Federal Mental Health Parity Bill Would Not Lead to Cost ‘Surge,’ BusinessWeek Op-Ed Says

Although opponents have said a Senate-passed bill ( S 543) that would expand the 1996 mental health parity law would "provoke a disastrous surge in health care costs," new studies suggest that employers' financial burden under parity "could be very small -- amounting to less than a 1% increase" in costs, Paul Raeburn writes in a BusinessWeek opinion piece (Raeburn, BusinessWeek, 12/17). The bill, currently being debated in a House-Senate conference committee, would require insurers that provide mental health coverage to offer these benefits at the same level as the benefits provided for physical health coverage with respect to both costs (such as deductibles) and access to services. The 1996 law only prohibited insurers from establishing annual or lifetime limits on mental health benefits that differed from those applied to other medical care (Kaiser Daily Health Policy Report, 12/5). Raeburn, a science and medicine reporter for BusinessWeek, notes that a new RAND Corp. study of 24 health plans found that mental health parity would amount to less than a 1% increase in health care costs. According to Raeburn, the RAND study also analyzed mental health care costs in Ohio -- which passed a mental health parity law 10 years ago -- and found the state's costs "totally stable." He also cites a Congressional Budget Office report, which found that the Senate bill would cost the private sector about $3 billion in 2002 and $5 billion in 2006 -- both "tiny fraction[s] of the $1.2 trillion" spent on health care each year. Raeburn adds that the Federal Employee Health Benefits Plan extended mental health parity to 2.2 million federal employees and their families this year; according to the Office of Personnel Management, which administers the program, health insurance premiums only increased 1.3% as a result. According to Raeburn, many private employers also have offered "generous mental health benefits" and have found that the "costs are low." He concludes, "The demand for better mental health coverage is growing. Many companies have already chosen to offer their workers expanded mental health benefits, without waiting for the government to order them to. Other employers -- eager to avoid government mandates -- may decide to do the same" (BusinessWeek, 12/17).