
Lifetime dollar limit Percent of noncompliant plans
$25,000 or less 37 (� 9.8)
$25,001 to $100,000 25(� 8.7)
More than $100,000 12 (� 6.4)
No limit 14 (� 7.1)a
aThese plans met the federal requirement for parity in lifetime dollar
limits but were out of compliance because they had annual dollar limits for
mental health services that were more restrictive than those for medical and
surgical benefits.
Source: GAO survey of employers' mental health benefits.
Restrictive for Mental Health Benefits Than for Medical and Surgical
Benefits
Most employers' plans we surveyed contain other plan design features that
are more restrictive for mental health than for medical and surgical
benefits. Typically, these features include limits on the number of covered
hospital days and outpatient office visits as well as higher cost-sharing
features such as copayments and coinsurance. In December 1999, 87 percent of
compliant employer plans contained at least one design feature more
restrictive for mental health benefits.17 Most prevalent were restrictions
on the outpatient office visit and hospital day limits, as indicated in
table 3.
Table 3: Compliant Employer Plans Reporting More Restrictive Limits on
Mental Health Benefits Than Medical and Surgical Benefits, 1999
Mental health plan design feature Percent
Lower outpatient office visit limits 66
Lower hospital day limitsa 65
Higher outpatient office visit copaymentsa 27
Higher outpatient office visit coinsurancea 25
Higher cap on enrollee out-of-pocket costs 12
Higher hospital stay coinsurance 10
Higher hospital stay copaymentsa 5
aThe differences between compliant and noncompliant plans placing more
restrictive limits on mental health services for these plan design features
were not statistically significant.
Source: GAO survey of employers' mental health benefits.
In contrast, very few health plans we surveyed impose any limits on hospital
days or office visits for nonmental health conditions--about 10 and 8
percent, respectively. Table 4 illustrates the variation in selected design
features for the most popular health plan of employers we surveyed.
Table 4: Selected Design Features for a Typical Employer-Sponsored Group
Health Plan, 1999
Design feature Mental health Medical and surgical
Lifetime dollar limit $1 million combined with $1 million combined
medical and surgical with mental health
Hospital day limit 30 days Unlimited
Outpatient office visit
limit 20 days Unlimited
Outpatient office visit
coinsurancea 50% 20%
aOutpatient office visit coinsurance includes the most frequent levels for
plans with coinsurance.
Source: Based on the mode of reported limits and coinsurance in GAO survey
of employers' mental health benefits.
Were More Likely to Add Other Restrictions
According to our survey, employers that newly adopted the federal parity
requirements were more likely than those that did not change dollar limits
after 1996 to further restrict access to mental health coverage by
tightening other design features. About 65 percent (plus or minus 8.2
percent) of employers that adopted annual or lifetime parity in dollar
limits after 1996 changed at least one other mental health design feature to
a more restrictive one. Most commonly changed were outpatient office visit
limits and hospital day limits, as shown in table 5. Only 26 percent (plus
or minus 5.2 percent) of employers that did not change dollar limits after
1996--that is, plans that were already in compliance or that remain out of
compliance--have changed at least one mental health design feature to become
more restrictive. This suggests that many employers have changed mental
health benefit design features in order to mitigate or offset the more
generous annual and lifetime dollar limits required by the Mental Health
Parity Act.
Table 5: Employers' Plans That Have Further Restricted Mental Health
Benefits Since 1996
Benefit design feature change Newly compliant Other employersa
Fewer office visits covered 51% (� 9.3) 11%
Fewer hospital days covered 36 (� 8.9) 11
Increased outpatient office visit
copaymentsb 20 (� 7.7) 13
Increased outpatient office visit
coinsurance 11 (� 5.8) 3
Increased hospital stay coinsurance 7 (� 4.6) 2
Increased hospital stay copaymentsb 3 (� 3.4) 7
Increased cap on enrollee's
out-of-pocket costs 18 (� 7.1) 7
aIncludes employers' plans that already had parity in 1996 and those that
did not have parity in 1996 and remained out of compliance in 1999.
bThe differences in the percentage of newly compliant and other employers
that increased hospital stay and office visit copayments after 1996 are not
statistically significant.
Source: GAO survey of employers' mental health benefits.
Our survey results show that 89 percent of employers' most popular health
plans contain managed care features. In addition, about 14 percent of the
survey respondents indicated that their employee health plans contained more
managed care features in 1999 than they did in 1996. Moreover, the mental
health benefits in many employers' health plans are administered by a
managed behavioral health organization that coordinates and manages the
mental health care. The Surgeon General estimates that almost 177 million
Americans with health insurance were enrolled in managed behavioral health
organizations in 1999.18 About 7 percent of employers responding to our
survey reported that their mental health benefits were separately
administered by a managed behavioral health care organization under a
carve-out arrangement in 1999. However, the extent to which mental health
benefits are carved out may be understated because employers may not have
been aware whether plans they purchase from a carrier carve out the mental
health benefits.
Some analysts and advocates for mentally ill persons suggest that managed
care can, under certain circumstances, diminish access to mental health
services. For example, the National Advisory Mental Health Council concluded
in its 1997 and 1998 reports to the Congress that parity alone does not
guarantee improved access to mental health care because of the counteracting
effect of managed care.19 Managed care techniques that can influence access
to care include primary care gatekeepers, capitation, financial incentives
to providers, the size and composition of provider networks, utilization
review, and case management services.
Conversely, other research suggests that managed care can have a more
positive effect on access to mental health services. According to a recent
study of eight large employers that insure more than 2.4 million Americans
through managed-care programs for mental health and substance abuse, the
employers in the study have eliminated most of the day and lifetime limits
and significantly decreased copayments. Employees' use of mental health and
substance abuse benefits has increased overall, with greater use of
outpatient and alternative treatment settings and a decrease in inpatient
care. Among factors that the study authors attributed to the success of
these programs were the availability of a full continuum of treatment
settings in the managed care networks and strong referral mechanisms to
connect employees to appropriate services.20
Which Appears to Be Negligible
While most of the employers we surveyed reported that they did not know
whether compliance with the law increased their plans' claims costs, early
concerns that the act's passage would increase claims costs by more than 1
percent appear to have been unfounded. Our findings corroborate past
studies' estimates that implementing federal parity would have a negligible
effect on employers' claims costs. Researchers anticipate higher yet modest
claims costs for employers in states that enact more comprehensive parity
laws.
Report Cost Increases
About 60 percent of the responding employers did not know whether compliance
with the Mental Health Parity Act increased their plans' claims costs, and
about 37 percent reported that compliance had not raised their claims costs.
Only about 3 percent of the respondents suggested that claims' costs
increased as a result of the act.21 However, as noted above, compliance with
the act was associated with increased restrictions for other plan features,
such as office visit or hospital day limits, which may have limited the
extent to which claims costs would increase. In addition, less than 1
percent of responding employers actually dropped coverage of mental health
benefits or their health benefits plans altogether after the law was
enacted, which may further illustrate the lack of employer concern about
increased costs.
Several studies aimed at estimating the costs of the federal parity law
concluded that requiring parity only in dollar limits would result in cost
increases of less than 1 percent. For example, the Congressional Budget
Office estimated that the Mental Health Parity Act would result in claims
costs increases of 0.16 percent, while Coopers and Lybrand predicted claims
cost increases of about 0.12 percent.22
Modest Cost Increases
Many states have enacted mental health laws that are more comprehensive than
the federal Mental Health Parity Act and thus are likely to have a greater
effect on claims costs than the federal law. Unlike the federal law, these
laws require parity not only in dollar limits but also in service limits,
cost-sharing provisions, or both. In addition, many state laws mandate the
inclusion of mental health benefits in fully insured group health plans and
cover substance abuse and chemical dependency. Public and private health
policy researchers have examined the estimated or actual costs resulting
from more comprehensive state parity laws. In addition to estimates of
increased claims costs in several states, several studies have examined the
potential premium cost increases associated with full parity nationally.
Most studies estimate the cost of full parity for individual states and on a
national basis to be between 2 and 4 percent, as summarized in table 6.
Table 6: Estimated Cost Increases for Full Parity in Mental Health and
Substance Abuse Benefits
Study Scope Increasea
Coopers and Lybrandb National 3.2%
Milliman and Robertsonc National 3.9
Congressional Budget Officed National 4.0
Mathematica Policy Researche National 3.6
Department of Banking, Insurance, Securities,
and Health Care Administrationf Vermont 0-3
North Carolina Psychological Associationg North Carolina h
Price Waterhouse Coopersi 16 statesj 2.5-3.9
aThe national figures are estimates of premium increases. The figures for
the individual states represent an expected increase in claims costs. The
percentages are a composite of the estimated cost increases for
fee-for-service, preferred provider organization, point of service, and
health maintenance organization (HMO) plans. Typically, cost estimates
assume that HMO and other managed care plans have lower cost increases.
bCoopers and Lybrand, An Actuarial Analysis of the Domenici-Wellstone
Amendment to S. 1028 "Health Insurance Reform Act" to Provide Parity for
Mental Health Benefits Under Group and Individual Insurance Plans, for
American Psychological Association (n.p.: Apr. 1996).
cMilliman and Robertson, Premium Rate Estimates for a Mental Illness Parity
Provision to S. 1028, "The Health Insurance Reform Act of 1995" (n.p.: Apr.
1996).
dCongressional Budget Office, CBO's Estimates of the Impact on Employers of
the Mental Health Parity Amendment in H.R. 3103 (Washington, D.C.: May
1996).
eMathematica Policy Research, The Costs and Effects of Parity for Mental
Health and Substance Abuse Insurance Benefits, for the Substance Abuse and
Mental Health Services Administration (Washington, D.C.: Mar. 1998).
fDepartment of Banking, Insurance, Securities, and Health Care
Administration, Report of the Department of Banking, Insurance, Securities,
and Health Care Administration on Mental Health and Substance Abuse Parity
(Act 25) to the Vermont General Assembly (Washington, D.C.: Jan. 1999).
gNorth Carolina Psychological Association, North Carolina Comprehensive
Major Medical Plan for Teachers and State Employees: Data on the Mental
Health Benefit (Raleigh, N.C.: Apr. 1999).
hBetween 1992 and June 1998, mental health payments as a percentage of total
health payments for the N.C. Comprehensive Major Medical Plan for Teachers
and State Employees decreased from 6.4 to 3.1 percent, representing a
cumulative cost reduction of 52 percent. In this health plan, the mental
health benefits are managed by a managed behavioral health care
organization.
iPrice Waterhouse Coopers is the result of a merger between Price Waterhouse
and Coopers and Lybrand.
jPrice Waterhouse Coopers estimated the claims costs increases of parity for
mental health and substance abuse benefits in Arizona, California, Delaware,
Kentucky, Massachusetts, Michigan, Missouri, Nebraska, New Jersey, New
Mexico, Nevada, North Carolina, Ohio, Oregon, South Carolina, and Vermont.
