9 Million Gaining Upgraded Benefit for Mental Care
By ERICA GOODE --------------------------------------------------------------------------------
Paul O. Boisvert for The New York Times
Anne Donahue, above, suffered a bout of depression in 1993 that left her with $17,000 in unpaid hospital bills. She was among those who campaigned for passage of a state law in Vermont requiring equal insurance protection for mental and physical illness.
-------------------------------------------------------------------------------- Acting on an executive order issued by President Clinton, the federal government will begin today to offer its nine million employees improved mental health benefits equal to those for physical ailments.
Federal officials' embrace of equal insurance protection for mental and physical ills represents a significant victory for mental health advocates, who have argued for more than a decade that the widespread practice of providing far less coverage for mental disorders is discriminatory.
The new policy also offers further evidence that the notion of equality in coverage is gaining wider acceptance. Thirty-two states now have laws that in some way address such insurance disparities, and many large corporations provide equal coverage for their employees, believing that doing so saves money in the long run.
The notion of equal coverage, referred to as parity, was also endorsed by Vice President Al Gore and Gov. George W. Bush during their presidential campaigns.
"There has been definite progress," said Jennifer Heffron, senior director of state affairs for the National Mental Health Association, a nonprofit group.
Yet Ms. Heffron, echoing the concerns of other mental health groups, said that despite such advances, true equal coverage, in its fullest sense, remained elusive. She said that many state laws included so many restrictions that they had little impact, and that in some cases, insurance companies had simply found other, more subtle ways to limit coverage for mental illness.
Dr. Richard Frank, a professor of health economics at Harvard University, said: "Parity is very much symbolic, and somewhat real. But it does not fix as many problems, when it winds up on the ground, as most people thought it would."
In offering equal coverage, federal officials hope to provide a model for employers around the country. The initiative is also likely to be monitored closely by Congress, which will probably take up the parity issue in its next session.
Under guidelines developed by the federal Office of Personnel Management, private health plans for federal employees will no longer impose higher co-payments or deductibles for mental health services, or set limits on outpatient visits or hospital days for mental disorders that are lower than those applied to general medical or surgical care.
Treatment for alcohol and drug abuse will also be covered equally under the new policy.
Even a decade ago, equal coverage for mental illness seemed more a pipe dream than a practical possibility. Opponents, including the insurance industry and business groups, warned that without limits on mental health coverage, the "worried well" would spend endless years on the couch and health care costs would spin out of control, forcing many employers to forgo health insurance altogether.
Yet over the last 10 years, much has changed.
Increased understanding of the biological underpinnings of many mental disorders and the advent of new and better treatments have led to a greater acceptance of the idea that conditions like manic depression and schizophrenia are illnesses like any other.
The cost-control strategies of managed care, still in their infancy in 1990, are now in widespread use.
And on Capitol Hill, lobbying by mental health groups — combined with the testimonials of celebrities like Tipper Gore, who last year revealed her own struggle with depression — has garnered unprecedented attention and bipartisan support for psychiatric issues.
Opposition to parity still survives. In Michigan, New York and other states, for example, repeated efforts to pass parity bills have been unsuccessful.
The 1996 Federal Mental Health Parity Act, banning dollar limits on mental health care that differ from those for general medical care, lacks the regulatory teeth to have much real effect. But the symbolic impact has led many state legislatures to address the issue.
And four states — Maryland, Minnesota, Connecticut and Vermont — have statutes that not only eliminate inequalities in reimbursements but also require employers to cover mental health, define mental illness broadly, include drug and alcohol addiction, and require small employers to comply.
Still, health care experts say that the reality of parity, as translated by lawmakers and insurance companies, often bears little resemblance to the ideal envisioned by advocates.
Some state statutes, for example, contain so many loopholes that thousands of employees are not covered. Others limit coverage to specific illnesses. And even where parity legislation is broadest, some critics say, managed care has undercut the goal of equality, leaving some patients worse off than they were before.
"On its face, parity is a simple issue," Ms. Heffron of the National Mental Health Association said. "But the clarity dilutes very quickly."
A Question of Cost For its champions, parity is about fairness. Without it, they argue, parents take out second mortgages to pay for the care of a child with severe mental illness, and professionals like Kathryn Lynnes, a lawyer and environmental consultant, end up devoting much of their salaries to simply staying well.
Ms. Lynnes, 43, has manic depression, a chronic illness rooted in genetics and brain chemistry that, if untreated, bounces her from suicidal depression to frenzied mania. Medication and psychotherapy have given her back her life.
