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April 2005, Vol. 128, No.4
Trends in employer-provided mental health and substance abuse benefits
John D. Morton and Patricia Aleman
Employer-provided mental health coverage has experienced dramatic changes over the last decade. Prior to the passage of the Mental Health Parity Act (MHPA) of 1996, nearly all employer-financed health insurance plans covered mental disorders, but benefits were traditionally more restrictive than for other illnesses.1 Coverage for mental disorders, for example, was usually for shorter periods, and plans generally provided lower annual and lifetime maximum dollar benefits. This was particularly true for outpatient care. The primary impact of the MHPA on mental health provisions was the requirement that coverage for lifetime and annual dollar limits for mental health benefits be the same as those for medical and surgical benefits. Data from the Bureau of Labor Statistics’ National Compensation Survey (NCS) show recent changes in mental healthcare provisions that affect most participants.2 For example, the incidence of employees in medical plans imposing more restrictive dollar limits on mental healthcare has decreased from 41 percent in 1997 to 7 percent in 2002 for inpatient care and from 55 percent to 7 percent for outpatient care.3 In contrast, the incidence of employees covered by medical plans that provide for fewer inpatient days of care for mental illness than for other medical conditions has increased from 61 percent in 1997 to 77 percent in 2002.
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1 The Mental Health Parity Act of 1996 was signed into law by President Clinton as a means of treating mental illness in the same fashion as all other illnesses. Among the Act’s provisions, annual and lifetime dollar limits for mental healthcare must be the same as all other illnesses. The Federal Mental Health Parity Act took effect on January 1, 1998 and expired on September 30, 2001; since then, several extensions have passed and the law is still in effect. On December 19, 2003, President Bush signed the Mental Health Reauthorization Act of 2003, extending the expiration date to December 31, 2004. The 108th Congress extended this sunset date to December 31, 2005. Note that the MHPA exempts private establishments employing 50 workers or less.
For a more detailed description of the Mental Health Parity Act of 1996, see Haneefa T. Saleem, "New Law Moves Insurance Plans Closer To Mental Health Parity," Compensation and Working Conditions (CWC), on the Internet at http://www.bls.gov/opub/cwc/cm20030909ar01p1.htm (visited Sept. 22, 2003). Note that sections of this article include expansions and updates of information, analysis, and data first presented by Saleem in the 2003 CWC.
2 Because no standard errors were calculated for the survey, none of the year-to-year comparisons made in this article could be verified by a statistical test.
3 Inpatient care is defined as facility charges in a hospital related to an acute mental condition. Outpatient care includes treatment in one or more of the following: outpatient department of a hospital, residential treatment center, organized outpatient clinic, day-night treatment center, or doctor’s office. If outpatient benefits differed by location of treatment, the location offering the most beneficial coverage was tabulated.
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