Mental Health Parity

February 11, 2002

Current Status

Senators Pete Domenici (R-NM) and Edward Kennedy (D-MA) and Representatives Jim Ramstad (R-MN) and Patrick Kennedy (D-RI) have sponsored the Paul Wellstone Mental Health Parity Act of 2003.  The bill text is identical to the Mental Health Equitable Treatment Act introduced in the 107^th Congress, S. 543 as reported/H.R. 4066.

On November 15, 2002, the U.S. House of Representatives and the U.S. Senate passed another extension of current law, the Mental Health Parity Act of 1996, pushing the expiration date back from December 21, 2002 until December 31, 2003.  If Congress fails to act by the end of 2003, the 1996 Act will expire.

Background and Legislative History

NASW strongly believes that all health insurance plans should provide beneficiaries with full coverage of mental health care and substance abuse treatment.

It is common practice that health insurance coverage for mental health and substance abuse services, if offered at all to beneficiaries, is regularly provided at different levels than those for all other medical and surgical services.  The number of covered outpatient visits and hospital days are often less for mental health and substance abuse, in addition to the imposition of higher co-payments and deductibles.

Mental health parity first appeared on the Congressional agenda in 1993 as part of the health care reform legislation promoted by President William J. Clinton, the Health Security Act of 1993.

A variety of other parity initiatives were introduced in Congress over the next three years, building a critical mass of support. The primary champions of the parity movement were Senators Pete Domenici (R-NM) and the late Paul Wellstone as well as Representatives Marge Roukema (R-NJ) and Patrick Kennedy (D-RI).  Success was achieved in 1996, when Senator Domenici and Senator. Wellstone offered an amendment to the Fiscal Year 1997 Veterans Administration and Housing and Urban Development Appropriations bill on September 5.  The full Senate agreed to both the amendment and the underlying legislation.  As the House had passed a different version of the bill, a joint House - Senate conference committee was appointed to reconcile the differences.  The resulting conference report included the Domenici-Wellstone parity amendment and was passed first by the House on September 24, 1996 and then by the Senate on September 25, 1996.  President Clinton signed the bill into law on September 26, 1996.

The 1996 Act took effect on January 1, 1998, and expired on September 30, 2001.

 Its basic premise was that all health care insurance plans should offer the same degree of coverage or parity for mental health benefits as provided for medical and surgical benefits.  It is important to note that the 1996 Act did not require employers to offer mental health care benefits, but if such benefits were provided, they had to have been equal to those offered for medical and surgical care.

Although mental illnesses were covered by the scope of the 1996 Act, neither substance abuse nor chemical dependency treatments were covered.  Specifically, both aggregate lifetime limits and annual limits for mental health benefits had to have been identical to those for medical and surgical benefits, if and only if a covered employer offered mental health benefits.  The 1996 Act applied to not only fully insured state-regulated health plans, but also to self-insured plans that are exempt from state law under the federal Employee Retirement Income Security Act and thereby regulated by the U.S. Department of Labor.  In addition, state mental health parity laws were not preempted by the 1996 Act, ensuring that stronger state statutes were not weakened.

Loopholes did exist, however.  Employers who could demonstrate at least a 1 percent or more increase in costs as a result of the implementation of mental health parity were permitted to exempt themselves from the tenets of the 1996 Act.  Co-payments, deductibles, out-of-pocket payments, managed care, and caps on the number of inpatient days and outpatient visits were beyond the scope of the legislation, as were organizations with fewer than 50 employees.

Although the 1996 Act did not eliminate all barriers and disparate treatment facing mental health consumers, it represented an important first step.  But given the loopholes and limited scope of the 1996 Act, employers and health insurers still continue to limit mental health benefits more severely than those for medical and surgical coverage, most often by restricting the number of covered outpatient visits and hospital days or by imposing higher co-payments and deductibles.

To date, 32 states have enacted their own mental health parity statutes.  However, it is important to note that the vanguard 1996 Act did not induce fundamental changes in employer behavior concerning mental health parity.  The U.S. General Accounting Office reported in May 2001 that 86 percent of employers surveyed reported that they had complied with the requirements of the 1996 Act.  Nevertheless, the vast majority of those employers substituted new restrictions on mental health benefits, thereby evading the spirit of the law.