"With treatment, I pay taxes and I own a home and I live a normal life," Ms.
Lynnes said. "Without it, I probably wouldn't even be here."
But Ms. Lynnes lives in Grand Rapids, Mich., and Michigan is a state without a parity law.
So she pays 50 percent of the $175 fee for each 45-minute visit with her psychiatrist, instead of the 20 percent she would pay for a trip to her internist's office. She works for a small business and her mental health coverage is limited to $2,000 a year and $5,000 for her lifetime, in contrast to the $5 million limit applied to general medical care. To make things worse, she is still paying off the last of the $70,000 she owed to two hospitals after a particularly severe episode of illness five years ago.
Yet if parity begins as an issue of unequal costs for some, it quickly becomes a debate about increased costs shared by all. And parity's opponents, who include the Health Insurance Association of America and the Chamber of Commerce, have traditionally argued that equal coverage is simply too expensive.
Early critics based their assessments on data collected in the 1980's, when costs for mental health treatment — primarily in- hospital care — were climbing steadily, eating up as much as 10 percent of employers' total health care budgets.
Borrowing a term from economists, insurers warned that unlimited mental health benefits posed a "moral hazard" to employers and insurers. If such benefits were offered, the argument went, they would be exploited and overused — simply because they were there.
Insurers also worried about "adverse selection": people who knew they needed psychiatric treatment, they argued, would flock to plans offering good coverage.
Ms. Lynnes encountered this logic firsthand, when she and her boss sought out a health plan that could give them better mental health benefits in exchange for higher premiums. Concerned about being singled out, insurance companies simply did not offer such benefits.
"We looked and there really wasn't anything out there that had the coverage,"
The Picture Changes A decade ago, fears about the cost of parity were difficult to dismiss. But today those fears have proved to be largely groundless in states that have equal-coverage laws.
The reason, experts say, is the widespread influence of managed care. In every case, the equalization of mental health benefits has come hand in hand with tightened management.
Vermont's statute, for example, specifically provides insurance companies with the option of bringing in managed care for mental health treatment, even if benefits for physical health care are not similarly managed.
"No place has or ever will implement parity without an increase in the managed care element," said Dr. Darrel A. Regier, an expert on parity and the executive director of the American Psychiatric Association's Institute for Research and Education.
As a result, most insurance companies have been able to meet the requirements of parity laws while keeping cost increases at a minimum. In a comprehensive analysis of the impact of parity submitted to Congress in June, the National Mental Health Advisory Council, a panel that advises the National Institute of Mental Health and the secretary of health and human services on mental health issues, found that on average, parity increased total health insurance premiums by 1.4 percent — far less than the 10 or even 15 percent predicted by critics. Other analyses have yielded similar numbers.
Ronald E. Bachman, an actuary at PricewaterhouseCoopers who has analyzed expected costs for more than 30 states considering parity legislation, said he believed that providing parity for both mental illness and substance abuse raised total health care costs on average 2.5 to 3.5 percent. Parity for mental illness alone raises premiums 2 to 3 percent, Mr. Bachman said. And if anything, he said, his estimates are high.
"How many examples do you need to show that mental health does not break the bank?" Mr. Bachman asked.
Insurers who will offer equal coverage to federal employees under the new guidelines also said they expected the costs of increased coverage to be manageable.
"If it's effectively managed, we think we can bring this in at a reasonable cost," said Stephen W. Gammarino, a senior vice president for Blue Cross and Blue Shield Association's federal employee program, which covers four million employees. Mr. Gammarino said his company estimated that increased mental health coverage would add about 2 percent to premiums.
One reason parity has proved to be economical, Dr. Regier and other health care experts say, is that managed care has greatly reduced hospital stays, especially the long hospitalizations common for adolescents 10 years ago. But Dr. Regier added that in some cases, the quality of care may have suffered and overall access to benefits may have grown more limited as a result of managed care. Under many managed care plans for mental health, patients must choose from an approved list of practitioners or forfeit equal coverage, and must seek authorization before receiving treatment and at regular intervals thereafter.
Parity may also bring indirect savings. Studies have found that access to mental health services can offset general medical costs, decrease absenteeism, reduce the psychiatric disability claims made by employees and offset court and prison costs.
The Chevron Corporation, for example, found that it saved $7 for every dollar it spent on an employee assistance program offering mental health resources, according to a 1997 report. And researchers at Johns Hopkins University found that insurance plans with the highest financial barriers to mental health treatment experienced a greater number of disability claims related to mental illness.
Yet many opponents of parity remain unconvinced by such statistics.
