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Mental Health Parity included in Bailout Plan; Stronger State Laws Remain in Effect

The new federal mental health parity law, passed as part of the recent $700 billion financial bailout package, is a real piece of help for families around the country. Even better, the law will not preempt stronger state parity legislation. The law will help states achieve their parity goals because it applies to self-insured health plans which are not subject to state regulation.

The federal parity law requires group and self-insured company health plans covering more than 50 employees to cover mental health and substance abuse services at levels equal to coverage for other health problems. The law applies to insurance plans covering 113 million Americans, including 82 million who are covered by self-insured company plans which are not regulated by the states. While the law does not mandate mental health coverage, to the extent a health plan includes coverage for any mental health service it must do so at levels equal to coverage for other health problems. Health plans covered by the law will no longer be able to discriminate against mental health patients by setting higher co-pays and deductibles or other strategies to limit access to care for mental health services.

Federal parity is a significant step forward for mental health advocates, who call the law "a great civil rights victory". Proponents represent both Democratic and Republican lawmakers, including Texas State Representative Garnet Coleman, who championed Texas' mental health parity law and is a board member of the Progressive States Network. Mental Health America reports that an estimated 67% of adults and 80% of children do not receive mental health services when they need it. The National Alliance on Mental Illness reports that untreated mental illness results in a staggering economic cost of $100 billion in the US each year, not to mention the personal toll of untreated mental illness on individuals and families.

Stronger State Standards Upheld: 38 states have mental health parity legislation, although the laws and standards vary greatly. According to Mental Health America, the federal law will not impact state laws mandating parity for health plans with 50 or fewer employees. For groups larger than 50 that are covered by state parity laws, federal law will not preempt stronger state standards. For instance, some states require health plans to cover certain mental health conditions, while the federal law does not, and to cover them at levels equal to other medical conditions. The federal law simply requires parity in instances where mental health services are covered. The stronger state laws will remain in effect. There are instances, however, where the federal law may improve state standards. If a state law mandates a level of coverage that is less than other medical coverage, federal law will prevail. Additionally, the federal law includes parity for substance abuse, effectively establishing the same standard across states.

Resources

Mental Health America - Federal Mental Health Parity Legislation: Impact on State Laws
Mental Health America - Approval of Federal Parity Legislation
National Alliance on Mental Illness - Victory on Parity
National Alliance on Mental Illness - Grading the States, 2006
Kaiser Daily Report - President Signs $700B Financial Bailout Bill that Includes Mental Health Parity Provisions