Behavioral health benefits for public employees: effect of mental health parity legislation

P C Borzi, S Rosenbaum
Issue Brief 2001, (13): 1-23
With the passage of the Mental Health Parity Act of 1996 (MHPA), Congress took an important first step toward equalizing treatment under medical plans between physical and mental illnesses by requiring parity in annual and lifetime dollar limits between physical and mental illness. But the Act was limited in scope: it did not mandate mental health benefits nor prohibit other common types of differentials between physical and mental illnesses, such as higher cost-sharing or lower limits on outpatient visits or inpatient treatments. Before Congress' action in 1996, a few of the states had adopted some type of parity requirement. Since 1996, state parity activity has accelerated.Recently, the Center for Health Services Research and Policy through a grant from the Substance Abuse and Mental Health Services Administration of the U.S. Department of Health and Human Services, examined contracts providing for mental health benefits for state employees in eight states to assess whether legislative attempts to require parity between physical and mental illnesses resulted in noticeable differences in behavioral health benefits for state employees. We concluded that, except in states that have mandated full parity for some or all types of mental illnesses, behavioral health benefits for state employees have not changed significantly as a result of the state parity laws, since they still remain subject to traditional restrictions, such as higher cost-sharing and greater limitations on outpatient visits and inpatient treatment days, than those imposed on physical illnesses. Thus the considerable state activity surrounding mental health parity may have little effect on state employees' access to mental health services, since although state laws required parity in dollar limitations, they generally permitted the continuation of other plan design features that are more restrictive for mental health coverage. However, many of the contracts we examined were multi-year contract and may not have fully reflected recent state activity. Moreover, if Congress renews the Mental Health Parity Act when it expires in September, 2001, and expands the scope of the Act to cover some of these other plan design features, states with more limited parity laws are likely to follow. In that case, perhaps state employees with mental illnesses may see significant change in the future.

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