The Health Insurance Association of America, for example, argues that even small premium increases add up, forcing some employers to drop their insurance. "Mandates add cost," said Richard Coorsh, a spokesman for the association.
In Michigan, where businesses and big labor unions are united in opposing insurance mandates, a package of five parity bills was introduced in the state House of Representatives in 1998, but never made it out of committee.
Larry Horwitz, the president of the Economic Alliance of Michigan, a lobbying group that represents both business associations and labor groups like the A.F.L.- C.I.O., said his members objected to parity not only because of the cost, but also because they believed it would infringe on freedom of choice — for example, by limiting what benefits labor unions can trade off at the bargaining table.
"I should be able to make my own judgments on what I want covered, and it should not be imposed upon me by state regulators," Mr. Horwitz said.
State Laws and Their Limits Concerns about cost and government intrusion may have kept parity statutes off the books in many states, but they have also shaped the laws that do exist.
The 1996 federal parity law, for example, does not require employers to provide mental health coverage. Small businesses, and those where costs would increase more than 1 percent as a result of equal coverage, are exempt. And the law says nothing about unequal co-payments or deductibles.
Many state statutes also exempt small businesses or those in which costs would increase beyond a set percentage.
And 19 states restrict parity to a narrow list of mental illnesses.
In Texas, for example, a 1997 law signed by Gov. George W. Bush provides equal coverage only for schizophrenia, paranoia and other psychotic disorders, bipolar disorder, major depressive disorder, obsessive-compulsive disorder and depression in childhood and adolescence. It does not cover drug or alcohol addiction.
Rhode Island's 1994 statute restricts parity to "serious mental illness" that "current medical science affirms is caused by a biological disorder of the brain and substantially limits life activities."
When states limit coverage to certain illnesses, children are often left out, Ms. Heffron said. "The laws usually focus on severe mental illnesses which don't manifest themselves until late adolescence," she said.
Reducing the impact of state statutes even further, companies that self-insure are exempt under the federal Employment Retirement Income Security Act, or Erisa, from state insurance laws, an exception that in some states leaves 80 percent of employers beyond parity's reach.
Noncompliance by employers is another problem.
A Congressional report released last May found that thousands of businesses were violating the federal law. Of employers in 26 states surveyed by the General Accounting Office, 14 percent — or between 9,000 and 13,000 employers — continued to set lower lifetime dollar limits for mental health treatment.
Thousands more merely substituted limits on covered days of hospital care or visits to a mental health professional for dollar limits.
Senator Pete V. Domenici, Republican of New Mexico, who co-wrote the 1996 law with Senator Paul Wellstone, Democrat of Minnesota, said he hoped to persuade Congress to close some loopholes and expand the legislation when it comes up for reauthorization next September.
A strengthened bill, he suggested, might require equal co-payments for mental and physical illness, and prevent companies from setting day and visit limits on care. But it almost certainly will stop short of requiring employers to carry coverage for mental illness, or removing the exemption for small employers.
"I'm not going to say that's real parity," Senator Domenici said.
The Risks of Managed Care The senator from New Mexico would get no argument from Dr. Ken Libertoff, who, as executive director of the Vermont Association for Mental Health, led the campaign for a state parity law so comprehensive it would offer a model for the rest of the country.
"Partial parity laws mean a continuation of strong discriminatory practices,"
Dr. Libertoff said.
Yet when parity is broad-based, as it is in Vermont, he said, it can have a profound impact.
"I think the bill is working, and it's working on several levels," Dr.
Libertoff said. "No. 1, companies are complying. And No. 2, the major argument used against parity over the last decade has been the cost factor, and the initial findings from Vermont are very positive."
In fact, Vermont's statute has made a good first impression on patients like Anne Donahue, who in 1993 plunged into a serious depression and, after five hospitalizations, was left with $17,000 in unpaid hospital bills.
Like most health insurance plans at the time, Ms. Donahue's policy treated mental illness differently than it treated other medical conditions. With her fourth hospitalization, she exceeded the plan's 30-day yearly maximum on the number of days in the hospital it would cover, and her insurance company refused to pay.
"I had never even dreamed that there were distinctions," said Ms. Donahue, who has a law degree from Georgetown University and was teaching high school science and religion at the time of her illness. "You don't think `Is heart disease covered?' when you have a heart attack."
Ms. Donahue told her story to lawmakers in Montpelier, and joined those who in 1997 campaigned for passage of a state parity bill. Now that the law has passed, she said, she no longer fears that another severe episode of depression, an illness that often recurs, might push her into bankruptcy.