Implementation of the Parity Law
Federal agencies have made varying progress in performing their oversight
roles under the act. Labor's role is expanding from a largely
complaint-driven approach to one that also uses investigations to more
systematically measure employers' compliance with the law. HCFA remains in
the early stages of identifying states that have not adopted conforming laws
or are not otherwise enforcing the federal standards. Once these states are
identified, HCFA must initiate a multistep process to establish itself as
the enforcement authority for insurance carriers found not to be enforcing
the federal parity standards in these states.
Labor has traditionally relied on a complaint-driven approach to identify
noncompliance with federal health plan standards. However, with the
enactment of several federal health insurance reforms since 1996, including
the Mental Health Parity Act, Labor's enforcement role has significantly
expanded.23 Accordingly, the agency has undertaken several initiatives to
improve and expand its oversight, customer service function, and consumer
and employer education efforts.24 On April 6, 2000, the agency published its
strategic enforcement plan to make public its goals and intended approach to
ensuring that employee benefit plans comply with federal standards,
including mental health parity.25
In particular, the agency has initiated a limited number of investigations
to more systematically determine health plan compliance. As of March 2000,
Labor officials said they had completed investigations of approximately 200
employers that varied by size and geography. In addition to reviewing their
compliance with other ERISA requirements, Labor had reviewed 215 of the
plans that were subject to the Mental Health Parity Act and found 26, or 12
percent, that were not in compliance, according to officials.26 These plans
typically retained annual or lifetime limits that were lower for mental
health coverage than for medical and surgical coverage or contained other
violations of the law. The agency plans to conduct approximately 1,000
investigations annually, according to agency officials. The agency is
considering developing a sampling model that it may use to help evaluate
compliance.
Enactment of the Mental Health Parity Act and other recent federal insurance
reforms has created a broad new regulatory role for HCFA. The agency must
enforce federal requirements on insurers in states where it determines that
a state has not enacted legislation that meets or exceeds the federal
standards or has otherwise failed to "substantially enforce" the federal
standards. Its activities in support of this new role have been evolving
since the enactment of the Health Insurance Portability and Accountability
Act of 1996 (HIPAA).27 On August 20, 1999, the agency issued enforcement
regulations that prescribe the process by which it assumes an enforcement
role in a particular state and describes regulatory responsibilities it may
perform.28
In mid-1999, the agency undertook an initial state-by-state analysis to
determine whether state laws conform to the federal standards--a precursor
to determining whether the agency may be required to play an enforcement
role in a particular state. Agency officials said that their preliminary
examination indicated that 7 states appeared not to have laws addressing the
federal parity standards, 24 states had laws about which the agency had
questions concerning their conformance to the federal standards, and 20
states appeared to have laws that fully conformed to federal parity
standards.
In December 1999, HCFA sent letters to the seven states without laws,
indicating that it had a reasonable question about whether the states'
standards substantially met the specified federal parity requirements. HCFA
officials said they would accept that states meet the federal standards if
alternatives such as regulations or advisory bulletins existed and had some
statutory basis. As of May 2000, HCFA officials said that four of these
states had enacted conforming laws or other directives or otherwise had
demonstrated that they enforce the federal parity requirements. In states
that do not meet these standards through other regulatory means, HCFA will
begin its formal determination process in which it can ultimately assume
direct enforcement responsibilities. As of April 2000, HCFA was still
evaluating the laws in the 24 states where it had questions concerning state
conformance.
The Mental Health Parity Act of 1996 sought to bring mental health benefits
closer to other health benefits. The act requires parity only in annual and
lifetime dollar limits and does not place restrictions on other plan
features such as hospital and office visit limits. Therefore, the changes
employers made to bring health plans into compliance with the act often
included further restrictions in these other plan features that may have
offset the parity achieved in dollar limits. Further, a significant minority
of plans--about 14 percent in the 26 states and the District of Columbia we
surveyed--continue to have lower mental health than medical and surgical
dollar limits in direct contradiction of the law. The net effect is that
consumers in states without more comprehensive laws have often seen only
minor changes in their health benefits, resulting in little or no increase
in their access to mental health services, and that the costs associated
with the federal law have been negligible for most health plans.
As the Congress considers proposals that would renew the Mental Health
Parity Act beyond 2001 or expand it to provide more complete parity between
mental health and other health benefits, the effects of the 1996 act along
with the experiences of the 29 states with more comprehensive parity laws
are instructive. These more comprehensive state laws, which require parity
not only in dollar limits but also in service limits, cost-sharing
requirements, or both may provide information about the potential costs of
extending parity--estimated to be about 2 to 4 percent. Further, the market
for mental health services has continued to evolve since 1996, with managed
care and carve-outs of mental health services increasingly applied.
Nonetheless, despite the federal and state parity laws and market changes,
many Americans are likely to remain in employer-sponsored health plans that
restrict benefits for mental illness more than for other types of illnesses.
HCFA and the Department of Labor commented on a draft of this report. Both
generally agreed with our findings and conclusions and provided technical
comments, which we have incorporated as appropriate. Appendix IV contains
the comment letter from HCFA.
As we agreed with your office, unless you publicly announce this report's
contents earlier, we plan no further distribution of it until 30 days after
its issue date. We will then send copies to the Honorable Donna E. Shalala,
Secretary of Health and Human Services; the Honorable Nancy-Ann Min DeParle,
Administrator of HCFA; the Honorable Alexis M. Herman, Secretary of Labor;
the Honorable Leslie B. Kramerich, Acting Assistant Secretary for the
Pension and Welfare Benefits Administration; and other interested
congressional committees and members and agency officials. We will also make
copies available to others on request.
Please call me at (202) 512-7114 if you have any questions. Other contacts
and major contributors are listed in appendix V.
Sincerely yours,
Kathryn G. Allen
Associate Director, Health Financing
and Public Health Issues
Survey Scope and Methods
To determine employers' compliance and responses to the Mental Health Parity
Act of 1996, we conducted a mail survey of employers in selected states
between November 1999 and February 2000. We sent the survey to a random
sample of employers, stratified by size, in the District of Columbia and 28
states initially identified as having mental health parity laws similar to
the federal law or that had no parity law of their own (and thus the federal
act was in effect). 29 The survey collected information about
1. the current most popular health plan that contains mental health
benefits;
2. the same plan in 1996, if available then, or the most popular health plan
containing mental health benefits offered in 1996 and how it compares with
the current plan; and
3. the cost of changes made to mental health benefits as a result of the
law.
To develop the questions we used in our survey, we reviewed the requirements
of the law as well as the existing research addressing the issue of mental
health parity. In addition, representatives from the Department of Health
and Human Services' (HHS) Substance Abuse and Mental Health Services
Administration (SAMHSA), the Washington Business Group on Health, and
Mercer/Foster Higgins reviewed a draft of the survey and provided us with
comments. We pretested the survey with five private employers of varying
sizes in California, Illinois, Michigan, and the District of Columbia.
We selected our sample to be representative of employers subject to the
law--private employers with more than 50 employees who offer medical
benefits, including mental health benefits, to their employees. We excluded
public employers (state and local governments) because their plans are
allowed to elect exemption from the federal mental health parity law.30 In
addition, because our goal was to measure the effect of federal rather than
state parity, we excluded states that had mental health parity laws that
exceeded the parity requirements of the federal law in order to avoid
confounding our results. On the basis of a preliminary review of state laws
that we requested from the National Conference of State Legislators (NCSL)
in July 1999, we initially identified 28 states and the District of Columbia
as eligible for inclusion in our survey.
Using our list of eligible states, Dun and Bradstreet identified all private
employers' headquarters offices with more than 50 employees in its database
of U.S. businesses.31 In addition, because certain aspects of health
benefits may vary depending on employer size and because more small
employers exist than larger ones, we divided the employers into three strata
by size before sampling in order to improve the precision of our estimates.
The three strata were
1. small employers, with 51 to 100 employees;
2. medium-sized employers, with 101 to 200 employees; and
3. large employers, with more than 200 employees.
The initial sample, drawn by Dun and Bradstreet, consisted of 2,500
employers in 28 states and the District of Columbia. Further review of state
laws revealed that Kentucky and Louisiana had mental health parity laws that
were more comprehensive than the federal law. Employers in these states were
removed from the sample (102 cases).
We received responses from 1,212 of the remaining 2,398 employers, and 102
were deemed undeliverable.32 We conducted three follow-up attempts to
increase the response rate--a second mailing of the survey to all
nonrespondents, a letter encouraging participation, and telephone calls to
about 63 percent of randomly selected nonresponding employers.
We adjusted the population and sample sizes for employers that we determined
were not subject to the federal law for the following reasons:
� they did not offer a health plan or had health plans without mental health
benefits for their employees (279 cases) or
� they reported having fewer than 50 employees (70 cases).
In adjusting both the population and sample sizes, we assumed that the
proportion of employers who were incorrectly identified as eligible for our
survey was the same for both responding and nonresponding employers and we
adjusted both the sample and population sizes accordingly. A total of 863
eligible responses were obtained out of an adjusted sample of 1,648
employers, for an overall response rate of 52 percent. See table 7 for
details of the population and sample sizes, number of responses received,
adjustments made, and response rates per strata.
Table 7: Selected Survey Sample and Response Data
Size of Initial Initial Total Adjusted Adjusted Number of Adjusted
business population sample number of population sample eligible response
size size responsesa size sizeb responses ratec
Small 79,320 1,263 636 44,664 711 392 55%
Medium 37,150 592 283 26,038 407 216 53
Large 40,531 645 293 32,709 530 255 48
Total 157,001 2,500 1,212 103,483 1,648 863 52%
aIncludes both ineligible and eligible responses.
bSample was adjusted based on proportion of ineligible responses.
c Response rate was based on eligible responses and adjusted sample size.
