SUMMARY: The Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction Equity Act of 2008
Part of this problem and equation is the fact that health insurers have long been able to discriminate between physical and mental health benefits. In 1996, Congress enacted the Mental Health Parity Act (P.L. 104-204) that required group health plans with 50 or more enrollees that choose to provide mental health benefits to have annual and lifetime dollar limits equal to those placed on physical health benefits. Though this law initiated progress towards a level playing field, it was not full parity and loopholes existed whereby insurers could impose lower treatment limitations and higher cost sharing requirements on mental health services.
- Approximately one in four Americans experiences a mental disorder in a given year and one in seventeen Americans lives with a serious mental illness. 1 In 2007, at least 22.3 million had a diagnosable alcohol and/or illicit drug dependence. 2 In different ways in different homes, mental illness and addiction to alcohol and drugs devastate hundreds of thousands of American families each year-sometimes leading to neglect, sometimes leading to various forms of abuse, and occasionally leading to termination of parental rights. Unfortunately, all too often, shortages of mental health and/or addiction treatment pose a significant barrier to success for the affected individual and their familial unit.
Prior to the 1996 federal law, states had begun enacting parity laws and after it was enacted, many more followed suit. In a 2002 speech, President Bush urged Congress to enact full parity and in its final 2003 report, the President's New Freedom Commission on Mental Health similarly recommended full parity be achieved in the near future. Legislation was introduced in the 107th, 108th, and 109th Congresses, but never became law.
In the 110th Congress, many members of Congress tirelessly advocated for passage of full parity, this time encompassing not only mental health benefits, but also substance use disorder benefits that were not covered by the 1996 law. In February 2007, Senators Pete V. Domenici (R-NM), Edward M. Kennedy (D-MA), and Michael B. Enzi (R-WY) introduced a comprehensive mental health and addiction parity bill in the Senate, which the Senate passed by unanimous consent in September 2007. In March 2007, Congressmen Jim Ramstad (R-MN) and Patrick Kennedy (D-RI) introduced an extensive parity bill in the U.S. House of Representatives, which the full House passed in March 2008. The two chambers reconciled policy differences and subsequently passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, as contained in the Emergency Economic Stabilization Act of 2008. President Bush signed the bill into law on October 3, 2008 (P.L. 110-343). The effective date of the 2008 parity law is October 3, 2009, but most impacted plans will offically assume compliance on thier plan start date, which often will be January 1, 2010.
The 2008 Mental Health Parity and Addiction Equity Law
The 2008 parity law amends the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act , and the Internal Revenue Code, requiring group health plans of 50 or more enrollees who choose to offer mental health or addiction benefits to provide them on the same terms as other medical conditions. Specifically, the law states that such insurers:
Also, if the insurer provides out-of-network coverage for medical and surgical benefits, it must provide out-of-network benefits for mental health and substance use disorders at parity.
- Cannot place more restrictive financial requirements on mental health or substance use disorder benefits. Financial requirements include deductibles, copayments, coinsurance, and out-of-pocket expenses.
- Cannot place more restrictive limits on treatment for mental health or substance use disorder benefits. This includes limits on the frequency of treatment, number of visits, days of coverage, or other similar limits.
Exemptions: When the Federal Parity Law Does Not Apply
- Small Business Exemption: As mentioned above, if the group health plan has fewer than 50 enrollees, the federal parity law does not apply. These entities may still be liable under state parity laws, however.
- Cost Exemption: Group health plans can be exempted from the federal law if a qualified and licensed actuary certifies that the health plan experiences a (1) 2% or more increase in actual total costs during the plan's first year and (2) a 1% or more increase in actual total costs during each subsequent year. The plan also must have complied with the federal parity law for the first six months of the plan year in question.
If the group plan qualifies and chooses to be exempt, the exemption lasts for the following year. The plan is required to notify the appropriate Secretary (either Labor or HHS), the appropriate state agencies, and beneficiaries of the plan. The Secretary has discretion to audit group health plans, to ensure proper compliance with the cost exemption provision.
- Secretary of Labor Report: The Secretary of Labor must issue a report by January 1, 2012 and every two years thereafter on ERISA group health plans' compliance with the federal parity law.
- Notice and Assistance: The Secretary of Labor, working with the Secretaries of HHS and the Treasury, must provide guidance and information on details and implementation of the federal parity law to group health plans, beneficiaries, applicable State and local regulatory bodies, and the National Association of Insurance Commissioners.
- Regulations: By October 2009, the Secretaries of Labor, HHS, and the Treasury must issue regulations to assist the implementation of their respective provisions.
- GAO Study: The GAO must conduct a study that analyzes specific rates, patterns, and trends in coverage and exclusion of mental health and substance use disorder benefits within three years of enactment.
Impact on State Parity Laws
The 2008 federal parity law is extremely protective of strong state parity laws. By applying the HIPAA standard, the federal parity law acts as a floor and stronger state parity laws are permitted to stand.
Additional Resources from Our Friends At:
- National Institute of Mental Health (NIMH). The Numbers Count: Mental Disorders in America (2008). Available online. Bethesda, MD: Author. back
- Substance Abuse and Mental Health Services Administration (SAMHSA), Office of Applied Studies, National Survey on Drug Use and Health, Results from the 2006 national survey on drug use and health: National findings. (NSDUH Series H-34, DHHS Publication No. SMA 08-4343). Available online. Rockville, MD: Author. back
For additional information, contact Laura Weidner at firstname.lastname@example.org.
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