"There's a whole stress factor involved in having to worry and battle for your insurance coverage when you're in the midst of an illness that is very specifically affecting the way you can cope in the world," she said.
But not everyone in Vermont is happy with the way parity has played out in the three years since its implementation.
In particular, the management of mental health benefits built into the legislation — a compromise added to make the bill acceptable to budget-conscious lawmakers, according to Dr. Libertoff — has some professionals hopping mad.
"I think that it's good we have parity," said Dr. Richard Root, an educational psychologist in Springfield, Vt., and a former president of the Vermont Psychological Association, "but the fact is that personally it is not what I really thought it was going to be."
Since the law passed, Dr. Root said, he has had difficulty persuading insurers to authorize needed treatment for his patients. And while before parity his fee for an hour of psychotherapy was $85 to $90, he now collects $63 an hour, the fee deemed reasonable by the managed care companies.
Dr. John Matthew, an internist in Plainfield, Vt., said he also believed that in some cases the stepped-up management had been bad for his patients' mental health.
In one instance, Dr. Matthew recalled, he had to make six calls to an 800 number to get a managed care company to authorize a single visit to a psychiatrist for a 9-year old girl with manic depression.
"I could have gotten six visits to a cardiologist without any questions being asked," he said.
Benefits for psychiatric services are often managed through a different set of procedures than are other forms of medical treatment. Many insurers, for example, farm out the management of their mental health benefits to companies that specialize in containing psychiatric costs by establishing provider networks and reviewing treatment.
And under many insurance plans, an employee who wishes to consult a psychiatrist or psychotherapist must get authorization from a "gatekeeper"
for a specified number of initial visits. If the practitioner feels that more sessions are necessary, a detailed justification for further treatment must be filed, and the patient's progression is monitored at regular intervals.
"I think that the kind of managed care that's done for mental health care doesn't exist in any other branch of medicine," said Dr. Jonathan L. Weker, a psychiatrist in Montpelier who is the chairman of an independent panel established by the state to review managed care complaints.
In the right hands, health care experts say, such practices can ensure that patients get the right treatment from the right person, and that treatment continues no longer than medically necessary. Wielded by less expert or less responsible bureaucrats, however, the same procedures can ignore a patient's long-term welfare, or the judgment of providers about what type of care is needed.
A Delicate Balance In a 1997 speech to a meeting of the American Psychiatric Association, Dr.
Howard Goldman, a professor of psychiatry at the University of Maryland, called the partnering of parity and managed care "a Faustian bargain."
What is given to patients by the nominal expansion of benefits, Dr. Goldman said, may in some cases be taken away by the practices used by management companies to contain costs.
Researchers are only beginning to tease out, however, exactly how much is lost and how much is gained by the marriage of parity and managed care.
Some studies suggest that in states that already use management strategies to control the costs of mental health treatment, parity laws have had a beneficial effect.
"If you don't have parity and you have a heavily managed system," said Dr.
Regier of the American Psychiatric Association's research and education institute, "you have a double whammy against patients: not only higher co-payments and restrictions, but also the gantlet of medical necessity determinations and more frequent reviews that come with management."
Parity, when it arrives, removes the arbitrary limits on care, and may increase the number of people who have access to treatment.
In one study, for example, researchers found that the combination of parity and managed care led to an increase in the number of adults and children who used outpatient mental health services. (The length of time patients spent in outpatient treatment stayed the same, the study found, and the use of inpatient hospital beds declined.)
In other states, however, where managed care enters on parity's arm, equal-coverage laws do not seem powerful enough to dampen the impact of cost cutting by managed care companies, Dr. Regier said.
And researchers still do not know what effect, if any, parity has on the division of costs between private health plans and the public mental health system, which has traditionally cared for the most severely ill — and thus most expensive — patients.
One possibility is that with parity legislation, patients are able to stay in the private sector longer, reducing the burden on taxpayers, who foot the bill for public-system care. But the shifting of expense, some experts point out, could also go the other way, if insurers use managed care to push more severely ill patients into the public system, to be cared for by community mental health centers, state hospitals and federal subsidy programs like Medicaid.
What is clear is that, parity or no parity, insurers continue to do what they can to control the expense of mental health treatment, and to avoid attracting the most expensive patients.
Yet for many who depend on their health insurance to offer lifesaving help in times of crisis and to keep them afloat when the crisis has passed, parity in any form is worthwhile.
"Without parity," Kathryn Lynnes said, "you don't even get to argue about managed care."