May 11, 2005--As mental health parity legislation gathers speed, small businesses are likely to be the worst affected.
Twenty-three states have already mandated, or are in the process of requiring, private health insurers provide the same level of benefits for mental ailments as those offered for physical disorders. The legislation could potentially raise health insurance costs and further hurt small businesses already struggling to afford health benefits.
"Any mandate adds to the cost of health insurance and increased costs can lead to less health coverage, especially for small businesses," said Michael Tanner, director of Health and Welfare Studies at the Cato Institute, a non-profit public policy research foundation, based in Washington, D.C.
Though states have been active in pursuing mental health parity legislation, on the Federal level, the issue has met a fairly frosty reception.
Currently, the Federal government does not require insurers to cover all mental ailments the same way they have to for physical ones.
There has been some form of Federal legislation discussed over the past few years on the topic. The last piece of legislation authored was the Senator Paul Wellstone Mental Health Equitable Treatment Act of 2003, which was reintroduced in the House on March 17, 2005. However, there has been no action taken on the bill.
While Federal legislation lies in limbo, many states have taken matters into their own hands and have approved mental health parity bills.
Last week, Iowa Governor Tom Vilsack signed a limited mental health parity bill into law that directs employer-paid health insurance policies to cover "biologically-based" mental health treatment as any other disease.
The Iowa legislation covers, among other mental health ailments, schizophrenia, bipolar disorders, major depressive disorders, obsessive-compulsive disorders and autism -- conditions that are usually not covered under most group insurance plans offered by employers.
The Iowa legislation does offer exemptions to small groups that have employed 50 or fewer persons during the past year, except if those groups offer employees a health plan that even minimally covers any type of mental disorder. This would mean that virtually every small business in Iowa cannot avail itself of the exemption, said the National Federation of Independent Business (NFIB).
According to the NFIB, Oregon and South Carolina legislatures have the mental health parity issue on the top of their docket, too, while the governors of Nevada and New Jersey have prioritized the expansion of mental-health services.
Supporters of the legislation say that the bills are essential to ensure that mental health illnesses, which are among the leading causes of disability in the country, be given a chance to be treated like other physical diseases.
"Bringing about parity does not mean a significant increase in costs, which can be made up because of the overall increase in productivity," said Ralph Ibson, vice president for Government Affairs, National Mental Health Association (NMHA).
For instance, in Iowa, the cost to employers in terms of premium increases has been estimated at $1.50 per employee per month.
But the NFIB has said that it continues to be concerned that government-imposed mandates will eventually increase cost to employers who voluntarily offer health-benefit plans.
According to the Cato Institute, an alternative to the mandates could be Health Savings Accounts, which allow workers to choose the kind of insurance that they need. However, despite the best efforts of small business organizations and leaders, it could be difficult to stop the parity legislation juggernaut.
"Finally, it comes down to an issue of dollars and cents versus treatment for someone who is sick. And then it can be tough to overcome the compassion argument," said Tanner.
Click here to read your state's mental health parity laws, provided by the NMHA.