Because we used a sample to develop our estimates, our results contain
sampling error that occurs from not collecting data from all employers
subject to the federal law in the states we surveyed. Sampling error
indicates how closely we can reproduce from a sample the results that we
would expect to obtain if we were to survey all eligible employers.
The sampling errors for the point estimates used in this report are based on
the design of the survey and the response-adjusted sample weights. These
sampling errors were used to calculate 95 percent confidence intervals
around our estimates, which means that the chances are about 19 in 20 that
the actual percentage being estimated falls within the range defined by our
estimate, plus or minus the sampling error. Unless otherwise indicated in
the report, the sampling error for the survey results presented in this
report is no greater than 2.5, for a confidence interval of plus or minus 5
percentage points. Sampling errors were larger for some analyses of
subgroups, such as employers that were newly compliant with the federal law.
All differences we report are statistically significant unless we note
otherwise.33 Statistical significance means that the differences observed
between the subgroups are unlikely to be attributed to chance.
To identify potential biases in the responses we received that may occur
when certain employers respond and others do not, we compared key
characteristics--size of business, geographic region, and type of
industry--of employers that responded to the survey with those that did not.
We found that large employers were less likely to participate in the survey
than small and medium-sized firms. In addition, employers in the Northeast
were less likely to respond to the survey while those in the Midwest were
more likely to participate. Despite these differences, compliance with the
mental health parity law among responding employers did not vary
significantly by employer size, type of industry, or geographic region.
However, we were unable to determine whether the compliance of nonresponding
employers differed significantly from that of those participating in the
survey. Where differences exist, the estimates could incorrectly attribute
the characteristics of the responding employers to the nonresponding
employers. For example, if employers with noncompliant plans were less
likely to respond to the survey, our compliance estimate would underestimate
the portion of noncompliant employer plans.
We weighted the results so they would be statistically representative of
private employers with more than 50 employees who offer mental health
benefits in the District of Columbia and the 26 states. The results of our
survey cannot be generalized to employers with fewer than 50 employees,
government employers, or private employers in states other than those we
surveyed.
As with all surveys that rely on self-reported data, some degree of
measurement error--error that occurs when the responses received do not
accurately reflect reality--exists in the results. Measurement error may
have occurred in our survey if respondents either misunderstood a question
or used outdated information, such as old summaries of their health plan, to
answer a question. We contacted some employers by telephone to obtain,
clarify, or verify information related to certain problematic responses. To
ensure completeness and accuracy in the contractor keypunched data, we
independently verified 3 percent of the surveys, or 38, for keypunch
accuracy.
Finally, not every respondent answered every question. Relatively high item
nonresponse included questions pertaining to the health plan in place in
1996. To see how item nonresponse may affect two of our key results--parity
in annual and dollar limits for 1999 and 1996--we tested to see if there
were significant differences between employers for whom we could determine
the parity of their benefits and those for whom we could not. Employers were
compared on size, geographic region, and type of industry. Our ability to
determine parity in 1999 varied only by employer size, for which item
nonresponse meant that we could not determine compliance for 24 percent of
small employers. Our ability to determine parity in 1996 varied by both
employer size and geographic region. Item nonresponse for 1996 health plan
data meant that we could not determine parity for 58 percent of small
employers and 60 percent of respondents from the South.
Summary of Survey Responses
Following are the responses we received to our survey of employers' mental
health benefits. The sum of the combined responses may not equal 100 percent
because of rounding. In addition, because not every employer responded to
each question, we have provided the total number of responses for each
question. As with the survey, we divided the summary of responses into three
parts:
� Information about the employer's current health plan that both covers the
largest number of lives and contains mental health benefits.
� Information about the same plan in 1996 or the most popular health plan
containing mental health benefits offered in 1996 compared with the 1999
plan.
� Information about the cost of changes made to mental health benefits as a
result of the Mental Health Parity Act.
Lives and Contains Mental Health Benefits
Table 8: Mental Health Benefits Offered Now
Are mental health benefits included in any of the health plans offered
employees? (n = 1,097)
Response Percent
Yes 79
No 15
No health plan offered 6
Table 9: Mental Health Benefits Ever Offered Since December 1996
Have mental health benefits ever been included in any of the health plans
offered employees since Dec. 1996? (n = 125)a
Response Percentb
Yes 4
No 61
No health plan offered 35
aQuestion applies only to employers indicating mental health benefits are
not included in any of their health plans.
bConfidence intervals ranged from �3.3 to �8.4 percent.
Table 10: Number of Lives Benefits Cover
How many lives are covered by the plan that has the largest number of
covered lives and contains mental health benefits? (Please include active
and retired employees and their dependents.) (n = 745)
Median 122
Range 2-333,652
Table 11: Plan Insurance
Is this health plan fully insured or self-insured? (n = 848)
Response Percent
Fully insured 64
Self-insured or self-funded 32
Don't know 4
Table 12: Plan Type
What type of plan is this health plan? (n = 837)
Response Percent
Conventional indemnity 8
Preferred provider organization (PPO) 45
Point-of-service (POS) 12
Health maintenance organization (HMO) 32
Other 4
Table 13: Administered by a Managed Behavioral Health Care Company
Does your organization contract with a managed behavioral health care
company for separate administration of mental health benefits? (n = 846)
Response Percent
Yes 7
No 86
Don't know 6
Table 14: Financial Risk of Administering Organization
What level of risk does the organization administering the mental health
benefits bear? (n = 59)a
Response Percentb
Bears no financial risk 41
Bears some financial risk 10
Bears all financial risk 10
Don't know 38
aQuestion applies only to employers contracting with a managed behavioral
health care company for the administration of their mental health benefits.
bBecause only a subset of respondents answered this question, the confidence
intervals ranged from �7.4 to �12.5 percent.
Table 15: Plan Design Features for Current Plan
What is the amount of the limit or cost-sharing feature that applies to the following plan
design features?
Mental health benefita Medical surgical benefita
Plan design Percent Median amount for Percent Median amount for
feature Number of with plans with limit Number of with plans with limit
responses responses
limit (25th-75th quartile) limit (25th-75th quartile)
Annual dollar $6,300 $1,000,000
limit 572 28% 593 16%
(1,500-1,000,000) (5,000-2,000,000)
Lifetime $1,000,000 $1,000,000
dollar limit 658 54 708 54
(1,000,000-2,000,000) (1,000,000-2,000,000)
Annual $1,000 $1,000
out-of-pocket 660 62 718 73
maximum (750-1,500) (800-1,500)
Annual $250 $250
deductible 757 47 771 51
(200-300) (200-300)
Inpatient $100 $100
hospital care 642 22 671 24
copayment (50-240) (75-240)
Inpatient 20% 20%
hospital care 720 51 725 45
coinsurance (10-20) (10-20)
Annual 30 days 30 days
inpatient 726 76 679 10
hospital days (30-30) (30-70)
Outpatient $15 $10
office visit 710 70 723 78
copaymentb (10-20) (10-15)
Outpatient 30% 20%
office visit 707 49 674 35
coinsuranceb (20-50) (10-20)
Annual 20 visits 20 visits
outpatient 747 75 683 8
office visit (20-30) (20-30)
aAll data reflect plan feature for in-network benefits, as applicable.
Estimates reflect plans that apply design features both to mental health and
medical surgical services combined and to those that apply a separate limit
or amount for mental health services and for medical surgical services.
bCopayment and coinsurance reflect amount for tenth visit.
Health Benefits Offered in 1996, Compared With the 1999 Plan
Table 16: Current Plan in 1996
Were mental health benefits offered through your current health plan at
any time in December 1996? (n = 802)
Response Percent
Yes 62
No, organization did not exist in December 1996 5
No, plan was not available or did not contain mental health
benefits 17
Don't know 17
Table 17: Mental Health Benefits in Any Plan
Were mental health benefits offered through any of the plans that you
offered in December 1996? (n = 268)a
Response Percentb
Yes 36
No 11
Don't know 53
aQuestion applies only to employers whose current plan was not offered or
did not contain mental health benefits in 1996.
bConfidence intervals ranged from �3.8 to �6.0 percent.
Table 18: Plans Covering the Most Lives in December 1996
Please identify the type of plan in place in December 1996 that covered
the most lives and contained mental health benefits. (n = 94)a
Response Percentb
Conventional indemnity 16
Preferred provider organization (PPO) 41
Point-of-service (POS) 9
Health maintenance organization (HMO) 30
Other 4
aQuestion applies only to employers whose current plan was not offered or
did not contain mental health benefits in 1996.
bConfidence intervals ranged from �4.2 to �9.9 percent.
Table 19: Plan Design Features in December 1996
For the health benefits plan that was available in December 1996, what was the amount of the
limit or cost-sharing feature applied to the following plan design features?
Mental health benefita Medical surgical benefita
Plan design Percent Median amount for Percent Median amount for
feature Number of with plans with limit Number of with plans with limit
responses (25th-75th responses
limit limit (25th-75th quartile)
quartile)
Annual dollar $5,250 $1,000,000
limits 379 51%b 370 18%
(1,500-15,000) (200,000-1,000,000)
Lifetime $50,000 $1,000,000
dollar limits 413 66 442 58
(25,000-1,000,000) (1,000,000-2,000,000)
Annual $1,000 $1,000
out-of-pocket 391 59 431 72
maximum (700-1,500) (750-1,500)
Annual $200 $200
deductible 464 50 471 55
(100-250) (100-250)
Inpatient $100 $100
hospital care 398 19 414 20
copayment (50-250) (50-240)
Inpatient 20% 20%
hospital care 448 52 456 46
coinsurance (10-20) (10-20)
Annual 30 days 60 days
inpatient 430 63 429 8
hospital days (30-30) (30-120)
Outpatient $20 $10
office visit 419 58 433 67
copaymentc (10-25) (10-15)
Outpatient 50% 20%
office visit 456 55 435 39
coinsurancec (20-50) (10-20)
Annual 20 days 20 days
outpatient 442 60 428 6
office visit (20-30) (20-25)
aAll data reflect plan feature for in-network benefits, as applicable.
