New Study finds Cost of Parity To Employers Is Only 1%

Mental Health Parity Coverage Will Cost Just 1%

Mental Health Parity Coverage to Cost $1.32 Per Month

WASHINGTON, Aug. 1 /PRNewswire/ -- Mental health coverage on par with physical health coverage will cost employers just 1 percent, or $1.32 per enrollee per month, according to a PricewaterhouseCoopers (PwC) actuarial analysis of legislation S. 543, the Mental Health Equitable Treatment Act of 2001. Sponsored by Sens. Pete V. Domenici (R-N.M.) and Paul Wellstone (D-Minn.), S. 543 calls for mental health parity with medical and surgical benefits. The American Psychological Association, which retained PricewaterhouseCoopers to do the analysis, released it today as the U.S. Senate Health, Education, Labor & Pensions Committee met to vote on the legislation.

"The U.S. Surgeon General said there is no scientific justification for treating mental health benefits differently from other benefits. This actuarial analysis shows doing just that is very affordable," said Russ Newman, Ph.D., J.D., of the American Psychological Association Practice Organization.

The marketplace has been changed by the proliferation of parity in state-regulated health plans, the Federal Employee Health Benefit Program (FEHBP), and private plans voluntarily offering it, asserts PwC. By calculating the degree of parity in these other health plans, PwC projects that the total net impact of S. 543 nationally will be only 1 percent of total health plan costs. Like FEHBP, S. 543 requires parity only for in-network services, where providers typically have agreed to discount their fees.

Previous parity cost studies by the nonpartisan Congressional Budget Office (CBO) have tracked the work of the author of this analysis, Ron Bachman, FSA, MAAA, a national expert in mental health benefit pricing. Mr. Bachman is a Principal of PwC, in its Global Human Resource Solutions Atlanta office. CBO's new analysis of S. 543, the Mental Health Equitable Treatment Act of 2001, projects a 1 percent increase, said Senator Pete Domenici on July 11.

The change in the marketplace makes S. 543 markedly less expensive than its 1996 full parity predecessor. Mr. Bachman had "scored" the original Domenici/Wellstone amendment to the Health Insurance Portability and Accessibility Act at 2.6 percent. The full parity amendment passed the Senate by a 68-30 vote in April 1996 but was later dropped in conference with the House. Since that time, 29 states have passed parity laws (in addition to the six laws in effect) and parity was instituted within FEHBP. The U.S. Office of Personnel Management, which administers FEHBP, testified July 11 that parity in-network for both mental health and substance abuse costs only 1.3 percent. S. 543 is modeled on FEHBP parity but does not propose parity for substance-abuse benefits.

"Health care coverage in this country needs to catch up with what people increasingly understand ... the mind and body are linked inextricably, and the perpetuation of discrimination against mental health in benefit design makes no financial sense and no common sense," said Newman.

S. 543 seeks to eliminate the arbitrary limits on mental health benefits that are written into many insurance policies, such as those that impose a stated maximum number of outpatient visits per year or require higher out-of-pocket spending. This "one size fits all" setup ill serves patients who need treatment for mental disorders that cannot be treated in short-term therapy. Allowing decisions appropriate for each patient's condition will mean that families no longer hit arbitrary limits that prevent them from getting needed care.

APA and 123 other national organizations believe that S. 543 must be passed to address discrimination in mental health benefits and to close the loopholes in the Mental Health Parity Act of 1996. That partial parity law only banned discrimination in annual and lifetime dollar limits, leaving employers free to manipulate coinsurance, deductibles, maximum out-of-pocket limits, and limits on inpatient days and outpatient visits. The 1996 Act sunsets on October 1, 2001.

The American Psychological Association (APA), located in Washington, DC, is the largest scientific and professional organization representing psychology in the United States and is the world's largest association of psychologists. APA's membership includes more than 155,000 researchers, educators, clinicians, consultants and students. Through its divisions in 53 subfields of psychology and its affiliations with 58 state, territorial and Canadian provincial associations, APA works to advance psychology as a science, as a profession, and as a means of promoting human welfare.

Opinions expressed in this web site do not necessarily reflect the views of NAMI Santa Cruz County, NAMI California or any affiliated organizations. We attempt to present a balanced perspective on issues by presenting multiple viewpoints.

FAIR USE NOTICE: This may contain copyrighted (©) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available to advance understanding of ecological, political, human rights, economic, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml If you wish to use copyrighted material for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.