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Mental Health

PERSPECTIVE

Parity Or Insurance Mandate? The Case For Mental Health Parity In Kansas

The debate on mental health parity in Kansas predates the federal parity law, passed in 1996. In 1977 Kansas passed its first piece of legislation regarding mental health (S.B. 105). This law required all insurance companies doing business in Kansas to offer coverage for treatment of alcoholism as part of their benefit options; in 1978 a mandated offer for mental illness and drug abuse was added. The practical effect of this mandatory offer was minimal, as the insurance companies offered the mental health benefit but employers rarely selected it to purchase for their employees.

By 1986 it was apparent to some legislators that mandatory offer did little to achieve actual coverage for mental illnesses. That year mandatory coverage was enacted into law, but with some restrictions. For inpatient care, the law requires coverage of at least thirty days of inpatient care for mental illness each year, with the same copayments and deductibles as required for other physical illnesses. For outpatient visits, dollar limitations exist: The first $100 in each year is reimbursed at 100 percent; the second $100 at 80 percent; then the next $1,640 at 50 percent, with a lifetime cap of $7,500.

This law (Kansas Statute no. 40–2,105) has been in effect in Kansas since 1986, with virtually no revision until now. In recent years, amid the national trends mentioned by Kevin Hennessey and Howard Goldman and by Dan Gitterman and colleagues, interest in mental health parity has renewed in the state. State insurance commissioner Kathleen Sebelius has stated, "While coverage for mental health disorders has existed for some time in Kansas history, it exists differently than coverage for other illnesses, and would lead one to ask why the difference exists."¹ Her department supports mental health parity, based on the fact that thirty-two states now have such laws and in light of studies showing that "implementing parity laws is not as expensive as once suggested." The Kansas legislature has been grappling with the issue ofmental health parity for several years now. On May 7, by a vote of 77–48, the Kansas House passed a bill agreeing with the Senate’s changes to its earlier bill. Gov. Bill Graves (R) signed the measure May 21.

Parity Or Mandate?

 
In Kansas the mental health insurance coverage debate has centered on the terms parity and mandate. The advocates for expanded coverage (which include consumers, parents, mental health advocacy groups, physicians, and other health care providers) use the term parity to describe the coverage expansion; the opponents (business and insurance companies) call the expansion a mandate. The term insurance mandate conjures up fears about increased health care premium costs and is used to help generate opposition from the business community. The term parity is used to make the case for the fairness of providing health insurance coverage for mental illness in the same way coverage is provided for other physical illnesses.

Parity. The proponents of mental health parity in Kansas worked to revise the Kansas law to "reflect the present state of scientific and medical knowledge about the treatment of mental illnesses," according to Stephen Feinstein, president of NAMI (National Alliance for the Mentally Ill) Kansas.² They have argued that placing dollar limits on outpatient visits has the potential to create an incentive for persons with mental illness to seek inpatient care because their out-of-pocket expense is less, even though the "first dollar" of outpatient care is paid. They also feared the loss of coverage for outpatient care because the lifetime cap is so low: Once a person has hit $7,500, the only way to obtain payment for services is through a hospital stay.

Proponents of parity have been willing to accept some limits to address the potential for increased costs by replacing the dollar limits with day limits. The new law requires coverage of forty-five inpatient days and forty-five outpatient visits per year. It also further restricts the change to only those mental illnesses considered to be biologically based, such as severe depression, schizophrenia, bipolar disorder, and several others as listed in the Diagnostic and Statistical Manual for Mental Disorders, Fourth Edition (DSM-IV). Even though the Kansas parity law includes day limits, as do at least ten of the states with so-called parity laws, the mandate will extend to all group health plans. Some states with parity laws exempt small groups of two to fifty employees from the mandates.

The list of illnesses covered by the new provisions is taken directly from the Kansas State Employees’ Health Plan, which began covering biologically based mental illness at parity in all of its plans in January 2001. Before the parity provision was added, the State Employees’ Health Plan Health Care Commission asked for comparative data from its health insurers estimating the cost of adding a parity-level benefit and negotiated a premium increase of about 1.5 percent to cover the cost of adding this benefit to its managed care products. After collecting two years of data (from the 1999 and 2000 plan years), the state determined that it was feasible to add the benefit for its indemnity plan enrollees as well, again for a premium increase of only around 1.5 percent.³

