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How Did We Get to Parity? What Can We Do Next?
Parity’s passage is a defining moment for treatment and recovery advocates
On October 3, 2008, addiction treatment and recovery advocates celebrated what may be their greatest legislative achievement in over fifteen years—the passage of a bill to end insurance discrimination against treatment. The Paul Wellstone-Pete Domenici Mental Health Parity and Addiction Equity Act, named after two early Senate sponsors of insurance “parity,” was the culmination of years of advocacy from supporters across the country. It is expected that parity will result in improved access to treatment for about 113 million Americans, as well as reinforce the civil rights message that people with addiction should not be second-class patients in the health care system.
Legislative History
Parity’s future was uncertain even three days before President Bush signed it into law. For eighteen months, parity had enjoyed historic success in both chambers of Congress. In September 2007, the Senate unanimously approved a parity bill, and the House of Representatives passed a similar, more consumer-friendly bill in March 2008. According to the U.S. Constitution, both chambers must pass the exact same legislation before it can become law, and the process of reconciling the two bills took several months. One of the key compromises negotiated by House and Senate leaders addressed the parity’s scope of coverage. Representatives Jim Ramstad (R-Minn.) and Patrick Kennedy (D-R.I.), the bill’s original sponsors in the House, wanted the Diagnostic and Statistical Manual IV (DSM-IV) to be the universal standard for what diseases would be covered by parity. The leadership in the Senate, led by Senators Edward Kennedy (D-Mass.), Michael Enzi (R-Wy.), and Pete Domenici (R-N.M.), had worked with the business community and insurance industry to win their endorsement of the Senate parity bill, and the DSM-IV requirement was considered unacceptable. The DSM-IV provision was dropped in exchange for several concessions from the Senate, including requiring parity in out-of-network coverage. By June, the resulting compromise parity bill had the support of both chambers of Congress, Democratic and Republican leadership, business and insurance groups, and mental health and addiction treatment advocates.
Once all the substantive work was finished, parity nearly fell victim to an intramural dispute in Congress. Starting in 2007, the House of Representatives instated a self-imposed policy of not approving any new spending without “offsetting” it either through new revenue or equivalent cuts elsewhere in the federal budget. The Senate had no similar rule, and it believed that the House’s “pay-as-you-go” policy was obstructing middle class tax cuts, incentives to produce renewable energy, and other popular programs.
Parity was estimated to cost about $3.9 billion over its first ten years. (The large majority of this cost comes in the form of lower tax revenues for the government rather than new expenditures. Congressional budget analysts expect that parity would mean slight increases in the cost of health insurance, and therefore employers would “shift” some employee compensation from income, which is taxable, to health insurance, which is not.) Although this price tag is insignificant in relation to the overall federal budget, House leaders insisted that it be offset. Several proposals were put forward, but none met the Senate’s approval.
Despite reassurances from both chambers of Congress that parity would be a priority, treatment and recovery advocates became increasingly anxious as the dispute over offsets lingered. In July, the Senate included parity in a large “tax extenders” bill that included a wide number of popular programs that the House refused to pass without offsets. The standoff continued into autumn. Congress was scheduled to adjourn the last week of September, and if parity was not passed by then there may not have been another chance; the entire process would have had to start again from scratch in 2009. On September 23, with the number of days before end of the congressional session slipping away, the House passed the compromise parity legislation as a stand-alone bill, and the same day the Senate passed it (again) as part of their tax extenders package. Since the baseline bills were different, parity was no closer to passage. Despite the widespread support in Congress for parity, there seemed to be no way to break the gridlock.
Parity Becomes Law
It took the national economic crisis to break the standoff. Pressure on Congress to “bailout” the financial services industry in order to prevent a broader economic crisis became intense in the last weeks of September, and it soon became clear that Congress would have to stay in Washington, D.C. longer than scheduled. On September 29, the House of Representatives failed to pass the first version of a $700 billion economic rescue package in a close, dramatic vote. This failure opened a window of opportunity for the Senate. Two days later, the Senate passed a very slightly modified $700 billion economic rescue bill, and it included the tax extenders provisions, including parity, which the House had refused to vote on without offsets (it went without saying that the $700 billion for economic stabilization would not be offset). With the stock market continuing to collapse and fears of a broader economic crisis mounting, the House of Representatives passed the Senate’s package on October 3. The president signed the bill that evening, and parity became law.
Parity applies to both insurance plans that are self-insured (under ERISA) and those sold in state insurance markets. Specifically, the bill requires that plans provide the same level of benefits for mental health and substance use disorders that they provide for medical/surgical conditions, both in terms of cost-sharing arrangements (such as co-pays and deductibles) and treatment limitations (such as annual or lifetime limits). State laws that are stronger than the federal “floor” will be protected. Out-of-network coverage must be equivalent for medical, mental health, and addiction. Insurance plans are allowed the full range of medical management techniques to control costs (as they are with medical/surgical conditions), but the law authorizes a study of the specific coverage rates for all mental health and substance use disorders and their impact on health and health care costs. Furthermore, if a beneficiary is denied the treatment they expected, the law requires that they be able to request the medical necessity criteria that were used.
There are some important limitations to the law’s scope. Insurance plans that cover fewer than fifty employees are exempt, and the law does not require a plan to cover mental health and addiction; it says that if they are covered, they must be covered equally. One-year exemptions are possible as well for plans that see their costs rise above one percent because of parity, although the process to opt-out of parity is extremely onerous.
Looking to the Future
For most insurance plans, parity will go into effect on January 1, 2010. In the meantime, the law must be translated into the regulations that will determine the details of how parity’s implementation and practice. Treatment and recovery advocates will need to monitor this process closely, to ensure that the regulations accurately reflect parity’s intent.
Furthermore, in order for parity to realize its potential, treatment and recovery advocates will need to use this opportunity to educate and engage the public about substance use disorders and the importance of treatment. While parity has the potential to greatly reduce stigma—it is hoped that the ability to access treatment through a health insurance plan in the same way that people access all other medical care will help them think of addiction as a treatable health care problem—earlier studies of states with parity show that a parity law alone will not significantly close the treatment gap.
According to the 2007 National Survey on Drug Use and Health, 20.8 million Americans needed substance use treatment but did not receive it. But only 6.4 percent of those people felt they needed treatment, which shows the critical imperative to teach the public to identify substance use disorders and recognize the effectiveness of treatment. For parity to have the most positive effect possible, it will also be important to inform people of the change in their health care coverage in 2010, and explain how to make use of their new benefits.
Although no one could have anticipated the exact route parity took to become a law, it was ultimately in a position to succeed due to the coordinated, longstanding efforts of thousands of mental health and addiction treatment and recovery advocates across the country, professional advocates, and champions in Congress. Parity was a historic achievement, but its ultimate effectiveness is still dependent on reaching out to the public to make sure people with addiction access the treatment that parity provides. In many ways, the work has just begun.