Estimates reflect plans that apply design features both to mental health and
medical surgical services combined and to those that apply a separate limit
or amount for mental health services and for medical surgical services.
bConfidence interval �5.0 percent.
cCopayment and coinsurance reflect amount for tenth visit.
Table 20: Reasons for Benefit Changes After December 1996, Part 1
Where differences exist in the design features for mental health benefits
in your current plan and those available in December 1996, please indicate
which factors other than the Mental Health Parity Act influenced your
decision to change these features. (Check all that apply.) (n = 652)
Response Percent
No changes made 36
Employee needs or preferences 5
Cost containment efforts 15
Market trends in health plan benefits 8
Increased availability of managed health care services 5
State statutes or regulations 9
Don't know 11
Other 10
Table 21: Reasons for Benefit Changes After December 1996, Part 2
Where differences exist in the design features for mental health benefits
in your current plan and those available in December 1996, please indicate
whether changes were made primarily in response to the Mental Health
Parity Act or primarily for the other reasons checked in the question in
table 20. (Check all that apply.)
About as
Primarily
Primarily much in or more
Plan design Number of No or more in response for Don't
feature responses change response to the act reasons know
to the act as for other than
other
reasons the act
Annual dollar
limit 513 48% 25% 2% 9% 16%
Lifetime dollar
limit 517 51 22 1 10 16
Annual
out-of-pocket 501 61 7 2 14 16
maximum
Annual
deductible 500 64 5 1 16 14
Inpatient
hospital care 502 67 4 1 14 14
copayment
Inpatient
hospital care 500 64 6 2 14 15
coinsurance
Annual
inpatient 506 57 14 2 12 15
hospital days
Outpatient
office visit 501 61 6 1 18 14
copayment
Outpatient
office visit 502 62 8 1 14 15
coinsurance
Annual
outpatient 506 54 17 2 13 15
office visit
Table 22: Administered by a Managed Behavioral Health Care Company in 1996
Did your organization contract with a managed behavioral health care
company for separate administration of mental health benefits in December
1996? (n = 577)
Response Percent
Yes 5
No 90
Don't know 5
Table 23: Managed Care in Current Plan Compared With December 1996
Were more managed care features (such as case management, utilization
review, precertification, provider networks, or individualized treatment
plans) implemented in your current plan for mental health benefits than in
the one available in December 1996? (n = 566)
Response Percent
Yes, implemented more managed care features 14
No, did not implement more managed care features 65
Don't know 22
Table 24: Employees' Access to Benefits
In your view, have the changes made to your mental health benefits since
December 1996 affected employees' access to mental health services?
Greatly or Neither Greatly or
Type of access Number of somewhat increased nor somewhat
responses
increased decreased decreased
Access to
inpatient 501 13% 84% 2%
services
Access to
outpatient 500 16 80 4
services
Access to
preventive 496 13 86 1
services
Access to mental
health services 501 17 81 3
overall
Table 25: Employee Eligibility for Coverage
In considering all of the health plans offered by your organization since
December 1996, would you say that the proportion of your employees who are
eligible to enroll in a health plan that contains mental health benefits
has changed?
Greatly or Neither Greatly or
Number of somewhat increased nor somewhat
responses
increased decreased decreased
Employees
eligible to 522 8% 91% 2%
enroll
Mental Health Parity Act
Table 26: Exemption Filed
A provision of the Mental Health Parity Act allows an exemption for
employers who can demonstrate that compliance has resulted in an increase
in total claims costs of 1 percent or more. Has your organization filed
for an exemption from the Mental Health Parity Act? (n = 791)
Response Percent
Yes 1
No 78
Don't know 21
Table 27: Reasons Exemption Not Filed
Below are reasons why an organization might not file for an exemption from
the Mental Health Parity Act. Please indicate the reasons your
organization did not apply for an exemption. (Check all that apply.)
Response Number of responses Percent
No changes were necessary to comply with the
act 620 32%
Not aware of exemption 619 28
Claims costs did not increase at least 1
percent 619 15
Changed benefit design to mitigate the cost
of the act 619 5
Preferred to have employees benefit from the
law 619 9
Did not examine changes in costs 619 18
Other 620 5
Don't know 620 11
Table 28: Compliance and Claims Costs
Has compliance with the act increased your health benefit plan's claims
costs? (n=772)
Response Percent
Yes 3
No 37
Don't know 60
Table 29: Claims Cost Increases
By about what percentage did your total health benefit claims costs
increase from complying with the act? (n = 33)a
Response Percent b
Less than 1 percent 19
1 to 2 percent 17
3 to 5 percent 22
More than 5 percent 15
Don't know 27
a Question applies only to employers indicating that compliance with the act
increased their health benefit plan's claims costs.
b Because only a subset of respondents answered this question, the
confidence interval ranged from �12.1 to �15.1 percent.
State Laws on Mental Illness and Substance Abuse Treatment
NCSL's Health Policy Tracking Service tracks state laws regulating private
health insurance coverage. At our request, NCSL undertook a comprehensive
review of the state laws that affect mental illness and substance abuse
coverage and prepared a summary as of March 1, 2000. That summary is the
basis for table 30. Identified in the table are whether each state has an
applicable law, its effective date, the type of coverage (for example, group
or health maintenance organization (HMO) or individual market), the
illnesses whose treatments are covered (for example, mental illness or
substance abuse), and the scope of benefits. In addition, the "type of
benefit mandate" is specified, which describes the extent to which each law
requires that a benefit be covered. For example, a "mandated benefit" clause
within a law addressing the coverage of mental health benefits requires that
all coverage sold in the applicable market contain mental health benefits
that comply with the terms of the law. A "mandated offering" clause
generally requires that the terms of the law apply only if mental health
coverage is included in the health plan. Finally, with respect to the
requirements of the law as they pertain to the scope of benefits offered in
a health plan, the table indicates whether the law requires that certain
elements of coverage--inpatient benefits, outpatient benefits, cost-sharing,
or dollar limits--be provided on a par with benefits for medical and
surgical coverage or specifies that minimum levels of coverage must be
offered.
Table 30 shows that as of March 1, 2000, laws in effect in 43 states and the
District of Columbia addressed mental health coverage in employer-sponsored
group plans and, to a lesser extent, coverage sold in the individual market.
With regard to group plans, more than half, or 29, of the state laws are
more comprehensive than the federal law in that they require parity not only
in dollar limits but also in service limits or cost-sharing provisions. In
addition, many of these also mandate that mental health benefits be included
in all plans sold. Laws in 6 states essentially parallel the federal law.
Laws in 8 states and the District of Columbia are more limited and may not
conform to the federal law, while 7 states have no laws addressing mental
health benefits. Unlike the federal law, most states, or 41, and the
District of Columbia either explicitly include substance abuse within the
scope of their mental health benefit laws or have separate statutes
addressing substance abuse coverage. However, 13 of these state laws cover
only alcoholism.
State laws also define mental illness differently. For example, some state
laws define mental illness narrowly to include only specified mental
illnesses. Commonly specified are schizophrenia, schizoaffective disorder,
bipolar affective disorder, major depression, obsessive compulsion, and
panic disorder. Other state laws define mental illness more broadly,
generally including the conditions classified as mental illness by the
American Psychiatric Association's (APA) Diagnostic and Statistical Manual
of Mental Disorders (DSM). In addition, many state laws do not define mental
illness or do so in broad, nonspecific terms.
Table 30: State Laws Addressing Coverage of Mental Illness and Substance
Abuse as of March 1, 2000
Scope of benefits
Type of Type of
insurance lllness benefit Inpatient Outpatient Cost sharing: Dollar limits:
affected covereda mandateb (hospitalization) services copayments and annual and
coinsurance lifetimec
Alabama
1979
1 inpatient
day can be
Group and HMO Alcoholism Mandated 30 days converted to 3Not specified Not specified
offering
outpatient
sessions
Alaska
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
1997
Group. If 5 Minimum
employees or mandated At least $9,600
fewer, exempt; Alcoholism and benefits or Must be equal every 2 years;
if 20 or fewer,drug abuse mandated Not specified Not specified to other $19,200
must offer offering for illnesses lifetime
coverage small group
Arizona
1998
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
Arkansas
1997
Group.
Exemption if
cost increase Mental illness
of 1.5% or moreand Mandated Must be equal to Must be equal Must be equal Must be equal
or small developmental benefits other illnesses to other to other to other
employer with disorderse illnesses illnesses illnesses
50 or fewer
employees
1987
Not less Not less
Alcoholism and Not less favorable favorable favorable $6,000 every 2
Group and HMO drug Mandated generally than to generally thangenerally than years; $12,000
dependency offering other illnesses to other to other lifetime
illnesses illnesses
California
1974
Mental or
Group nervous Mandated Not specified Not specified Not specified Not specified
disorders offering
July 2000
Group, Must be equal Must be equal Must be equal
individual, andSevere mental Mandated Must be equal to to other to other to other
HMO illnessf benefits other illnesses illnesses illnesses illnesses
1990
Group Alcoholism Mandated Not specified Not specified Not specified Not specified
offering
Colorado
1992
Shall not
exceed 50% of
Mental Covered under the payment;
major medical,
Group illness, Mandated 45 days not less than deductible Not specified
excluding benefits shall not
autism $1,000 per differ from
year
that for other
illnesses
1998
Biologically Must be equal Must be equal Must be equal
Group based mental Mandated Must be equal to to other to other to other
illnessg benefits other illnesses illnesses illnesses illnesses
1994
Shall not
exceed 50% of
the payment;
Group Alcoholism Mandated 45 days $500 annually deductible Not specified
offering shall not
differ from
that for other
illnesses
Connecticut
Jan. 2000
Mental or
nervous
Group and conditions, Mandated Must be equal to Must be equal Must be equal Must be equal
individual including benefits other illnesses to other to other to other
alcoholism and illnesses illnesses illnesses
drug
addictionh
Delaware
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
1999
Group and Serious mental Mandated Must be equal to Must be equal Must be equal Must be equal
individual illnessi benefits other illnesses to other to other to other
illnesses illnesses illnesses
District of Columbia
1997
75% for first Lifetime limit
Mandated 40 visits and Deductibles, of no less than
45 days for mental copayments, and
Group, Mental illness offering for illness; 12 days 60% for visitslimits on total $80,000 or
individual, and alcohol individual of detoxification exceeding 40 amounts payable one-third of
HMO, and state and drug plans; and 28 days for for mental to an the lifetime
employee plans abusej mandated alcoholism and illness; 30 individual in a maximum for
benefits for visits for other illness,
all others drug abuse alcoholism andcalendar year whichever is
drug abuse may be applied greater
Florida
1992
May be May be
Mental and different after different after
Group and HMO nervous Mandated 30 days $1,000 per minimum minimum
disordersk offering benefit year benefits are benefits are
met met
1998d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
1993
44 visit Annual limits
maximum, $35 not specified;
Group and HMO Substance Mandated Not specified maximum Not specified minimum
abuse offering lifetime
reimbursement
per visit benefit of
$2,000
Georgia
1998
Mental
Group and disorders, Mandated Must be equal Must be equal
individual including offering 30 days 48 visits to other to other
substance illnesses illnesses
abusee
Hawaii
1988
Group, Must be Must be
individual, andMental Mandated 30 days 30 visits comparable to comparable to
HMO illnessl benefits other illnesses other illnesses
1999
Group and
individual.
