The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 was signed into law on October 3, 2008. This monumental law requires group health plans of 50 or more employees provide the same level of coverage for mental health and substance abuse treatment as other medical and surgical benefits. The law is anticipated to provide over 113 million individuals across the United States, including 82 million people enrolled in Employee Retirement Income Security Act (ERISA) group health insurance plans that are not protected by current state parity laws.
Key features of the law include:
- Require equitable coverage for all financial requirements and treatment limitations, including deductibles, copayments, coinsurance, out-of-pocket expenses, reimbursement ceilings, frequency of treatment, number of visits, and days of coverage.
- Mental health and substance use benefit coverage is not mandated. Thus, the law does not apply to health plans that provide no behavioral health benefits. However, if a plan offers behavioral health coverage, it must be provided at parity with medical benefits.
- Does not apply to health plans offered by employers with 50 or fewer employees.
- Effective date is October 2009 for the first plan coverage year. For most consumers, the parity changes will be available January 1, 2010.
Passage and implementation of the parity law will mean more people with mental health and addictive disorders will have access to comprehensive treatment.
In addition, the parity law should have a positive impact on state and local mental health and substance abuse budgets as previous cost shifting would be minimized. Presently, the cost of mental health treatment and especially, substance use treatment is disproportionately borne by government. Public sources pay for 45% of all health care costs, but make up 58% of the costs for mental health care and 77% of substance use care. Parity could rebalance public and private expenditures. If private insurance were to cover the same proportion of mental health and substance use treatment costs as for general medical care (this is the fundamental tenet of parity, after all), this would represent an increase of $13 billion annually for mental health treatment and $5.6 billion annually for substance use treatment. An increase of this size would equal the entire Federal payments for substance use treatment and would be half the size of all Federal payments for mental health treatment.
Medicaid and SCHIP beneficiaries would also benefit under the new law. Over 65 percent of the total Medicaid population is served through managed care. The parity law extends parity to Medicaid managed care and the State Children’s Health Insurance Program (SCHIP) reauthorization in 2009 further directed extension of parity to all children covered by SCHIP.
A link to the full text of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act can be found here.
For more information on the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act, see our Q and A on Parity Legislation.