Federal law now requires equal insurance coverage for mental and physical disorders. That's good for patients, but employers worry about higher costs.

"Helen" believes she was born on an alien planet.

"There is absolutely nothing that you can do or tell me that is going to make me stop believing that. Believe me, they've tried," says the 45-year-old employee of a Central Ohio health-care company.

Helen is not her real name, but her illusions are very real-to her. Most days, she can push away those thoughts-a product of her schizoaffective disorder-and go to work like everyone else. She does need medication, regular visits to her psychologist and occasional week-long stints in the hospital, expenses that cost nearly $8,000 in 2009.

In terms of insurance coverage for her ongoing mental health expenses, Helen has been one of the lucky ones. She says her employer's plan has covered the first $750 of claims, followed by a split of 10 percent out-of-pocket to 90 percent from the insurance company, until Helen has paid $2,000. Once that out-of-pocket maximum is hit, medical claims are 100 percent covered. Mental health services, excluding medication, she says, are treated like any other covered condition, except that the 10 percent out-of-pocket payments don't stop when she has paid $2,000. Her medication, however, is covered at 100 percent after she's reached that ceiling.

Helen says she usually has reached the maximum out-of-pocket expense by February. Her medications alone cost about $2,600 per month.

"Most people do not have insurance as good as mine," Helen says. "When I was looking for a job, one of the determining factors was I needed to work for a large company. I wouldn't be able to work for a small company where you have to pay quite a bit more for less coverage."

Helen says she has friends who pay a $40 co-pay for each visit to a psychiatrist, plus 80 percent of their other mental health costs. Mental Health America, a national advocacy group, estimates that 67 percent of adults and 80 percent of children requiring mental health services nationwide do not receive help.

Those percentages may shift dramatically downward, thanks to the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. Effective for health insurance "plan years" beginning on or after Jan. 1, 2010, the federal law requires that any group health plan that covers 51 or more employees and offers mental health benefits must provide those benefits on the same terms and conditions as medical and surgical benefits.

According to Mental Health America, the new law will provide parity for 113 million people in the United States, including 82 million enrolled in self-funded plans regulated by the Employee Retirement Income Security Act (ERISA).

What Is Parity?

Supporters of mental health parity say the Wellstone-Domenici Act will help to combat discrimination against those with mental illness. "The big thing for us is just that for years employer-provided health plans have imposed higher out-of-pocket costs for mental health care than any other illness," says Laura Moskow Sigal, executive director of Mental Health America of Franklin County.

"Mental illnesses are biologically based. They're no different than any other illness," Sigal says. For example, "If you're depressed, your brain isn't thinking clearly and your body will react to that."

In 2007, Ohio became the 38th state to pass a mental health parity law, but it was limited in scope, applying only to seven biologically-based mental illnesses: schizophrenia, schizoaffective disorder, major depressive disorder, bipolar disorder, paranoia, obsessive-compulsive disorder and panic disorder.

Sigal says Ohio's law was a step in the right direction, but still left some-a mother whose child has attention-deficit hyperactivity disorder, for example-out in the cold.

Others, like Helen, were limited by the coverage their employers provided. The Ohio law requires insurers to provide parity for individual, small group, fully-insured and private or public self-funded plans. It also requires plans to provide at least a $550 per year benefit for outpatient treatment of mental or emotional disorders.

The state law does not apply to self-insured private employer plans governed by ERISA, or to persons covered by Medicaid or Medicare.

Helen's employer's plan, governed by ERISA, was exempt under the state law, but parity will be required under the new federal law. She estimates that will save her more than $2,000 per year.

With her previous coverage, Helen says, "We really [had] to think hard when I [went] to the hospital. Even though I fit all the criteria of needing to be hospitalized, sometimes [I would] just have a friend stay with me. Most of my hospital stays are seven to 10 days. That's a big chunk of change."

The new law also will end restrictions on how often Helen may visit her mental health-care social worker. Until Jan. 1, her plan allowed 50 visits a year. In 2009, she paid out-of-pocket for an additional 10 visits.

