Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
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Overview
This law applies to all group health plans with 51 or more employees. It will cover 82 million individuals in self-insured employer health plans that are not governed by state parity laws and another 31 million in plans that are subject to state regulation.
Major Provisions
- Scope: The Act imposes no requirement as to what conditions must be covered. But whatever is covered must be at parity with medical coverage (except to the extent that a state parity law requires broader coverage). Specifically, it prohibits group health plans that offer coverage for mental health and substance-use conditions from imposing treatment limitations and financial requirements on those benefits that are stricter than for medical and surgical benefits.
- Out-of-network coverage: If a plan offers out-of-network benefits for medical/surgical care, it must also offer out-of-network coverage for mental health and addiction treatment and provide services at parity.
- State Laws: The Act preserves strong state parity and consumer laws. State parity laws vary widely from state to state.
Oversight
The Act establishes an important oversight mechanism to determine if insurers are discriminating against certain conditions or failing to cover some treatments.
Cost Exemption
The cost exemption allows a health plan to be exempted from the federal parity law if it can prove that parity is raising its total plan costs by more than 2 percent in the first year after enactment of the parity law and 1 percent thereafter. But plans must first implement parity for at least six months.
Background
Insurance discrimination: Employer-provided health plans have for years routinely set stricter treatment limits and imposed higher out-of-pocket costs on mental health care than care for any other illness. The Mental Health Parity Act of 1996 took a first step toward ending such discriminatory practices and established the principle that mental health benefits should be “on par” with medical and surgical benefits. But the law outlawed only the use of disparate annual or lifetime dollar limits between mental health coverage and coverage of other illnesses. Insurance plans still routinely set arbitrary caps on how many mental-health treatment sessions or days of hospital care they will cover regardless of medical need. And those who “get in the door,” often face far higher out-of-pocket costs than for treatment of any other illness. Congressional efforts to end those discriminatory practices to close the loopholes in the 1996 act have been thwarted for the last six years.
Parity Legislation: The Senate and House both passed parity bills during this Congress. The Senate passed the Mental Health Parity Act of 2007, S. 558, unanimously on September 18, 2007, and the House on March 5th passed the Paul Wellstone Mental Health and Addiction Equity Act, H.R. 1424. The measures had common elements, while differing on a few issues. An agreement that bridged these differences was reached by House and Senate negotiators in June. Final approval was delayed until the Senate and House reached agreement on how to fund the modest cost of the legislation, and on the vehicle on which to send this historic measure to the President’s desk.
See the Mental Health Parity Fact Sheet for a more detailed analysis.
