Health Insurance versus Mental Health Parity

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Understanding Physical Health and Mental Health Insurance

By Carol Miller; RN, MBA

Carol S. Miller

There is a difference between the benefits covered under medical insurance compared to those covered under mental health benefits.

Mental Health Parity Act

There has always been a disparity resulting in caps on the annual number of visits allowed, higher co-pays, higher deductibles, and reduction of covered benefits such as partial hospitalization and number-of-treatment limits for mental health. Congress touched on this issue in 1996 with the Mental Health Parity Act. This federal law prevented group health plans from placing annual or lifetime dollar limits on mental health benefits that are lower¾less favorable¾than annual or lifetime dollar limits for medical and surgical benefits.

Group Health Plan Exclusions

However, the law did not require group health plans and their health insurance issuers to include mental health coverage in their benefits package¾it only applied to group health plan insurances that already did include mental health benefits in their benefit package.

MHETA Attempts at Correction

In 2003, Senators Pete Domenici, Edward Kennedy, and Representatives Patrick Kennedy and Jim Ramstad introduced S. 486 and H.R. 953, called the Mental Health Equitable Treatment Act. In March 2005, the Mental Health Equitable Treatment Act [MHETA] was passed and with the passage of this bill a loophole – insurers may no longer arbitrarily limit the number of hospital days or outpatient treatment sessions for people in need of mental health care – was closed.


Nevertheless, even though states are encouraged by the government with this new bill to enact stronger parity laws, the final decision of parity still rests with the states.  Many states have not enforced the law and therefore, insurers may still be inclined to limit


And so, your thoughts and comments on this Medical Executive-Post are appreciated. Why the mental versus medical health care insurance disparities?

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8 Responses

  1. Insurance Plan Non-Coverage,

    An increasing number of health insurance plans are denying coverage for children with ADD, ADHD and related disorders.

    1. What is Attention Deficit Disorder (ADD)?

    According to
    Attention Deficit Disorder is a biologically based condition causing a persistent pattern of difficulties resulting in one or more of the following behaviors:

    • inattention
    • hyperactivity
    • impulsivity

    2. What is Attention-Deficit Hyperactivity Disorder (ADHD)?

    According to the National Institute of Neurological Disorders and Stroke (NINDS/NIH) ADHD is condition that develops within some children in their early childhood years, but can continue into adulthood. ADD ADHD can make it difficult for people to be able to control their behavior, as well as various other symptoms.

    Nevertheless, the reason often cited for non-coverage is that these disorders are behavioral problems, not physical problems, as defined by their respective insurance, MCO, HMO contracts, etc.

    Is there any one present with experience in this matter?



  2. The Mental Health Parity and Addiction Equity Act of 2008 was passed without much attention when it was attached to the federal bailout bill.

    This bill went into effect on January 1, 2010. It requires group health plans that cover 50 or more employees and offer both medical and mental health benefits to ensure that the mental health and substance abuse benefits are no more restrictive than the medical and surgical benefits.

    The Patient Protection and Affordable Care Act – otherwise known as “the healthcare reform act”, was signed into law on March 23, 2010. Under Section 1302 (b) of the Act, mental health coverage is considered an “essential health benefit.” Insurance companies are required to provide coverage, and that coverage must be equal to coverage provided for any other medical condition. Mental health benefits are designated to be a mandatory part of basic care.

    Additionally, certain psychotropic medications are required to be covered under insurance company formularies. This portion of the law does not take effect until 2014, so until then the 2008 act determines the treatment of mental health benefits.

    Brian J. Knabe MD CMP™


  3. On the Mental Health Parity Act

    Brian, according to experts, the Mental Health Parity Act could add anywhere from 2 to 10 percent to the cost of health insurance coverage.

    Hope Hetico RN, MHA


  4. Excellent post. I want to thank you for this informative read.
    Richard Brodsky, DC


  5. I want to thank you for this informative read, and appreciate sharing this great post. Keep up your good work.

    Melissa Osborn DC
    Brighton MI Chiropractic


  6. Mental Health Coverage

    While the cost of health insurance coverage increases with mental health coverage now considered a “essential health benefit”, let us not forget that it is reasonable to expect costs to go down in other areas – namely the ER which is flooded with under/no coverage patients suffering from a broad range of mental illnesses.

    Also, maybe a few less disheartening stories will hit the evening news if there was broader mental health coverage.

    David K. Luke MIM
    Certified Medical Planner™ candidate


  7. Public Spending on Mental Health Services in California

    In California, about 16% of the adult population, more than 4 million people, have mental health care needs. Public spending on mental health services in California for Fiscal Year (FY) 2012-13 was estimated to be $7.76 billion, of which $3.34 billion was for Medi-Cal (California’s Medicaid program) beneficiaries.

    As the most populous state, California ranked first in the US for total spending on public mental health services but 15th for per capita spending in 2010.

    Publication Source: California HealthCare Foundation


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