21 Apr 2007 Mental Health Parity Bill Critiqued

Our health-care guru, David Hogberg, teamed up recently with Paul Gessing of New Mexico’s Rio Grande Foundation to critique Senator Pete Domenici’s Mental Health Parity Act. The resulting op-ed appeared in The Daily Times of Farmington, New Mexico the other day.

Hogberg and Gessing found Domenici’s bill (introduced with Senators Mike Enzi (R-WY) and Ted Kennedy (D-MA)) lacking for a number of reasons:

Although Domenici’s desire to help those with mental illness is noble, it has led him to support a proposal that inevitably, if inadvertently, will harm both the mentally ill and the uninsured.This bill would require that health insurance policies that provide coverage for mental illness must provide it in the same way that they provide benefits for other conditions. Thus, if the co-pay to see a family doctor is $20, then the co-pay to see a psychiatrist must also be $20.

In a free market, the decision of how to cover mental health benefits is left to the insurer and the insured. A mandate to require that mental health coverage be given parity eliminates that freedom. Furthermore, mental health parity is one of the most costly of benefit mandates. Using actuarial data, the Council for Affordable Health Insurance, an insurance industry group, estimates that it can add between five and ten percent to the cost of a health insurance policy.

Few of the likely consequences of imposing a mental health parity mandate are good for employees. Forcing insurance programs to cover mental health the same way they cover physical illnesses and conditions will result in more expensive health insurance. That means more businesses will increase their insurance premiums or drop their insurance altogether, resulting in an increase in the number of uninsured. Another route that businesses might pursue is simply dropping their mental illness coverage from their insurance policies, meaning that employees will have less access to mental health benefits.

Read the whole thing.