Mandate. Opponents of mental health parity have used the term mandate to suggest that the law proposes new coverage and will cause premium costs to increase. In testimony before the Kansas Senate Financial Institutions and Insurance Committee on 15 February 2001, Brad Smoot, a lobbyist for Blue Cross and Blue Shield of Kansas, asserted that a 1 percent to 2.5 percent increase in premiums would cost [some Kansas] consumers between $10 million and $25 million a year in increased premiums."⁴ The Kansas Chamber Commerce and Industry (KCCI) also cited cost in its opposition, stating that the law would "dramatically increase the coverage for certain mental conditions that insurance companies will be required to cover."⁵ Terry Leatherman, KCCI vice-president for legal affairs, testified before the Senate committee that "a mandate and a tax increase are very similar. In both, the cost of a service to a selected group of people [is] socialized to a larger group. In the case of mandates, all individual purchasers pay higher costs so a group of individuals can receive the additional benefit."⁶ These arguments echo those made at the national level regarding federal mental health parity legislation, as both the Hennessey and the Gitterman papers point out.

Reconciling The Debate

Top Parity Or Mandate? Reconciling The Debate NOTES

 
Because a mandate for mental health coverage has been law in Kansas since 1986, to label the parity bill as a "new" mandate does not accurately reflect the intentions of its proponents. The parity bill updates the current dollar restrictions by replacing them with day limits and brings Kansas law into conformity with the way mental illness is treated in today’s medical environment. In Kansas as elsewhere, lengthy and expensive hospital stays have been replaced by a greater emphasis on outpatient care. In fact, as part of its mental health reform, Kansas has closed two hospitals for the mentally ill in the past decade, returning patients to their local communities. The change in treatment setting can be linked to a better understanding of the causes of mental illness, different methods of treatment, and the efficacy of the new "wonder drugs," which are combined with psychotherapy to effectively treat and cure many psychoses.

The "mandate" label carries with it a stigma almost as great as mental illness itself. The proponents of mental health parity, in Kansas at least, have overcome not only the stigma of mental illness, which has allowed the segregation of mental illness from other illnesses in insurance coverage, but also the stigma that the term mandate carries with it as the result of very effective lobbying by the insurance industry and some business organizations. Here in Kansas, that stigma made it very difficult for the legislature to overcome the cost concerns, even though data from the state’s actuarial consultants and from other states and other business organizations, such as the Washington Business Group on Health, demonstrate that fears about cost increases have been overstated.⁷

Managing care in the outpatient setting, effective use of new pharmaceuticals, and expanded knowledge of the causes of some mental illnesses have all contributed to more cost-effective treatment. If mental illness can be treated as effectively as cancer, heart disease, high blood pressure, and diabetes, then why is insurance coverage for mental illness treated so differently? That is the question that the Kansas legislature has answered by passing a mental health parity law in 2001.

Editor's Notes

 
Sandy Praeger is a Republican state senator from the Kansas Second District; she lives in Lawrence. She is past chair and a member of the steering committee of the Reforming States Group, a voluntary association of the leaders of legislative and executive branches from more than forty states. Health Affairs invited this Perspective in response to the preceding papers on mental health parity by Kevin Hennessey and Howard Goldman and by Daniel Gitterman and colleagues.

NOTES

Top Parity Or Mandate? Reconciling The Debate NOTES

 

1. Kathleen Sebelius , commissioner of insurance, Kansas Insurance Department, testimony before the (Kansas) Senate Committee on Financial Institutions and Insurance, 14 February 2001.
2. Stephen H. Feinstein , president, NAMI Kansas, testimony before the Committee on Financial Institutions and Insurance, 14 February 2001.
3. Terry Bernatis , assistant director, Division of Personnel Services, State of Kansas, personal communication, 26 April 2001.
4. J. McLean, "Insurers Dispute Parity Cost Issue," Topeka Capital-Journal, 16 February 2001, <www.cjonline.com/stories/021601/leg_parity/issues.shtml> (25 April 2001).
5. Kansas Chamber of Commerce and Industry, "Mental Health Parity," no date, <www.kansaschamber.org/insurance/mhp.htm> (25 April 2001).
6. Terry Leatherman , vice-president, legislative affairs, KCCI, testimony before the Committee on Financial Institutions and Insurance, 15 February 2001.
7. Elizabeth Saadi , director, Office of Health Care Information, Kansas Department of Health and Environment, personal communication, 25 April 2001. Many of these national studies are cited in the preceding papers by Kevin Hennessey and Howard Goldman and by Daniel Gitterman and colleagues.

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