Beginning in January, many patients with mental health disorders will be able to obtain comprehensive health insurance coverage of mental health services for the first time. The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 and the Affordable Care Act (ACA) extend mental health and substance use disorder benefits to 62 Million Americans and require that those benefits be comparable to general medical benefits.

    Prior to the passage of the MHPAEA, even insured patients suffering with mental health and substance use disorders completely lacked coverage for behavioral health services or faced harsh restrictions on the amount and type of care covered. Many insurers imposed higher co pays and deductibles or stricter treatment limitations on mental health and substance abuse disorder benefits than on general medical benefits. Health insurance providers have justified these practices with reports that moral hazard and the risk of adverse selection are significantly higher in mental health and substance use care than in general medical care. Insurers feared that policy-holders with chronic mental health issues would drive up the cost of plan premiums, effectively forcing out the healthier plan members who cost the providers less to insure.

    In 2008, the MHPAEA required health insurance providers to ensure that financial requirements and treatment limitations imposed upon mental health or substance use disorder benefits are no more restrictive than those imposed on medical and surgical benefits offered by the provider. Under the parity law, health insurers must compare the cost-sharing and treatment limitations applied to mental health and substance abuse services to the restrictions placed on medical services and change any limitation that is more restrictive than the restrictions imposed on medical care. This rule ensured that patients with policies that included behavioral health benefits would have full coverage. However, the law did not apply to insurers that choose not to offer mental health or substance use disorder benefits or to small group, individual, and self funded plans.

    The ACA expands the protections of the MHPAEA by applying the parity requirements to the individual and small group markets and by designating mental health and substance use disorder benefits as Essential Health Benefits (EHB). According to the final rule issued by The U.S. Department of Health & Human Services (HHS) in February of this year, individual plans and small group plans (those with fewer than 100 employees) must ensure that mental health and substance use disorder coverage is comparable to the general medical coverage offered by the plan. Perhaps more significantly, all non-grandfathered individual and small group plans must provide mental health and substance use disorder coverage for policies issued or renewed on or after January 1, 2014. Under the ACA,  plans offered in the  individual and small group markets, both in and out of state health insurance exchanges, must provide coverage for ten categories of services referred to as Essential Health Benefits, including mental health and substance use disorder services.

    What does this expansion mean for insurers, providers, patients, and the healthcare system in general? According to HHS 18% of enrollees in individual and small group plans did not have mental health coverage and 62% of enrollees did not have coverage for maternity services (another EHB). Insurers must fill these and other gaps in their current coverage. Providers must prepare for an increase in demand for mental health and substance use disorder services as patients with mental health and addiction issues obtain EHB coverage. Patients struggling with mental health and substance use disorders will have greater access to the treatment and care that they need. In fact, HHS estimates that 32.1 million individuals will gain mental health and/or substance use benefits under the ACA and another 30.4 million individuals who already have some mental health coverage will be able to count on comprehensive coverage thanks to federal parity protections. Finally, comprehensive coverage of mental health and substance use services will enable patients to better manage their disorders, cutting down on ER visits and prolonged inpatient treatment. Given that untreated mental health and substance use disorders result in huge costs for the health care system, ensuring more comprehensive care for those suffering with such disorders may inevitably reduce the level of health care spending in the U.S.  

Holly Hosford is in the Health Care Legal Department with Bradley Arant Boult Cummings LLP.