Mental Health Parity Act

GAO surveyed employers in the 26 states and the District of Columbia that did not have state laws that were more comprehensive than the federal Mental Health Parity Act as of July 1999. Eighty-six percent of the responding employers reported that as of December 1999 their plans complied with the federal parity requirement that annual and lifetime dollar limits for mental health benefits be no more restrictive than those for all medical and surgical benefits. Fourteen percent of plans were noncompliant; in 1996, before the parity law was enacted, only about 55 percent reported offering parity in dollar limits. Although most employers' plans now have parity in dollar limits for mental health coverage, 87 percent of those that comply contain at least one other plan feature that is more restrictive for mental health benefits than for medical and surgical benefits. For example, about 65 percent of the plans restrict the number of covered outpatient office visits and hospital days for mental health treatment more than those for other health treatment. In addition, many employers may have adopted newly restrictive mental health benefit design features since 1996, specifically to offset the more generous dollar limits they adopted as a result of the federal law. About two-thirds of these newly compliant employers changed at least one other mental health benefit design feature to a more restrictive one compared with only about one-fourth of the employers that did not change their dollar limits. The law appears to have had a negligible effect on claims costs. Federal agencies have made varying progress in performing their oversight roles under the parity law. The Department of Labor is in the process of expanding its oversight role. The Health Care Financing Administration has not yet fully determined the nature and the extent of its oversight responsibilities. GAO summarized this report in testimony before Congress; see: Mental Health Parity Act: Employers' Mental Health Benefits Remain Limited Despite New Federal Standards, by Kathryn G. Allen, Associate Director for Health Financing and Public Health Issues, before the Senate Committee on Health, Education, Labor, and Pensions. GAO/T-HEHS-00-113, May 18 (11 pages).

GAO noted that: (1) 86 percent of the responding employers in the 26 states and the District of Columbia reported that as of December 1999 their plans were in compliance with the federal parity requirement that annual and lifetime dollar limits for mental health benefits be no more restrictive than those for all medical and surgical benefits; (2) GAO's survey found that 14 percent of plans were noncompliant--a noncompliance rate similar to Department of Labor's preliminary estimates based on investigations of employer-sponsored plans; (3) although most employers' plans now have parity in dollar limits for mental health coverage, 87 percent of those that comply contain at least one other plan design feature that is more restrictive for mental health benefits than for medical and surgical benefits; (4) in addition, many employers may have adopted newly restrictive mental health benefit design features since 1996 specifically to offset the more generous dollar limits they adopted as a result of the federal law; (5) about two-thirds of these newly compliant employers changed at least one other mental health benefit design feature to a more restrictive one compared with only about one-fourth of the employers that did not change their dollar limits; (6) only about 3 percent of responding employers reported that compliance with the law increased their claims costs, and virtually no employers have dropped their mental health benefits or health coverage altogether since the law was enacted; (7) federal agencies have made varying progress in performing their oversight roles under the parity law; (8) Labor is in the process of expanding its oversight role to include not only the complaint-driven approach used in its oversight of private employer-sponsored health plans but also one that in the future may include randomly selected employer investigations to gauge overall compliance with parity and other federal standards; (9) the Health Care Financing Administration (HCFA) reported that 4 out of 7 states identified as not having a parity law are enforcing the federal standards through conforming legislation or other means and that it is still working with the three other states to assist them in enacting similar protections; and (10) HCFA has determined that laws in 20 states appear to fully conform to the federal standards and is still evaluating whether laws in the remaining 24 states fully conform to the federal standards.