Mental Health Care Transformation Coming to America

Two federal laws -- and state implementation of their provisions -- are overhauling insurance coverage for the mentally ill.
by | January 9, 2013

In the wake of last month's deadly school shooting in Newtown, Conn., there was an outpouring of rhetoric about the need to improve our mental health system so people like Adam Lanza -- the person who killed twenty children and six adults at Sandy Hook elementary school -- could be identified and stopped from committing such a heinous act. But one thing was often overlooked in those calls to action: The Affordable Care Act (ACA), President Barack Obama's signature health law, includes arguably the most significant reforms to mental health coverage in our nation’s history.

The ACA names mental health and substance abuse treatment as one of the 10 essential health benefits that insurance plans must cover starting in 2014. While most large-group plans offer some kind of mental health benefits, according to a 2011 HHS survey, only 18 percent of small-group and individual plans cover mental health, and a mere 34 percent cover substance abuse treatment. Those markets -- which will make up the plans sold on the health insurance exchanges that are soon to be rolled out in every state under the ACA -- should see a significant upgrade next year in the quantity and quality of mental health benefits that are offered.

In addition to the essential health benefits provision, the Obama administration has pledged to implement the 2008 Mental Health Parity and Addiction Equity Act. It requires insurers to cover mental health at a level that's comparable to their physical health coverage.

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“There’s been a growing emphasis on the idea that mental health and physical health are interrelated,” says Caroline Pearson, director of health reform at Avalere Health, an independent consulting firm. “You cannot keep people physically healthy if you cannot address their mental health issues.”

According to the Alliance for Health Reform, more than 17 percent of Americans with mental illnesses didn’t receive care in 2011 because of inadequate insurance coverage. Nearly half of those who didn't get help for their mental illness cited cost as the reason.

The ACA and the 2008 legislation combined represent the most important policy changes in mental health ever, analysts and advocates say, because they're designed to improve the coverage and cost issues that people with mental illnesses -- which make up one out of every five Americans -- face.

But while the two federal laws are praised by the mental health community, implementing them has been a challenge.

One irony in particular sticks out: The “benchmark plan” that most states have selected for essential health benefits often doesn’t meet the mental health coverage standards in the 2008 parity law. So questions linger about how to reconcile those two realities.

For starters, advocates and policymakers say the White House hasn’t released enough information about how parity should be measured -- one of the first necessary steps toward enforcing the 2008 law. Lawmakers from the U.S. House and Senate have asked the Obama administration for what they say is long-overdue guidance on the issue, and watchdogs are pushing HHS to release more information about the mental health coverage in states' benchmark plans. Once all of that's available, states and insurance companies will have to determine how their benchmark plans -- and by extension, every insurance plan sold in the state -- must change starting in 2014.

“The devil is now in the details, regarding what all of this is going to mean, state by state,” says Sarah Steverman, director of state policy at Mental Health America, an advocacy group. “We don’t really know what parity means yet. We don’t have enough information about benchmark plans.”

The ACA’s Medicaid expansion debate will also leave its fingerprint on mental health access in the United States. According to estimates from Avalere Health, as many as 2.8 million people with a serious mental illness could qualify for the low-income insurance program if all 50 states expanded eligibility to 133 percent of the federal poverty level -- the law’s new threshold. Though it has other widely recognized problems, Medicaid’s mental health coverage has historically been better than private insurance. So bringing nearly 3 million new patients under that umbrella could have a huge impact, which is why it's "going to be the No. 1 issue” for Mental Health America, says Debbie Plotnick, senior director of state policy.

Mental Health America has 240 state and local affiliates in 40 states, according to Steverman, and they plan to lobby for the expansion -- particularly in the states with reluctant governors and/or legislatures. The argument for covering the mentally ill under Medicaid is the same as it is for the other childless adults who make up most of the expansion population: With the federal government covering almost all of the costs -- and states likely saving money on uncompensated care payments -- it’s a financial and moral win.

But though the ACA largely solves the coverage side of the equation, much work remains to be done to fix the mental health care system itself. Most importantly, according to advocates, the number of primary-care providers who can address behavioral problems needs a boost.

The ACA funds demonstration projects -- it's funded 64 thus far -- to increase mental-health care access. For example, under the health homes model, one primary-care provider -- which, in the case of a mentally ill person, could be a mental health facility -- is responsible for coordinating all of a patient’s health care. The idea is that wherever a mentally ill person seeks medical care, their doctor will know not only about their physical ailments but their mental state as well. Missouri and Rhode Island are two of the states that are making mental health care a focal point of those projects.

Steverman describes the quandary, viewed as the next frontier for improving mental health care: “The question is: If you have this benefit [mental health coverage], is there going to be anywhere to go to get quality treatment?”

Checking Up on Health News

  • Last week, HHS released more guidance on state partnership exchanges. Most analysts viewed the guidance as the White House's latest effort to entice more states to pursue a partnership exchange, which means less administrative work for HHS. 
  • As we look forward to the year to come, Politico has highlighted five states (Arizona, Arkansas, Florida, Idaho and Maine) to watch on ACA implementation in 2013.
  • The Connecticut Office of the Healthcare Advocate released a report calling the state mental health care system fragmented and inadequate, the Connecticut Mirror reports. A slew of related bills is expected when the state Legislature convenes Jan. 9.
  • Florida has been hit with two bad pieces of news in recent days. First, Health News Florida reported that one in five nursing homes in the state are on a ‘watch list’ for poor performance. Then, this devastating Miami Herald piece chronicled the plight of parents of medically needy children, who say the state is skimping on home health care and driving some to place their young ones in nursing homes.

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