Small-employer Serious mental Mandated Must be equal to Must be equal Must be equal Must be equal
exemption if 25illnessm benefits other illnesses to other to other to other
or fewer illnesses illnesses illnesses
employees
1988
Group, Alcohol and No less than two No less than Must be Must be
individual, anddrug Mandated treatment episodes two treatment comparable to comparable to
HMO dependence benefits per lifetime episodes per other illnesses other illnesses
lifetime
Idaho
No law
Illinois
1991
Annual benefit
Mental, may be limited
emotional, or Insured may be to the lesser
Group Mandated Not specified Not specified required to pay of $10,000 or
nervous offering up to 50% of 25% of the
disorders expenses lifetime policy
limit
1995
Group Alcoholism Mandated Not specifiedn Not specified Not specified Not specified
benefits
Indiana
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
Jan. 2000
Must be equal Must be equal
Group, to to
individual, and Must be equal
state Mandated Must be equal to to other other illnesses other illnesses
employees. offering; other illnesses illnesses for for for
Exemption if mandated for plans that plans that
cost increase Mental benefits for offer coverage; offer plans that plans that
of 4% or more illnesso state mandated benefits coverage; offer offer
or small employee for state employee mandated
employer with plans plans benefits for coverage; coverage;
50 or fewer state employeemandated mandated
employees plans benefits for benefits for
state employee state employee
plans plans
Iowa
No law
Kansas
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
1998
Not less than
100% of the
first $100,
Group, Mental 80% of the
individual, conditions, Mandated next $100, and Specified only
HMO, and state alcoholism, or benefits 30 days 50% of the Not specified for outpatient
employee plans drug abusep next $1,640 treatment
per year and
not less than
$7,500 per
lifetime
Kentucky
1986
To the same extent To the same To the same To the same
Group Mental Mandated as coverage for extent as extent as extent as
illnessq offering coverage for coverage for coverage for
other illness
other illness other illness other illness
1980
Emergency
10 visits
Group Alcoholism Mandated detoxification: 3 reimbursed at Not specified Not specified
offering days reimbursed at
$40 per day $10 per visit
Louisiana
1982
Group,
self-insured, Mandated Must be equal to Must be equal Must be equal Must be equal
and state Mental illness offering other illnesses to other to other to other
employee plans illnesses illnesses illnesses
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
Jan. 2000
52 visits; 1
day of
Group, HMO, and inpatient Must be equal Must be equal
state employee Serious mental Mandated 45 days benefits can to other to other
plans illnessr benefits be converted illnesses illnesses
to 4
outpatient
visits
1982
Group Alcoholism and Mandated Not specified Not specified Not specified Not specified
drug abuse offering
Maine
1996
Group.
Exemption if Must be equal Must be equal Must be equal
small employer Mental Mandated Must be equal to to other to other to other
with 20 or illnesss benefits other illnesses illnesses illnesses illnesses
fewer employees
1996
Must be equal Must be equal Must be equal
Individual Mental Mandated Must be equal to to other to other to other
illnesss offering other illnesses
illnesses illnesses illnesses
1984
Group. Small May place a May place a
employer Alcoholism and maximum limit maximum limit
exemption if 20drug Mandated Not specified Not specified on benefits as on benefits as
or fewer dependency benefits long as they long as they
employees are consistent are consistent
with the law with the law
Maryland
1994
Unlimited
Mental visits but
illness, subject to
emotional different
Group and disorder, drug Mandated Must be equal to copayments: Must be equal Must be equal
individual abuse benefits other illnesses 80% for visitsto other to other
disorder, or 1-5, 65% for illnesses illnesses
alcohol abuse visits 6-30,
disorder and 50% for 31
or more per
year
Massachusetts
1996
Lifetime
Group, Mental or maximum must be
individual, andnervous Mandated 60 days in a $500 per year Not specified equal for
HMO conditionst benefits mental hospital inpatient
treatment
1991
Group,
individual, andAlcoholism Mandated 30 days $500 per year Not specified Not specified
HMO benefits
Michigan
1988
Group for
inpatient; Mandated
group and offering of $1,500 per Charges, terms, $1,500 per year
individual for Substance inpatient and To the extent year for and conditions for outpatient
other levels. abuse mandated agreed upon outpatient andshall not be and
Exemption for benefits for intermediate less favorable intermediate
cost increase other levels treatment treatment
of 3% or more
Minnesota
1995
Mandated
Group, Mental health benefits for Must be equal Must be equal Must be equal
individual, andand chemical HMOs; Must be equal to to other to other to other
HMOs dependency otherwise, other illnesses illnesses illnesses illnesses
mandated
offering
1986
Alcoholism, At least 20% of At least 130
Group and chemical Mandated the total days hours of
individual dependency, or benefits allowed but not treatment per Not specified Not specified
drug addiction less than 28 days year
per year
Mississippi
1994
Group and Mandated Services certified Services
individual Mental illness offering as necessary certified as Not specified Not specified
necessary
1975
Annual limit of
$1,000 per
Group Alcoholism Mandated Not specified Not specified Not specified year; lifetime
benefits
limit not
specified
Missouri
1997
Must be equal
Must be equal for mental
Must be equal illness;
Group, Recognized 90 days for mental for mental for mental chemical
individual, andmental illness Mandated illness, 6 days illness; 26 illness and dependency may
HMO and chemical offering for detoxification visits for chemical be limited to
dependencyu chemical
dependency dependency not less than
10 episodes of
treatment
Jan. 2000
Equal for
A lifetime
Mental Equal for mental mental Shall not be limit equal to
Group, illness, illness; at least illness; at unreasonable in four times the
individual, andincluding Mandated 30 days for least 20 relation to the annual limit
HMO alcohol and offering alcohol and drug visits for cost of may be imposed
drug abusev abuse if offered alcohol and services for alcohol and
drug abuse if provided
offered drug abuse
1995
Alcoholism, Mandated 30 days for
benefits for
Group and chemical alcoholism; alcoholism; 80% of 30 days for
individual dependency, mandated reasonable charges all levels of Not specified Not specified
and drug up to $2,000 care
addiction offering for maximum
others
Montana
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
1997; exemptions expire Oct. 2001
Group. No less than See specified
Exemption if 21 days with $2,000 per No less maximums under
cost increase Mental $4,000 maximum year for favorable inpatient and
of 1% or more illness, Mandated every 2 years; mental illnessgenerally than outpatient
or small alcoholism, benefits $8,000 lifetime and $1,000 perfor other benefits.
employer and drug maximum for year for illnesses up to Aggregate
(number not addiction alcohol and drug alcohol and maximums limits may not
specified) addiction only drug addiction be imposed more
restrictively
Jan. 2000
Group and Severe mental Mandated Must be equal to Must be equal Must be equal Must be equal
individual illnessw benefits other illnesses to other to other to other
illnesses illnesses illnesses
Nebraska
Jan. 2000
Group and HMO.
Exemption if Must be equal May be Must be equal
small employer Serious mental Mandated Must be equal to to other different from to other
with 15 or illnessx offering other illnesses illnesses that for other illnesses
fewer employees illnesses
1989
30 days per year 60 visits No less No less
favorable favorable
Group and HMO Alcoholism Mandated with at least 2 during the generally than generally than
offering treatment periods lifetime of
in a lifetime the policy for other for other
illness illness
Nevada
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
Jan. 2000
Group and
individual. Must not be
Exemption if more than 150%
cost increase of Must be equal
of 2% or more Severe mental Mandated 40 days 40 visits out-of-pocket to other
or small illnessy benefits expenses illnesses
employer with required for
25 or fewer medical and
employees surgical
1997
Must be paid in
same manner to
Group, Abuse of $9,000 inpatient maximum
individual, andalcohol or Mandated and $1,500 for $2,500 per Must be paid in benefit;
HMO drugs benefits detoxification per year same manner lifetime
year
maximum not
specified
New Hampshire
1993
Ratio of Ratio of
Ratio of benefits benefits benefits
Group, substantially the substantially substantially
individual, and same as benefits the same as the same as
HMO. Different for other benefits for Ratio of benefits for
benefits for Mental or illnesses under other benefits other illnesses
mental illness nervous Mandated nonmajor medical illnesses substantially under nonmajor
specified underconditions benefits plans and $3,000 under nonmajorthe same as medical plans
major medical per year and medical plans benefits for and $3,000 per
and nonmajor $10,000 per and not less other illnesses year and
medical plans lifetime under than 15 hours $10,000 per
major medical per year under lifetime under
plans major medical major medical
plans plans
1995
Biologically Must be equal Must be equal Must be equal
Group and HMO based mental Mandated Must be equal to to other to other to other
illnessz benefits other illnesses illnesses illnesses illnesses
New Jersey
1999
Group and Biologically Mandated Must be equal to Must be equal Must be equal Must be equal
individual based mental benefits other illnesses to other to other to other
illnessaa illnesses illnesses illnesses
1985
Mandated Benefits Benefits
provided to the provided to the
Group and benefits for Must be equal to Must be equal same extent as same extent as
individual Alcoholism care other illnesses to other benefits for benefits for
prescribed by illnesses
a doctor any other any other
sickness sickness
New Mexico
1998d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
Oct. 2000
Group.