Under the old plan, Helen says, money worries forced her to ration her appointments with the social worker: "I started seeing her less and less, even though I needed to see her." With parity, "I don't have to worry."

Under the federal law, insurers must offer coverage parity for all financial requirements-deductibles, copayments, coinsurance and out-of-pocket expenses. If the copay for visiting a family physician or gynecologist is $20, the copay for visiting a psychiatrist or psychiatric social worker must also be $20. A plan must impose the same treatment limitations-frequency of treatment, number of visits and days of coverage-on schizophrenics and on diabetics.

The federal law applies to large employer group plans and health insurance companies. Small businesses-employing fewer than 51 people-and self-funded state and local government plans may opt out of the federal law, as long as they do not violate the requirements of Ohio's law.

Defining Mental Illness

Unlike Ohio's parity law, which lists covered, biologically-based mental illnesses, the Wellstone-Domenici Act law does not provide a clear-cut definition of covered mental illnesses or substance abuse problems. Guidelines are in the works, but the wheels of federal bureaucracy grind slowly.

"The biggest issue we have seen, as far as implementation goes, is that we don't have a full definition of mental illness," Sigal says. If the federal guidelines allow states to use their own definitions, "Ohio is going to get the short end of the stick, because only seven biologically-based mental illnesses are covered. We could be in worse shape than other states, but that's just conjecture at this point."

Ohio's law does not require coverage for drug use disorders, while the federal law does. But what about alcohol-related illness? "We get a lot of questions about alcoholism coverage and illnesses that are not biologically based," says Mary Jo Hudson, director of the Ohio Department of Insurance (ODI). "It's not really clear under the federal law, so right now we have more questions than answers."

"It's not like someone can call us and say that their insurance isn't covering them and they want to sue," says Sigal. "There are so many different issues. Do they have more than 50 employees? Is that plan government-regulated? It's not a simple yes or no. If someone isn't covered, we can't necessarily say the insurance company is violating the coverage. We can only advise them to look at their own policy and then call us and we can hopefully steer them in the right direction."

Potential Costs

Insurance companies seem to be taking the Wellstone-Domenici Act in stride, perhaps because they've had more than a year to prepare.

In an e-mail statement, Anthem Blue Cross and Blue Shield of Ohio said the company "supports parity for mental health benefits provided that covered services for mental health be defined by the plan; health plans retain the ability to medically manage benefits and establish and regulate healthcare provider networks; and in the case of strong federal parity legislation, differing state parity laws should be preempted and patchwork regulations should be minimized." Translation: Give us clarity, and we'll live with parity.

Paula Sauer, vice president of care management for Medical Mutual of Ohio, says parity "requires that we modify our benefit structures so that when claims are processed, they're not denied because there's a benefit limit. We have to communicate to customers that there is a change. Otherwise, it doesn't impact us in a lot of ways," she says.

A spokesman for Aetna declined an interview, saying the company couldn't speculate on the law's effects on business and had no public opinion to offer.

Most insurance companies were already providing mental health benefits, so revisions have been minimal, says Kelly McGivern, president and CEO of the Ohio Association of Health Plans, a industry trade group.

Employers, on the other hand, fear that expanding mental health coverage may lead to higher claims and higher premiums. "I think that Ohio businesses are concerned about increased financial exposure," says Sauer. She has had a few customers who have cut down on benefits in order to control costs.

"Absolutely there is a cost," McGivern says. "Any time you expand benefits, that means there will be additional people using those benefits and costs to reimburse providers, so premiums will reflect those changes going forward."

ODI says there are no provisions in the Ohio or federal laws governing who is to pay for any costs related to the parity mandates. If claims and premiums rise, they rise.

"It sort of puts a burden on the small business owners struggling to pay for the benefits they have already," says Mandy Minick, Ohio communications director for the National Federation of Independent Business (NFIB). "Even if the increase is only 1 percent, when you add up 1 percent from mandates for autism and for diabetes and for mental health, that adds up. Our members are already trying to handle double-digit annual increases in health-care costs. We do support individuals who have these ailments, but ... it is difficult to afford for small businesses."

