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“We’re the Deciders”

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Big Insurers Stymie Mental Health and Chemical Dependency Parity Bill

By Rob Schofield

Quick Take:

  • Member of the General Assembly are considering an important proposal that would require health insurance providers to cover mental illness and chemical dependency.
  • Despite deep and longstanding support from the advocacy community and a proven record in other states, the “parity” legislation is encountering behind-the-scenes opposition from the insurance industry.
  • Absent a courageous move by state lawmakers to stand up to this enormously powerful interest group, the proposal seems likely to be stopped or significantly watered down.

One of the most frustrating and troubling phenomena in the public policymaking world is the stealth interest group. It’s bad enough when popular causes or policy proposals that would benefit the many are quashed by the well-financed PR campaign of a powerful moneyed interest (think the N.C Association of Realtors). It’s even worse when the quashing is carried out in the shadows and the groups behind it won’t even stand up, state their position and engage in an open and honest debate. It’s worse still when such groups hold themselves up in public as selfless paragons of virtue at the same time that they’re pulling strings behind the scenes in a coldhearted, self-serving fashion.

From the looks of things, North Carolina is currently witnessing just such an episode. The issue is health insurance “parity” for persons with mental illness, chemical dependency and addiction and the stealth interest group is the health insurance industry.

Initial Progress Comes to a Halt

Recently, the House Committee on Health gave unanimous approval to a bill that would require state health insurers to provide coverage for both mental illness and chemical dependency on terms no less favorable than are provided for ordinary physical illness. The action by the committee was an encouraging step forward for a cause that mental health advocates have been championing for many years. If passed into law, the proposed parity legislation would help assure that thousands of suffering North Carolinians (and their families) will have access to quality, affordable care. For many, many people, the change is almost certainly a life and death matter.     

Any hopes, however, that the Health Committee vote had sent the long sought measure on its way toward swift passage were quickly dashed last week by reports emanating from the House Insurance Committee (the bill’s next stop on the legislative carousel). Like a lot of “business” committees in the General Assembly, the Insurance Committee has traditionally been viewed as a place in which the insurance industry will almost always get its way. It appears to be living up to its reputation.

According to the reports from advocates and observers, the parity bill has run into strong opposition from the health insurance lobby, which almost always chafes at any effort by public officials and institutions to regulate the terms and conditions of the services it sells – even when the requirements apply to the entire industry or, as in the case of the state’s biggest health insurer, Blue Cross Blue Shield (BC/BS), profit is not an issue.

Though unwilling to publicly admit their opposition or spell out their concerns for fear of negative PR, the industry appears nonetheless to have forced a halt to the bill’s progress while it draws up and puts forward a “compromise” version. With the legislature’s so called “crossover deadline” just 10 days away (after a one week extension last week), proponents are concerned that the industry may be attempting to “run out the clock.”

Parity Basics

The basics of the parity legislation are fairly straightforward. Its purpose is to eliminate the discrimination currently practiced in North Carolina against individuals with mental illness, chemical dependency and addictive disorders. The bill would require health plans to cover necessary treatment of mental illness and the disease of addiction. Benefits would be subject to the same durational limits, dollar limits, deductibles and co-insurance factors as those for “physical” illnesses. The bill does not prohibit insurers and HMO’s from managing care and they will remain free to use the same “utilization” management and “medical necessity” criteria they are currently using.    

Though they have yet to say so in public, health insurers led by BC/BS are fighting the bill as it was introduced and passed by the Health Committee. The apparent argument is that the legislation would mandate coverage that is overly generous and expensive and that this, in turn, would drive up costs and injure industry profits (or in the case of a nonprofit like BC/BS, “surpluses”).

A look at the facts, however, calls this reasoning into question. Parity is already on the books in one form or another in 37 states. None report significant premium increases or decreases in overall health insurance coverage as a result. For example, full parity cost Marylanders a 0.6% hike in costs. In Minnesota, the cost was comparable. Best estimates from actuaries and experience in the federal employee system (where parity has long been the law) point to a similar bump in North Carolina.

Many analysts believe (and common sense confirms) that parity can produce lower overall medical costs. The most obvious reason for this is that providing benefits that assure early treatment can significantly reduce the need for hospitalization. Similarly, when addicted persons receive appropriate treatment, their use of medical services decreases – often falling to the level consumed by the non-addicted population. Indeed, treatment of the addicted often provides helpful spillover benefits (and reduced health care costs) for their family members as overall stress levels are reined in.

Parity also has an enormously beneficial impact on the public mental health care system as large numbers of people are no longer forced to turn to it for care. A 2004 study by the Mental Health Association in North Carolina estimated that the current lack of parity forced the public mental health system to expend an extra $42 million per year on adult care alone.

Stealth Opposition

As is often the case with powerful interest groups concerned about their public images, the opposition to the parity bill has been behind the scenes. Indeed, this is a familiar tactic for the enormously well-connected and influential BC/BS. Many observers believe that it was BC/BS that quietly stopped last year’s legislative efforts to enact a state “High Risk Pool.”

No one from the industry is speaking out publicly against parity, but the word at the Legislative Building is that industry representatives are demanding two major changes to the bill that would:

1. Significantly narrow the definition of mental illness and thus greatly reduce the number of diagnoses that will be covered; and

2. Remove all coverage for persons suffering from substance abuse.

These changes would, of course, dramatically weaken the bill. The current definitions of mental illness in the proposal (see page 3) are linked to the widely accepted Diagnostic and Statistical Manual of Mental Disorders (or DSM-IV) published by the American Psychiatric Association. To force proponents to accept an artificially abbreviated list that includes only a small subset would be to reinstate the very kind of discrimination the proposal was deigned to eliminate. As for chemical dependency and addiction, removal of coverage will not save money in the long run. As the “Alcohol Cost Calculator” demonstrates, treatment for alcohol abuse can actually return more in savings than is invested.

Open Debate? 

Especially in light of the recent decision by House budget makers to reject the recommendations of their own study on the need for significant new investments in mental health, now seems like an odd time for state lawmakers to short circuit the discussion of how to serve the tens of thousands in need of services. With a topic of such immense importance as mental health and chemical dependency parity, North Carolina deserves an open and honest debate. Let’s hope lawmakers have the courage to have it.

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