Exemption if
cost increase
of 1.5% or more
for small Must be equal Must be equal Must be equal
employer with Mental health Mandated Must be equal to to other to other to other
49 or fewer benefitsbb benefits other illnesses illnesses illnesses illnesses
employees or
2.5% or more
for larger
employers
1987
30 visits per
30 days per year, year, limited Consistent with Consistent with
Group Alcoholism Mandated limited to no less to no less cost sharing dollar limits
offering than two episodes than two imposed on imposed on
per lifetime episodes per other benefits other benefits
lifetime
New York
1998
Mental, As deemed As deemed
nervous, or 30 days mental $700 mental appropriate by appropriate by
emotional illness, 30 days illness and 60the the
Group disorders and Mandated alcoholism or visits for superintendent superintendent
alcoholism and offering substance abuse, alcoholism or and consistent and consistent
substance and 7 days substance with cost with dollar
abuse detoxification abuse sharing for limits for
other benefits other benefits
North Carolina
1997
State employee Mental illness Mandated Must be equal to Must be equal Must be equal Must be equal
plans and chemical benefits other illnesses to other to other to other
dependencycc illnesses illnesses illnesses
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
1985
$8,000 per year $8,000 per Same as for $8,000 per year
Group Chemical Mandated and $16,000 per year and other illness and $16,000 per
dependencycc offering $16,000 per
lifetime generally lifetime
lifetime
North Dakota
1995
No deductible
Mental 30 hours for or copayment
disorders, 45 days for mental mental illnessfor first 5 Lifetime and
Group and HMO alcoholism, Mandated illness and 60 and 20 visits hours or annual dollar
and drug benefits days for substance for substance visits, not to limits not
addiction abuse abuse exceed 20% for specified
remaining hours
or visits
Ohio
1987
At least $550
Mental or Mandated At least $550 for for mental Benefits may be
Group and nervous offering; mental illness and illness and subject to Lifetime dollar
self-insured disorders and mandated $550 for $550 for reasonable limits not
alcoholism benefits for alcoholism per alcoholism perdeductibles and specified
alcoholism year coinsurance
year
Oklahoma
Jan. 2000
Group.
Exemption if
cost increase
of 2% or more Severe mental Mandated Must be equal to Must be equal Must be equal Must be equal
or small illnessdd benefits other illnesses to other to other to other
employer with illnesses illnesses illnesses
50 or fewer
employees
Oregon
July 2000
Payments for
all treatment
$2,500 for for mental
both adults health and
Mental or $5,000 for adults and children substance abuse
nervous and $7,500 for per 24 months are $13,125 for
conditions, children per 24 for mental No greater than adults and
Group and HMO including Mandated months for mental health; $1,875for the $15,625 for
alcoholism and benefits health; $5,625 for for adults andtreatment of children.
chemical adults and $5,000 $2,500 for other illnesses Payments for
dependencyee for children for children for substance abuse
substance abuse only are $8,125
substance
abuse for adults and
$13,125 for
children per 24
months
1981
$4,500 in a Coverage must
Individual Alcoholism Mandated $4,500 in a 24-month be no less than Lifetime, not
offering 24-month period specified
period 80% of total
Pennsylvania
1999
Group and HMO. 60 visits; 1
Small- employer day of Must not Must be equal
exemption if 50Serious mental Mandated 30 days inpatient can prohibit access to other
or fewer illnessi benefits be converted to care illnesses
employees to 2 visits
Rhode Island
1995
Group,
individual, Serious mental Mandated Must be equal to Must be equal Must be equal Must be equal
HMO, and illnessff benefits other illnesses to other to other to other
self-insured illnesses illnesses illnesses
1995
30 hours for
each
Group, Three episodes of individual
individual, Substance Mandated detoxification or under
HMO, and dependency and benefits 21 days, whichever treatment and Not specified Not specified
self-insured abusegg comes first, per 20 hours for
year
family per
year
South Carolina
1994
Psychiatric
conditions, $2,000 per $2,000 annual;
Group including Mandated $2,000 per year year overall May be $10,000
substance offering overall total total different lifetime
abusehh maximum
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
South Dakota
1998
Group, Biologically Must be equal Must be equal Must be equal
individual, andbased mental Mandated Must be equal to to other to other to other
HMO illnessii benefits other illnesses illnesses illnesses illnesses
1979
On the same On the same
Group, 30 days overall 30 days basis as basis as
individual, andAlcoholism Mandated each 6 months; 90 overall each 6benefits benefits
HMO offering days lifetime months; 90 provided for provided for
days lifetime
other illnesses other illnesses
Tennessee
1997d
Group. May impose May impose
Exemption if May impose terms terms and terms and
cost increase Mental and conditions, conditions, conditions,
of 1% or more illness, Mandated including cost including costincluding cost Must be equal
or small excluding offering sharing and limits sharing and sharing and to other
employer with alcoholism and on the number of limits on the limits on the illnesses
50 or fewer drug abuse visits or days number of number of
employees covered visits or daysvisits or days
covered covered
Jan. 2000
Group.
Exemption if
cost increase
of 1% or more Mental or Mandated Must be equal Must be equal
or small nervous benefits 20 days 25 visits to other to other
employer with conditionsk illnesses illnesses
25 or fewer
employees
1982
Alcohol and Must be equal Must be equal Must be equal
Group and HMO drug Mandated Must be equal to to other to other to other
dependency offering other illnesses illnesses illnesses illnesses
Texas
1991
State employee Biologically Mandated Must be equal to Must be equal Must be equal Must be equal
plans only based mental benefits other illnesses to other to other to other
illnessjj illnesses illnesses illnesses
1997
Mandated
Group and HMO. benefits with 60 visits;
Small-employer a mandated medication Must be equal Must be equal
exemption if 50Serious mental offering for 45 days checks are notto other to other
or fewer illnesskk small groups counted towardillnesses illnesses
employees of 50 or the limit
fewer
1981
Lifetime
Mandated Lifetime maximum maximum of
Group, HMO, and benefits with of three separate three separate
self-insured. a mandated series of series of Must be Must be
Exemption for Chemical offering for treatments, treatments, sufficient to sufficient to
self-insured dependencyll self-insured including all including all provide provide
plans of 250 or plans of 250 levels of levels of appropriate appropriate
fewer members or fewer medically medically care care
members necessary care in necessary care
each episode in each
episode
Utah
1994
Alcohol and
Group drug Mandated Not specified Not specified Not specified Not specified
dependency offering
Vermont
1998
Mental health
condition,
Group and including Mandated Must be equal to Must be equal Must be equal Must be equal
individual alcohol and benefits other illnesses to other to other to other
substance illnesses illnesses illnesses
abusemm
Virginia
Jan. 1, 2000, to July 1, 2004
Group and Biologically Must be equal Must be equal Must be equal
individual. based mental Must be equal to to achieve theto achieve the to achieve the
Small-group illness, Mandated achieve the same same outcome same outcome as same outcome as
exemption if 25including drug benefits outcome as as treatment treatment for treatment for
or fewer and alcohol treatment for any for any other any other any other
members addictionnn other illness illness illness illness
Washington
1987
Reasonable
Group and HMO Mental health Mandated Not specified Not specified deductible and Not specified
treatment offering
copayments
1990
Group and HMO Chemical Mandated Not specified Not specified Not specified Not specified
dependency benefits
West Virginia
1997d
May impose May impose
May impose terms terms and terms and
Group. Mental and conditions, conditions, conditions,
Exemption if illness, Mandated including cost including costincluding cost Must be equal
cost increase excluding offering sharing and limits sharing and sharing and to other
of 1% or more alcoholism and on the number of limits on the limits on the illnesses
drug abuse visits or days number of number of
covered visits or daysvisits or days
covered covered
1998
50% of the
Group and eligible Lifetime and
individual. Mental or 45 days in a expenses up to aggregate
Exemption for anervous Mandated mental hospital; $500 per year;Not specified limits must be
cost increase conditions offering must be equal in a must not equal to other
of 1% general hospital exceed 50 illnesses
visits in 12
months
1998
Not less than
$750 per year
Must be equal and not less
up to 30 days; than an amount
Group Alcoholismoo Mandated 30 days Not specified cannot exceed equal to the
offering
50% for lesser of
outpatient $10,000 or 25%
of the lifetime
policy limit
Wisconsin
1981
The lesser of 30 $2,000 per
Mental days or $7,000 year minus a
copayment of
Group and HMO disorders and Mandated minus a copayment up to 10% for Copayment of up Lifetime limits
alcohol and benefits of up to 10% for to 10% not specified
drug abuse group plans and group plans
$6,300 for HMOs and $1,800 for
HMOs
Wyoming
No law
Note: Years below state names are years laws became effective, based on the
most recent major amendments to statutes.
aIllnesses that health plans subject to the law must cover. APA's DSM IV
defines 13 diagnoses that mental health providers and consumer organizations
commonly refer to as biologically based mental illnesses. Between 3 and 13
of these diagnoses are referred to in various state parity laws concerning
mental illness.
b Decribes the extent to which the law requires that a mental health benefit
be included. A mandated benefit clause requires that all coverage sold in
the applicable market contain the mental health benefits that complies with
the terms of the law. A mandated offering clause could require that (1)
mental health coverage, if offered, complies with the terms of the law or
(2) each issuer offer mental health coverage that meets the terms of the law
in at least one of its plans or as a separate rider. In either case, the
issuer may charge more for the plan with the mental health benefits or the
rider.
c Annual and lifetime dollar limits are the amounts of health coverage that
an insurer will cover per individual.
d Year the law was adopted.
e As defined in the Internal Classification of Disease (ICD) manual and DSM.
f In California, severe mental illness is defined as (1) schizophrenia, (2)
schizoaffective disorder, (3) bipolar disorder (manic-depressive illness),
(4) major depressive disorders, (5) panic disorder, (6) obsessive compulsive
disorder, (7) pervasive developmental disorder or autism, (8) anorexia
nervosa, and (9) bulimia nervosa.
