Access to Care

The potency of laws equalizing coverage for mental health care varies between States

The 1996 Federal Mental Health Parity Act served as an impetus for stronger State-level policies to reduce the discrepancy between mental health and other health insurance benefits. Although many States have passed parity laws, the potency of the laws varies from State to State. This is primarily due to the exemptions for self-insured firms and small firms as well as limits on the types of conditions covered, according to a new study.

Philip F. Cooper, Ph.D., and Samuel Zuvekas, Ph.D., of the Agency for Healthcare Research and Quality, and colleagues analyzed the 1997 to 2003 Medical Expenditure Panel Survey Insurance Component. They examined the extent and scope of State parity legislation in terms of the number of insured private-sector employees covered.

The number of States with strong parity laws in effect grew from just 4 in 1996 to 23 (45 percent of States) by 2003. However, the actual impact of these State laws was greatly reduced by the exemptions for self-insured plans and small firms. On average, these exemptions cut the number of employees actually covered roughly in half. As a result, by 2003, strong parity rules applied to only about one-fifth of private sector workers with employer-sponsored insurance, estimate the researchers.

The self-insurance exemption accounted for nearly all of the difference between potential and actual coverage. Small firm exemptions accounted for only 13 percent of the difference in 2003. Since the self-insurance exemption comes from Federal law, States can do little to increase the percentage of enrollees covered by parity rules. Even the actual coverage rates displayed may overstate the extent of coverage. This is because some laws that require a minimum level of coverage for mental disorders still limit the range of disorders covered.

While about 20 percent of private sector employees with employer-sponsored insurance were covered by strong parity laws in 2003, only 3 percent were covered by strong laws that applied to all mental illnesses. This suggests that full parity can be achieved only at the Federal level. The Congressional Budget Office suggests that parity would increase premiums by less than 1 percent. Yet employers and insurers remain concerned about the costs of parity mandates.

See "Parity for whom? Exemptions and the extent of State mental health parity legislation," by Thomas C. Buchmueller, Ph.D., Dr. Cooper, Mireille Jacobson, Ph.D., and Dr. Zuvekas, in the June 7, 2007, Health Affairs 26(4), pp. w483-w487.

Reprints (AHRQ Publication No. 07-R062) are available from the AHRQ Publications Clearinghouse.

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