Feature

Three new states--Kentucky, New Mexico and Utah--have passed laws requiring that health insurers provide coverage of mental health on par with physical health for a broad range of mental disorders.

That brings to 11 the number of states with requirements for "broad-based parity"--that is parity that covers a broad range of different diagnoses. In addition, North Carolina has broad-based parity for state employees.

Eighteen other states have laws that require parity for severe mental illnesses (SMIs) only, which typically means schizophrenia, bipolar disorder and a few other diagnoses. Several of the states with SMI laws expand that list to include other circumstances.

The passage of the three new laws for broad parity stand in contrast to last year's events: Of the12 states that passed parity laws in 1999, only two required broad-based parity. The rest required parity coverage only for SMI.

"The efforts of psychologists and others in these three states demonstrate a growing concern that many people with debilitating mental disorders are left unprotected by SMI parity bills," says Marilyn Richmond, the APA Practice Directorate's assistant executive director for government relations.

The adoption of broad-based parity in three states is also important in light of next year's scheduled rewrite of the federal mental parity law, which has some major loopholes in it, according to the APA Practice Directorate. The law does not require parity in copayments and deductibles or keep insurance plans from limiting visits or treatment days for mental health; it only prohibits more restrictive annual or life-time dollar limits on mental health coverage by plans with more than 50 enrollees.

New Mexico, Utah take action

APA and other mental health organizations seek to close those loopholes and make the federal law cover all mental disorders. That hope wasbolstered in February when New Mexico passed, and the governor signed, a law for coverage of mental disorders benefits in general. One way the New Mexico law differs from other state laws, however, is that it defines "mental health benefits" to mean those mental health benefits described in the group health plan or group health insurance. In other words, the law does not require coverage of any particular mental health disorders, but if insurers do cover a disorder it must be on par with physical health coverage.

Then, in early March, the Utah state legislature passed its mandate for equal coverage for any of a broad range of diagnostic categories for mental health diagnoses that were traditionally covered by Utah health insurance plans.

"The Utah law is significant because it is the first of the state laws to use the 'catastrophic' model," says Michael Sullivan, PhD, APA assistant executive director for state advocacy. "That is, it covers out-of-pocket expenses that are likely to bankrupt people who are the sickest, without regard to diagnosis."

The Utah law allows insurers to have patients pay out-of-pocket up to a certain level for treatment of mental health and physical health problems. The mental health out-of-pocket limit may not be more than the physical health out of pocket limit. After the limit is reached, patients are fully covered for expenses.

The Utah law's passage is also another landmark for psychology. It was the first time a state psychological association president was the sponsor of the legislation. Judy Ann Buffmire, PhD, president of the Utah Psychological Association, and a member of the state house of representatives, fought for the bill in the face of strong opposition from state business and insurance interests. But when the legislation passed, both houses of the legislature gave her bipartisan, standing ovations for her efforts.

"We are feeling good about it" says Buffmire. "We do have something started. And we have been very clear that our move will be toward full parity."

Kentucky's triple crowning

In April, Kentucky became the third state this year to pass parity with broad-based coverage. That law requires that any health benefit plan issued or renewed after the time of the act's implementation will have parity for all mental disorders. The law includes some exemptions to the parity requirement. Small employer benefit plans and individual health-insurance plans, for example, will not have to have equal mental and physical benefits.

"We made the decision in the beginning that the legislation would cover the broad range of mental illness diagnoses including substance abuse and we never wavered from that," says Sheila Schuster, PhD, executive director of the Kentucky Psychological Association. "The fact that we had an established mental health coalition in which providers, consumers and family members worked hand-in-hand really carried the day."

Meanwhile, APA is hoping for a reversal of a major disappointment in California last year. At the end of the year, the state legislature was expected to send both a broad-based bill and an SMI bill to Gov. Gray Davis (D) and allow him to decide which to sign. But, due to last-minute political maneuvering, the legislature only passed the SMI bill. The governor signed it. The law does require broad-based coverage for children.

But this year the state legislature is in the midst of considering comprehensive reform for a range of mental health laws. The California Psychological Association hopes that among the reforms passed will be an expansion of the new parity law to require broad-based coverage.

Recently, Massachusetts enacted a law requiring partial parity for SMIs, as well as parity protections for children and rape victims.

Of course, all of the state laws for mental health parity, both for SMI and broad-based coverage, are limited in one important aspect. They do not cover the health plans of self-insured employers, due to an exemption from state regulations under the Employee Retirement Income Security Act (ERISA) of 1974, a situation that can leave many residents without the parity protection. That's the reason APA's Practice Directorate is advocating for strong federal legislation.