Mental Health Parity Law Forces Small Businesses To Make Choices About Coverage
When the Mental Health Parity and Addiction Equity Act takes effect in January 2010, some small-business owners could face "a Hobson's Choice -- either significantly upgrade their mental health and substance abuse coverage, or drop it altogether," the Pittsburgh Post-Gazette reports (Twedt, Pittsburgh Post-Gazette, 12/2). In October, President Bush signed into law a $700 billion bailout of Wall Street firms that included mental health parity legislation (HR 1424).
The law requires group health plans of 51 or more employees to cover mental illnesses at the same level as physical ailments. It does not require the plans to offer such coverage, but it must be equivalent if they do. The mental health legislation was added to the larger bailout package as a means of enticing House members who voted against the previous bailout measure but supported a parity bill (Kaiser Daily Health Policy Report, 10/6).
While some larger employers have taken steps on their own to offer equivalent mental and physical health insurance coverage, that has not been the case for smaller employers. For large businesses, many of which self-insure, the risk and cost of offering equivalent coverage often are "spread out enough to be manageable," but for small- to medium-sized businesses, the risk and cost can be "daunting," the Post-Gazette reports. Adding unlimited outpatient coverage for mental health ailments or substance use problems can boost a company's premium significantly.
Steven Wojcik, vice president for public policy at the National Business Group on Health, said, "For people who need mental health treatment, (the new law) is definitely a win because it will be easier to get appropriate care," but "for those smaller employers, it's definitely going to make health care costs more expensive, so those employers operating at the margins may have a hard time continuing to offer those benefits." Wojcik said, "The timing is certainly not good, and it's ironic that this was attached to the bailout bill," adding, "The last thing you want to do is to raise labor costs at a time of rising unemployment."
Lee Taddonio of SMC Business Councils said he thinks some small businesses are not as aware of the law as they should be. He also noted that the law offers a reprieve to businesses if the growth in their health care costs exceeds 2% in the first year and 1% after that. Taddonio said, "My gut feeling is that I don't think it will be an issue," adding, "But we'll find out when they make the rates. If it gets too expensive, then it would cause people to opt out and that would change the ballgame all together" (Pittsburgh Post-Gazette, 12/2).
Reprinted with permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign up for email delivery at kaisernetwork.org/email . The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.