Minick says the NFIB supports the federal exemption for businesses with fewer than 50 employees.

"The positive thing is that the focus is on providing more benefits to consumers, but not everyone can afford the current costs of health insurance," McGivern says. "As it gets more expensive, it gets harder for those without insurance. It's a double-edged sword."

The Congressional Budget Office has estimated that mental health parity will increase premiums less than 1 percent. If that estimate is off, the Wellstone-Domenici Act allows health plans whose costs increase by more than 2 percent in the first year and by more than 1 percent in a subsequent year to be exempt from the law's requirements for the following year.

Malesa Litteral, vice president of benefits at Battelle, says the research organization has made a few tweaks to its benefits in order to comply with parity laws. "It impacts so few people that, overall, we don't expect much impact to our plan from a financial standpoint," Litteral says. "The cost to the employees would impact just a few people in specific circumstances, and they will get a better benefit."

Molina Healthcare of Ohio, whose plans target those on Medicaid and Medicare, is exempt from parity laws. But Dr. Kevin Smith, Molina's chief medical officer, says the company has been offering behavioral health benefits on par with medical benefits for its 220,000 members since it began operations in 2005.

"It's a challenging population," Smith says. "Folks with severe mental illness often are not compliant with their treatment regimen." To combat this, Molina uses trained care mangers who "manage those folks from the time they get into the hospital to when they are discharged, arranging medications and follow-up visits."

Despite the challenges, Smith supports parity: "I think it's a great trend we're starting to see. Being able to coordinate the mental health aspects of physical problems and the physical aspects of mental health problems really gives a health plan like Molina the tools we need to be able to take care of the whole patient."

Overcoming Stigma

Sigal says Mental Health America of Franklin County has been working more than 20 years to overcome discriminatory insurance practices, and to raise public awareness about the realities of mental illness.

"People misunderstand," Sigal says. "They think someone with a mental illness should be able to pull themselves up by their bootstraps. We're working to get people over that stigma. You don't really get it until you're diagnosed with depression or bipolar disorder and you look at your insurance and find that it's not covered, that there's a $50 copay and a thousands of dollars deductible, and everything is very unequitable. The federal bill has alleviated that."

According to the Health Policy Institute of Ohio, mental disorders are the leading cause of disability for those aged 15 to 44, and diagnosable mental disorders affect 25 percent of American adults each year.

Many with mental illnesses prefer to stay in the background. "I've not told anybody at work I have a mental illness. My boss knows, but that's it," Helen says. "I think it might be different if I had depression or something less than schizophrenia. People hear that and they're shocked that I work and that I've been working for 15 years-that's not normal."

A better understanding of mental illness will help foster better health care because mental disorders and physical ailments are more closely linked than many people realize, Sigal says. "We are really focusing on the integration of physical and mental health care. They really should be co-located so people can walk from office to office," she says.

ODI's Hudson agrees: "If you get hurt and, as a result of that you can't work, you might become very depressed," she says. "I think people are trying to find a more sophisticated way of evaluating health. You can't tell sometimes what causes what, so it's a way to move away from drawing a bright line where a bright line doesn't exist."

Helen says her physical and mental health often go hand-in-hand. Her medication, atypical antipsychotics, can cause metabolic syndrome, which increases the risks for cardiovascular disease and diabetes.

"Right now, I am on the borderline of getting a formal diagnosis [for diabetes]," Helen says. "It's a balance between that and how much I can decrease my meds. Is there a choice between diabetes and psychosis?"

At least for Helen's insurance coverage, the Wellstone-Domenici Act mandates that the answer to that question, for now at least, is no.

Michelle Davey is an editorial assistant for Columbus C.E.O.

Reprinted from the March 2010 issue of Columbus C.E.O. Copyright © Columbus C.E.O.