WWS Parity

Where We Stand: Mental Health Parity

A Response to Discrimination in Health Insurance Benefits

What is parity?
Mental health parity would require that health insurance coverage of physical illnesses and disorders be treated the same as for mental illnesses and disorders. Parity is a legal mandate prohibiting health insurance policies from discriminating based on a particular illness, disorder, or health condition. Mental health parity is a legal means prohibiting discrimination based on a mental disorder.

Why is CHADD concerned?
Most health insurance plans in America treat mental disorders in a discriminatory fashion when compared to physical disorders. The typical health insurance plan in America authorizes unlimited hospitalization for physical disorders while limiting hospitalization for mental disorders to 30 days per calendar year. The typical insurance plan in America authorizes a broad array of outpatient services for physical insurance, but limits outpatient mental health services to 20 visits each year.

The Surgeon General’s Report on Mental Health (published in December 1999) affirmed at the highest level that attention-deficit/hyperactivity disorder (AD/HD) is a mental disorder. Thus, AD/HD is limited by the same discriminatory insurance practices as other mental disorders.

Types of health insurance discrimination
There are generally four types of discriminatory health insurance practices used against the coverage of mental disorders: hospital day limits; outpatient visit limits; discriminatory out-of-pocket obligations; and discriminatory lifetime and annual plan expenditure limits. Typical health insurance plans require a 20 percent copayment for outpatient visits. Typical health insurance plans require a 50 percent copayment for outpatient mental health services.

The Mental Health Parity Act of 1996, U.S. Public Law 104-204, prohibits the use of discriminatory lifetime and annual health plan expenditure limits for mental disorders, excluding addictive disorders. It applies only to insurance plans offering mental health benefits, which includes most plans in America. It exempts small employers, who are defined as employers with 50 or fewer employees, from the national legal requirement. Further, if the cost of meeting the mental health requirement exceeds a one percent increase in actual health plan costs, that particular health plan is exempt from the national law requirement.

Current federal legislation
Two legislative bills are currently pending before the U.S. Congress to extend and expand the Mental Health Parity Act of 1996:
     • S. 558, with Senators Pete Domenici (R-NM), Edward Kennedy (D-MA), and Michael Enzi (R-WY) as the lead sponsors, passed the U.S. Senate on September 18, 2007.
     • HR 1412, with Representatives Patrick Kennedy (D-RI) and Jim Ramstead (R-MN) as lead sponsors, has passed three House committees but has not been considered on the House floor.
The House bill is more comprehensive in its coverage of diagnoses and its benefits. HR 1412 would mandate coverage of every disorder in the Diagnostic and Statistical Manual (DSM). S. 558 would allow employers to decide which DSM conditions to cover. The House bill mandates benefits currently covered under the Federal Employee Health Benefit Program. The Senate bill does not mandate benefits.

What should CHADD members do?
Most national mental health and substance abuse organizations, including CHADD, prefer the House bill over the Senate bill. However, as we enter the 2008 election year, enactment of the Senate legislation is preferable to no progress since the 1996 act.

CHADD members are encouraged to write their federal legislators, emphasize the importance of mental health benefits to the treatment of AD/HD, and encourage legislators to enact in 2008 a mental health parity bill, at least as detailed as S. 558 and preferably as comprehensive as H.R. 1424.

Original Release Date: April 17, 2001
Updated: January 29, 2008