g In Colorado, biologically based mental illness is defined as (1)
schizophrenia, (2) schizoaffective disorder, (3) bipolar affective disorder,
(4) major depressive disorder, (5) specific obsessive compulsive disorder,
and (6) panic disorder.
h In Connecticut, mental and nervous conditions are defined as mental
disorders, as defined in the most recent edition of DSM, and include
alcoholism and drug addiction as defined by DSM.
i Serious mental illness means any of the following: (1) schizophrenia, (2)
bipolar disorder, (3) obsessive compulsive disorder, (4) major depressive
disorder, (5) panic disorder, (6) anorexia nervosa, (7) bulimia nervosa, (8)
schizoaffective disorder, and (9) delusional disorder.
j In the District of Columbia, mental illness is defined as any psychiatric
disease identified in the most recent edition of ICD or DSM. Alcohol abuse
and drug abuse are defined as any pattern of the pathological use of alcohol
or a drug that causes impairment in social or occupational functioning or
that produces physiological dependency as evidenced by physical tolerance or
by physical symptoms when it is withdrawn.
k As defined by DSM.
l In Hawaii, mental illness is defined as a syndrome of clinically
significant psychological, biological, or behavioral abnormalities that
results in personal distress or suffering, impairment of capacity for
functioning, or both.
m In Hawaii, serious mental illness is defined as (1) schizophrenia, (2)
schizoaffective disorder, and (3) bipolar mood disorder, as defined in the
most recent edition of DSM, that is severe enough to result in substantial
interference with the activities of daily living.
n The Illinois statute reads: "no policy of group accident and health
insurance delivered in this state which provides inpatient hospital coverage
for sickness shall exclude from such coverage the treatment of alcoholism."
No further specifications are provided.
o Indiana defines "coverage for services for mental illness" to include
benefits with respect to mental health services as defined by the contract,
policy, or plan for health services. However, the term does not include
services for the treatment of substance abuse or chemical dependency.
p In Kansas, nervous and mental conditions are defined as disorders
specified in DSM IV but not conditions not attributable to a mental disorder
that are a focus of attention or treatment.
q In Kentucky, mental illness is defined as psychosis, neurosis, or any
emotional disorder.
r In Louisiana, severe mental illness includes (1) schizophrenia or
schizoaffective disorder, (2) bipolar disorder, (3) pervasive developmental
disorder or autism, (4) panic disorder, (5) obsessive compulsive disorder,
(6) major depressive disorder, (7) anorexia and bulimia, (8) Asperger's
disorder, (9) intermittent explosive disorder, (10) posttraumatic stress
disorder, (11) psychosis not otherwise specified when diagnosed in a child
younger than 17 years old, (12) Rett syndrome, and (13) Tourette syndrome.
s In Maine, mental illness is defined as (1) schizophrenia, (2) bipolar
disorder, (3) pervasive developmental disorder or autism, (4) paranoia, (5)
panic disorder, (6) obsessive compulsive disorder, and (7) major depressive
disorder.
t Massachusetts defines mental and nervous conditions as they are defined by
APA's standard nomenclature.
u In Missouri, recognized mental illness is defined as conditions classified
as "mental disorders" in DSM but does not include mental retardation.
Chemical dependency is defined as the psychological or physiological
dependence on and abuse of drugs, including alcohol, characterized by drug
tolerance or withdrawal and impairment of social or occupational role
functioning or both.
v In Missouri, mental illness is defined as the following disorders in ICD:
(1) schizophrenic disorders and paranoid states (295 and 297, except 297.3);
(2) major depression, bipolar disorder, and other affective psychoses (296);
(3) obsessive compulsive disorder, posttraumatic stress disorder, and other
major anxiety disorders (300.0, 300.21, 300.22, 300.23, 300.3, and 309.81);
(4) early childhood psychoses and other disorders first diagnosed in
childhood or adolescence (299.8, 312.8, 313.81, and 314); (5) alcohol and
drug abuse (291, 292, 303, 304, and 305, except 305.1); (6) anorexia
nervosa, bulimia, and other severe eating disorders (307.1, 307.51, 307.52,
and 307.53); and (7) senile organic psychotic conditions (290).
w In Montana, severe mental illness is defined as the following disorders as
defined by APA: (1) schizophrenia, (2) schizoaffective disorder, (3) bipolar
disorder, (4) major depression, (5) panic disorder, (6) obsessive compulsive
disorder, and (7) autism.
x In Nebraska, serious mental illness before January 1, 2002, is defined as
(1) schizophrenia, (2) schizoaffective disorder, (3) delusional disorder,
(4) bipolar affective disorder, (5) major depression, and (6) obsessive
compulsive disorder. Serious mental illness on and after January 1, 2002, is
defined as any mental health condition that current medical science affirms
is caused by a biological disorder of the brain and that substantially
limits the life activities of the person with the serious mental illness.
Serious mental illness includes but is not limited to (1) schizophrenia, (2)
schizoaffective disorder, (3) delusional disorder, (4) bipolar affective
disorder, (5) major depression, and (6) obsessive compulsive disorder.
y In Nevada, severe mental illness is defined as any of the following mental
illnesses that are biologically based and for which diagnostic criteria are
listed in DSM IV: (1) schizophrenia, (2) schizoaffective disorder, (3)
bipolar disorder, (4) major depressive disorders, (5) panic disorder, and
(6) obsessive compulsive disorder.
z In New Hampshire, biologically based mental illnesses are defined as (1)
schizophrenia, (2) schizoaffective disorder, (3) major depressive disorder,
(4) bipolar disorder, (5) paranoia and other psychotic disorders, (6)
obsessive compulsive disorder, (7) panic disorder, and (8) pervasive
developmental disorder or autism.
aa In New Jersey, biologically based mental illnesses are defined as mental
or nervous conditions that are caused by a biological disorder of the brain
and that result in a clinically significant or psychological syndrome or
pattern that substantially limits the functioning of a person with an
illness including, but not limited to, (1) schizophrenia, (2)
schizoaffective disorder, (3) major depression, (4) bipolar disorder, (5)
paranoia and other psychotic disorders, (6) obsessive compulsive disorder,
(7) panic disorder, and (8) autism.
bb In New Mexico, mental health benefits means the mental health benefits
described in the group health plan or group health insurance offered in
connection with the plan but does not include substance abuse benefits or
gambling addiction.
cc In North Carolina, mental illness is defined as (1) an illness that, when
applied to adults, so lessens their capacity to use self-control, judgment,
and discretion in the conduct of their affairs and social relationships as
to make it necessary or advisable for them to be under treatment, care,
supervision, guidance, or control and (2) a mental condition, other than
mental retardation alone, that, when applied to minors, so impairs their
capacity to exercise age-adequate self-control or judgment in conducting
their activities and social relationships that they are in need of
treatment. North Carolina defines chemical dependency as the pathological
use or abuse of alcohol or other drugs in a manner or to a degree that
impairs personal, social, or occupational functioning and that may, but need
not, include a pattern of tolerance and withdrawal.
dd In Oklahoma, severe mental illness is defined as (1) schizophrenia, (2)
bipolar disorder, (3) major depression, (4) panic disorder, (5) obsessive
compulsive disorder, and (6) schizoaffective disorder as defined in the most
current edition of DSM.
ee In Oregon, chemical dependency is defined as an addictive relationship
with any drug or alcohol that is either physical or psychological or both
and that interferes recurringly with an individual's physical,
psychological, or social adjustment to common problems. Chemical dependency
does not include addiction to or dependency on tobacco, tobacco products, or
foods. The Oregon law does not provide a specific definition for mental or
nervous conditions.
ff In Rhode Island, serious mental illness is defined as any mental disorder
that current medical science affirms is caused by a biological disorder of
the brain and that substantially limits the life activities of a person with
the illness. The term includes but is not limited to (1) schizophrenia, (2)
schizoaffective disorder, (3) delusional disorder, (4) bipolar affective
disorders, (5) major depression, and (6) obsessive compulsive disorder.
gg In Rhode Island, substance dependency and substance abuse are a pattern
of pathological use of alcohol or other psychoactive drugs characterized by
impairments in social or occupational functioning, debilitating physical
condition, inability to abstain from or reduce consumption of the substance,
or the need for daily use of the substance for adequate functioning.
hh In South Carolina, psychiatric conditions are defined as mental and
nervous conditions, drug and substance addiction or abuse, alcoholism, or
other conditions that the most current edition of DSM defines, describes, or
classifies as psychiatric disorders or conditions.
ii In South Dakota, biologically based mental illness is defined as (1)
schizophrenia and other psychotic disorders, (2) bipolar disorder, (3) major
depression, and (4) obsessive compulsive disorder.
jj In Texas, biologically based mental illness is defined as a serious
mental illness that current medical science affirms is caused by a
physiological disorder of the brain that substantially limits the life
activities of the person afflicted with the illness and includes (1)
schizophrenia, (2) paranoid and other psychotic disorders, (3) bipolar
disorders (manic-depressive disorders), (4) major depressive disorders, and
(5) schizoaffective disorders.
kk In Texas, serious mental illness is defined as the following psychiatric
illnesses as defined by DSM: (1) schizophrenia, (2) paranoid and other
psychotic disorders, (3) bipolar disorders (hypomanic, manic, depressive,
and mixed), (4) major depressive disorders (single episode or recurrent),
(5) schizoaffective disorders (bipolar or depressive), (6) pervasive
developmental disorders, (7) obsessive compulsive disorder, and (8)
depression in childhood and adolescence.
ll In Texas, chemical dependency is defined as the abuse of or psychological
or physical dependence on or addiction to alcohol or a controlled substance.
mm In Vermont, mental health condition is defined as any condition or
disorder involving mental illness or alcohol or substance abuse that falls
under any of the diagnostic categories listed in the mental disorders
section of ICD as periodically revised.
nn In Virginia, biologically based mental illness is defined as any mental
or nervous condition caused by a biological disorder of the brain that
results in a clinically significant syndrome that substantially limits a
person's functioning. The following diagnoses are specifically defined as
biologically based mental illness as they apply to adults and children: (1)
schizophrenia, (2) schizoaffective disorder, (3) bipolar disorder, (4) major
depressive disorder, (5) panic disorder, (6) obsessive compulsive disorder,
(7) attention deficit hyperactivity disorder, (8) autism, and (9) drug and
alcoholism addiction.
oo In West Virginia, alcoholism is defined as a chronic disorder or illness
in which the individual is unable, for psychological or physical reasons or
both, to refrain from the frequent consumption of alcohol in quantities
sufficient to produce intoxication and, ultimately, injury to health and
effective functioning.
