From the November 2007 issue of Treasury & Risk magazine

No Mental Block

Time was when mentally ill patients were considered weak willed or, even, possessed by the devil. But science has proven that many mental disorders are caused by a chemical imbalance, not unlike, say, diabetes. Problem is, insurance companies and employers refused to provide equal coverage.

Until now. In mid-September the Senate unanimously approved the Mental Health Parity Act, which requires insurers and companies to treat psychological, psychiatric and substance abuse disorders the same way as physical disorders on items like deductibles and co-pays. While it only applies to companies that already offer mental health benefits (most large corpora-tions), it will nonetheless improve benefits for more than 113 million Americans.

The House version, considered more expensive, applies to companies with fewer than 50 employees and allows more expensive in-network coverage A compromise favoring the Senate version is expected to be ironed out in conference and signed into law before year-end. By the time of its passage, the Senate version was backed by many of the groups that are often on the opposite side of healthcare expansions, such as the U.S. Chamber of Commerce.

Why the change in heart? Studies of the claims of the 8.5 million federal employees who have benefited from parity since 2001 indicate that costs will rise less than 1%, according to Peter Newbould, director of congressional and political affairs for the American Psychological Association (APA) Practice Organization. "There is no cost debate within insurance companies if they are able to use their own definition of medical necessities and management techniques," Newbould says. "There are a zillion medical procedures for chronic ailments that cost more, like going to the dermatologist or rheumatologist."

But the change could actually save money. Proponents contend that employers will save as much as $300 billion in absenteeism, diminished productivity and turnover--and that's for job stress alone. According to the National Committee for Quality Assurance, depression results in more days of disability than chronic health conditions, such as heart disease, hypertension and diabetes.

This isn't the first time Congress has made a stab at putting mental disorders on a par with accepted medical disorders. The Mental Health Parity Act of 1996 required that annual and lifetime coverage limits for mental health care have to be the same as other medical expenses. But a General Accountability Office study in 2000 said companies found loopholes to avoid the law.

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