The 1996 Act had an expiration date—common among federal legislation—of September 30, 2001.  To address that issue as well as eliminate the loopholes contained in the 1996 Act, Senators Domenici and Wellstone introduced the Mental Health Equitable Treatment Act of 2001, S. 543.   Representative introduced similar legislation, the Mental Health and Substance Abuse Parity Amendments of 2001, H.R. 162.

S. 543 and H.R. 4066 aimed to finish the work that Congress began with the 1996 Act.

Both S. 543 and H.R 162 would have expanded on the 1996 Act by providing full parity for all categories of mental health conditions listed in the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV).  H.R. 162 was broader than S. 543, as it included coverage for substance abuse disorders.  Health insurance plans would have been forbidden from applying different deductibles, co-payments, out-of-network charges, inpatient day and outpatient visit limits for mental health care from those for medical and surgical health care, if mental health benefits were offered.  Like the 1996 Act, neither S. 543 nor H.R. 162 would have mandated plans offer mental health benefits if they did not already.

Small businesses with fewer than 50 employees would have been exempted, and the 1 percent compliance cost increase opt-out would have been eliminated.

The Senate Health, Education, Labor and Pensions Committee, chaired by Senator Edward Kennedy (D-MA), took an aggressive stance with S. 543 and held hearings.  The Committee ultimately "marked up" the legislation and reported it out of committee unanimously on August 3, 2001, making S. 543 eligible for debate by the full Senate.  The House did not act at all on H.R. 162; the Republican chairs of the three committees of jurisdiction (Ways and Means, Energy and Commerce, and Education and the Workforce) stonewalled and did not schedule hearings during 2001.

A critical mass of support for mental health parity existed.  In the House, H.R. 162 garnered 202 cosponsors; in the Senate, S. 543 gathered 66 cosponsors.  However, when the “sunset” date arrived September 30, 2001, the Act was allowed to expire.

To rectify that problem, on October 30, 2001, Senators Domenici and Wellstone offered an amendment to the Labor-HHS Fiscal Year 2003 Appropriations bill, which was S. 543 in its entirety.  The Senate unanimously approved the Domenici-Wellstone Amendment, thereby forcing the House to address the issue in a conference committee.

On December 18, 2001, conferees on the Labor-HHS-Education Appropriations bill voted to remove the Domenici/Wellstone mental health parity amendment.  None of the 10 House Republican conferees voted for Representative Patrick Kennedy’s (D-RI) motion to accept the amendment, whereas all seven House Democrats voted for it.  Representative Ralph Regula (R-OH), conference chairman, cited opposition from authorizing committee chairs as the reason behind the “no” votes.  Senate conferees, who strongly supported the provision, did not need to vote.

However, the Labor-HHS conferees did approve a motion by Representative Randy “Duke” Cunningham (R-CA) to include in the bill a simple one-year extension of the Mental Health Parity Act of 1996, extending the life of the Act until December 31, 2002.

Acknowledging the timeliness of the issue, the House Committee on Education and the Workforce Subcommittee on Employer–Employee Relations held its first hearing on parity since 1995 on March 13, 2002, entitled "Assessing Mental Health Parity: Implications for Patients and Employers." Parity proponents Representatives Roukema and Kennedy testified before the Subcommittee, as did other industry and nonprofit entities.

A week later, Representatives Roukema and Kennedy introduced H.R. 4066, the House companion to the well-supported Senate bill, S. 543, the Mental Health Equitable Treatment Act of 2002.  Although H.R. 4066 was more limited in scope than Representative Roukema's prior parity bill, H.R. 162, it provided a uniform platform from which Congressional debate can be launched.  H.R. 4066 is generally identical to the amended version of S. 543, which was unanimously approved by the Senate as the Domenici-Wellstone Amendment.

President Bush expressed his support for the broad concept of mental health parity on April 29, 2002; however, the President took no further action in support of full mental health parity.

Unfortunately, the 107th Congress ended without further discussion of full mental health parity.  Despite its inaction, Congress did demonstrate its concern for the issue through its passage of another extension of the Mental Health Parity Act of 1996 on November 15, 2002 pushing the expiration date back from December 21, 2002 until December 31, 2003.

Should you need further information, please contact Francesca Fierro O'Reilly, NASW Senior Government Relations Associate, via e-mail at fforeilly@naswdc.org.