Source: Tracy Delaney, Overview of State Laws Affecting Coverage of Mental
Illness and Substance Abuse Treatment (Washington, D.C.: NCSL, Health Policy
Tracking Service, Mar. 1, 2000).
Comments From the Health Care Financing Administration
GAO Contact and Staff Acknowledgments
John Dicken, (202) 512-7043
JoAnne Bailey, Randy DiRosa, Mary Freeman, and Betty Kirksey made key
contributions to this report.
In addition, Dae Park provided statistical support, Richard Lipinski and
Elsie Picyk provided programming assistance, Mary Reich provided legal
review, and Susan Anthony and Mark Vinkenes assisted in the design and
development of the questionnaire.
(101843)
Table 1: State Laws Affecting Mental Health Benefits Compared
With the Federal Mental Health Parity Act of 1996 as of
March 2000 8
Table 2: Lifetime Dollar Limits for Noncompliant Employer Plans,
1999 12
Table 3: Compliant Employer Plans Reporting More Restrictive
Limits on Mental Health Benefits Than Medical and Surgical
Benefits, 1999 12
Table 4: Selected Design Features for a Typical Employer-Sponsored Group
Health Plan, 1999 13
Table 5: Employers' Plans That Have Further Restricted Mental
Health Benefits Since 1996 14
Table 6: Estimated Cost Increases for Full Parity in Mental Health
and Substance Abuse Benefits 17
Table 7: Selected Survey Sample and Response Data 26
Table 8: Mental Health Benefits Offered Now 29
Table 9: Mental Health Benefits Ever Offered Since December 1996 29
Table 10: Number of Lives Benefits Cover 30
Table 11: Plan Insurance 30
Table 12: Plan Type 30
Table 13: Administered by a Managed Behavioral Health Care
Company 31
Table 14: Financial Risk of Administering Organization 31
Table 15: Plan Design Features for Current Plan 32
Table 16: Current Plan in 1996 33
Table 17: Mental Health Benefits in Any Plan 33
Table 18: Plans Covering the Most Lives in December 1996 33
Table 19: Plan Design Features in December 1996 34
Table 20: Reasons for Benefit Changes After December 1996, Part 1 35
Table 21: Reasons for Benefit Changes After December 1996, Part 2 36
Table 22: Administered by a Managed Behavioral Health Care
Company in 1996 37
Table 23: Managed Care in Current Plan Compared With
December 1996 37
Table 24: Employees' Access to Benefits 37
Table 25: Employee Eligibility for Coverage 38
Table 26: Exemption Filed 38
Table 27: Reasons Exemption Not Filed 38
Table 28: Compliance and Claims Costs 39
Table 29: Claims Cost Increases 39
Table 30: State Laws Addressing Coverage of Mental Illness and
Substance Abuse as of March 1, 2000 41
1. The Mental Health Parity Act also generally applies to certain state and
local government health plans, church plans, and certain other health plans,
although self-funded state and local government health plans may elect
exemption from the act.
2. These states were Alabama, Alaska, Arizona, California, Florida, Idaho,
Illinois, Iowa, Kansas, Massachusetts, Michigan, Mississippi, Nevada, New
Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, South Carolina,
Tennessee, Utah, Washington, West Virginia, Wisconsin, and Wyoming.
3. The survey was stratified by employer size so that the results are
weighted to be representative of small, medium-sized, and large employers'
relative size in the population rather than their response rate. Further,
large employers were more likely than small or medium-sized employers to
provide complete responses, allowing us to determine whether they complied
with the law.
4. An employer may provide group coverage to its employees either by
purchasing a group policy from an insurance carrier (fully insured coverage)
or by funding its own health plan (self-funded coverage) and assuming the
financial risk.
5. P.L. 104-204, title VII, 110 Stat. 2847, 2944-50 (to be classified at 29
U.S.C. 1185a and 42 U.S.C. 300gg-5).
6. Provisions implementing the Mental Health Parity Act were later added to
the Internal Revenue Code of 1986 under the Taxpayer Relief Act of 1997.
7. The law also provides that in the case of a plan under which annual or
lifetime dollar limits differ for categories of medical and surgical
benefits, the plan may comply by calculating a weighted average annual or
lifetime dollar limit for mental health benefits based on a formula
specified by the secretary of Labor.
8. Tracy Delaney, Overview of State Laws Affecting Coverage of Mental
Illness and Substance Abuse Treatment (Washington, D.C.: NCSL , Health
Policy Tracking Service, Mar. 1, 2000).
9. A smaller number of state laws also apply to coverage sold in the
individual insurance market.
10. ERISA allows employers to offer uniform national health benefits by
preempting states from directly regulating employer-sponsored benefit plans.
As a result, states are unable to directly regulate self-funded plans but
can regulate health insurers. Under ERISA, Labor is responsible for ensuring
that employer-sponsored group health plans meet certain fiduciary,
reporting, disclosure, and appeal requirements related to the provision of
health benefits.
11. HCFA is also responsible for enforcing the parity standards on state and
local government health plans.
12. The Department of the Treasury also enforces the requirements for
generally all nongovernmental group health plans, including church plans, by
imposing an excise tax under the Internal Revenue Code as a penalty for
noncompliance.
13. This federal and state regulatory scheme applies to other federal health
insurance standards, including those established under the Health Insurance
Portability and Accountability Act of 1996, the Newborns' and Mothers'
Health Protection Act of 1996, and the Women's Health and Cancer Rights Act
of 1998. To facilitate coordination of their shared oversight
responsibilities, HHS, Labor, and the Department of the Treasury entered
into a memorandum of understanding effective April 21, 1999. See 64 Fed.
Reg. 70,164 (Dec. 15, 1999).
14. The compliance rate excludes employers that did not know their plan's
annual or lifetime dollar limits or did not respond to the question. We
could not determine compliance for 21 percent of employers in 1999 because
their responses did not provide complete information. We were less likely to
know the compliance for small employers than medium-sized and large
employers.
15. Our survey results did not find significant differences in the rate of
employer noncompliance based on characteristics such as employer size,
industry, or geographic region or whether the plan was fully insured or
self-funded.
16. Respondent uncertainty and item nonresponse prevented us from
determining parity for 51 percent of employers in 1996. We were less likely
to determine parity for both small employers and those in the South compared
with employers of other sizes and in other areas of the country.
17. As of December 1999, noncompliant plans did not differ significantly
from compliant plans, with about 93 percent (� 5.5 percent) of noncompliant
plans also containing at least one such restriction.
18. HHS, Mental Health: A Report of the Surgeon General (Washington, D.C.:
Substance Abuse and Mental Health Services Administration, Center for Mental
Health Services, National Institutes of Health, National Institute of Mental
Health, 1999).
19. The National Advisory Mental Health Council is a congressional advisory
council made up of the National Institutes of Health and the National
Institute of Mental Health within HHS.
20. Kristen Reasoner Apgar, Report to the Office of Personnel Management:
Large Employer Experiences and Best Practices in Design, Administration, and
Evaluation of Mental Health and Substance Abuse Benefits--A Look at Parity
in Employer-Sponsored Health Benefit Programs (Washington, D.C.: Washington
Business Group on Health, Mar. 2000).
21. The act allows an exemption for group plans that experience an increase
in health benefit costs of 1 percent or more because of compliance with the
law's requirements. Federal agencies estimated that as many as 10 percent of
health plans affected by the law, or 30,000 health plans, could be eligible
for the exemption. However, as of March 2000, Labor officials reported that
only nine employers nationally had claimed an exemption.
22. Coopers and Lybrand, "An Actuarial Analysis of S. 2031, `The Mental
Health Parity Act of 1996,'" n.p., Sept. 1996.
23. The Health Insurance Portability and Accountability Act of 1996, the
Newborns' and Mothers' Health Protection Act of 1996, and the Women's Health
and Cancer Rights Act of 1998.
24. For additional information on Labor's initiatives, see Private Health
Insurance: Progress and Challenges in Implementing 1996 Federal Standards
(GAO/HEHS-99-100, May 12, 1999) and Health Insurance Standards: New Federal
Law Creates Challenges for Consumers, Insurers, Regulators (GAO/HEHS-98-67,
Feb. 25, 1998).
25. 65 Fed. Reg. 18,208 (Apr. 6, 2000).
26. The number of plans that Labor reviewed is larger than the number of
employers reviewed because the employers could offer more than one health
plan with mental health benefits.
27. For additional information on HCFA's activities, see Implementation of
HIPAA: Progress Slow in Enforcing Federal Standards in Nonconforming State
(GAO/HEHS-00-85, Mar. 31, 2000), (GAO/HEHS-99-100), (GAO/HEHS-98-67), and
Private Health Insurance: HCFA Cautious in Enforcing Federal HIPAA Standards
in States Lacking Conforming Laws (GAO/HEHS-98-217R, July 22, 1998).
28. 64 Fed. Reg. 45,786 (45 C.F.R. pt. 144, 146, 148, and 150).
29. Our survey results are based on responses from surveys sent to employers
in the District of Columbia and the following 26 states: Alabama, Alaska,
Arizona, California, Florida, Idaho, Illinois, Iowa, Kansas, Massachusetts,
Michigan, Mississippi, Nevada, New Mexico, New York, North Dakota, Ohio,
Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Washington, West
Virginia, Wisconsin, and Wyoming. The initial sample also included Kentucky
and Louisiana, but these states were later removed from the sample after
further review of state laws.
30. As of April 2000, 530 self-insured state and local government plans had
filed for an exemption from the federal parity standards.
31. We included only single-site firms and the headquarters offices of
multisite businesses in the survey. We drew our population and sample from
Dun and Bradstreet's database of 11 million U.S. businesses, a source
commonly used for employer surveys.
32. About 126 employers provided summary plan descriptions that we
abstracted in order to complete the questionnaire, as applicable.
33. Statistical significance was measured at the 95 percent confidence level
(p< .05), which means that the probability of detecting a difference between
subgroups where none exists is no greater than 5 percent.
*** End of document. ***