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This Congressional session marks the first time that both houses of Congress have passed legislation requiring parity. Last fall, the Senate unanimously adopted the Mental Health Parity Act (S. 558), and in March the House followed suit by passing the Paul Wellstone Mental Health and Addiction Equity Act (H.R. 1424). But differences in the language of the two bills have left the legislation stalled, and final passage of legislation remains uncertain.
The difference between the Senate and House bills that is causing the current impasse involves the defining of mental illness. The Senate bill is silent on the matter, which means that insurers would be able to define the set of covered conditions themselves. The House bill explicitly defines the conditions covered under the law as all the mental or substance-related disorders that appear in the Diagnostic and Statistical Manual of Mental Disorders (DSM).
To put this distinction into context, it is useful to consider how health plans define the set of non–mental health conditions they cover. Most health insurance plans follow the Senate's strategy — they do not formally define the medical conditions whose care they cover. Rather, the scope of coverage is generally governed by the rule that services be "medically necessary." This term, which is not always defined, generally refers to care that is "accepted medical practice or community standards of care; not for the convenience of the patient or provider; not experimental or investigational; and appropriate and effective."1 Insurers do not always require that a set of symptoms meet the criteria delineated by an official categorization of medical conditions — such as the International Classification of Diseases (ICD) — if they are to pay for a benefit under the medical-necessity standard. Conversely, plans are not obligated to — nor do they — pay for the treatment of all conditions included in the ICD. They may deny coverage because of a judgment that a condition would not improve with treatment or because the treatment being contemplated is not appropriate or effective or is experimental.
Like the ICD, the DSM aims to classify illnesses and patterns of symptoms — in this case, mental health illnesses and symptoms — so that they can be measured and studied in a common language. Both classification systems contain many conditions — more than 100,000 in the ICD and about 300 in the DSM — and both contain "many disorders [that] are mild, nondisabling, and self-limited and need no professional intervention."2
The disagreement between the House and the Senate about whether to define what constitutes mental health care, though apparently arcane, reflects an underlying difference that has dogged every debate about parity3: Do insurers design mental health benefits to balance cost control and access to valuable care? Or do they design their plans to discourage enrollment among people with serious and chronic mental health conditions?
Under traditional fee-for-service indemnity insurance, the use of mental health treatment was found to be significantly more responsive to cost sharing than was the use of other medical treatment. That is one reason that insurers have kept cost sharing high for mental health services (see graph). Opponents of the House legislation are concerned that requiring insurers to cover all the conditions in the DSM will prevent plans from managing "parity" mental health benefits in a way that trades off costs and access, which will lead to excessive costs from a torrent of claims for treatment of trivial conditions such as jet lag and caffeine intoxication.
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If medical-necessity rules will trump the DSM criteria anyway, does it make any sense for the House to include these criteria in the legislation? Including the DSM criteria may address the possibility that insurers design their mental health benefits so as to avoid attracting high-cost enrollees. Mental health conditions are often exceptionally persistent and costly. Insurers who offer relatively generous coverage for mental health care will disproportionately attract people with mental disorders — people who have been shown to incur higher costs for health care and mental health care than most other enrollees. Being the best mental health plan in a competitive health insurance market is a losing financial proposition, so insurers may compete to narrow their benefits and avoid enrolling people with mental illness. A parity law that requires all plans to offer mental health benefits as generous as their general health benefits ought to reduce the ability of plans to engage in this race for the bottom. But if plans can specify which conditions "count" as mental health and therefore qualify for the parity benefit, they may persist in competing to drive away high-cost enrollees.
The evidence from the existing parity plans suggests a possible compromise between the House and Senate positions. Insurers should not be permitted to exclude entire categories of conditions from coverage. On the other hand, they should be permitted, and even encouraged, to use the existing criterion of "medical necessity" to ensure that covered services are directed to the types of mental disorders that are most impairing and disruptive and that can be treated effectively with medical care. Parity in mental health should not mean mental health services for all problems, for everyone, at any time — that's not how good insurance works for any condition. But the promise of parity is that treatment for people with mental illnesses that cause impairment, disability, and suffering will not be excluded from insurance coverage, and effective legislation needs to make sure that happens.
Dr. Frank reports receiving lecture fees from a medical director forum organized by the Chatham Institute, which received grant support from AstraZeneca, and holding equity in Humana. No other potential conflict of interest relevant to this article was reported.
Source Information
Dr. Glied is a professor in and chair of the Department of Health Policy and Management, Mailman School of Public Health, Columbia University, New York. Dr. Frank is a professor of health economics at Harvard Medical School, Boston.
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