Senate Parity Version Will Increase Costs, Decrease Coverage: Employer Groups

November 5, 2001 ( - The Senate version of a mental health parity amendment is likely to increase costs - and decrease coverage of mental health treatments, according to employer industry groups.

Mark Ugoretz, President, The ERISA Industry Committee (ERIC) notes, “The unreasonable parity requirement, coupled with already rapidly rising health care costs, will force many plan sponsors to significantly raise employee contributions and is an incentive to terminate coverage for mental health benefits altogether.”

“The Senate amendment to the Labor Health and Human Services appropriations bill contains a provision that would significantly expand the current law and make the requirements permanent,” Paul Dennett, Vice President of Health Policy at the American Benefits Council, told .

Flexibility Fare Well?

“It would eliminate all flexibility in how mental health services could be provided under an employer-sponsored health plan, subjecting them to the same cost-sharing requirements and service limits as non-mental health services covered under a health plan,” he adds

The Senate amendment would require all employer sponsored health plans to cover every mental health service that is mentioned in the diagnostic code manual used by health professionals. “In other words,” Dennett explains, “every condition that has a name and a diagnostic code for billing would be required to be covered if the health plan covered any mental health services at all today.”

“By mandating that employers cover mental health services the same way they cover other medical and surgical services, Congress will open the floodgates to overutilization and explosive mental health claims costs, giving plan sponsors little choice but to raise employee contributions, curtail benefits across the board, or drop mental health coverage entirely,” Ugoretz said in a statement.

“In addition, the Senate amendment would delete a very important employer protection in the earlier 1996 parity law, which allowed employers to waive the parity requirement if they determined that it would result in a more than 1% increase on their healthcare premiums,” Dennett adds.

Voice Vote

The amendment passed by the Senate was based on provisions of the Mental Health Equitable Treatment Act, approved by the Senate Health, Education, Labor and Pensions (HELP) Committee in July. The amendment, offered by Senators Pete Deomenici (R ? New Mexico) and Paul Wellstone (D ? Minnesota), extends the expiration date of the Act to January 1, 2003, from January 1, 2002.

The amendment requires employer sponsored health plans that offer mental health coverage benefits to provide full parity with respect to medical benefits regarding both treatment limitations and financial requirements, including deductibles, coinsurance and co-payments.

The bill has its origins in 1996, when Congress originally approved a limited version of mental health parity law. It was enacted with a five-year sunset provision, which expired in September this year.

“The original sunset clause provision was included to make Congress reconsider whether the law should be modified or allowed to expire entirely because the issue was very controversial when it was debated in 1996,” according to ABC’s Dennett

House Measures

In a similar move last week, the House of Representatives voted to extend the law, which expired in September, until 2003, as part of the economic stimulus package.