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SUMMARY

Synopsis of the HBIC Amendment

The House Business and Industry Committee (HBIC) amendment to House Bill 452 makes two changes. First, it changes the effective date of the legislation on group health plans to October 1, 2000, from the original date of July 1, 2000. Second, for employers with less than 49 employees, it lowers the threshold for premium increases to 1.5 percent, instead of two percent. This change allows small businesses more flexibility in managing the increased cost of coverage.

Synopsis of Bill

House Bill 452 would prohibit an employer-provided group health plan from imposing treatment limitations or financial requirements on the coverage of mental health services if similar limitations or requirements are not imposed on coverage of other conditions. The bill would allow an insurer to require pre-admission screening and restrict coverage for mental health services to those that are medically necessary. HB 452 also provides remedies for employers to enact in response to providing this insurance coverage to employees, when the premiums increase more than 1.5 to 2.0 percent for employers of 2 to 49 employees or more than 50 employees, respectively. The remedies follow: absorb the increase, cost share with employees, or negotiate a reduction in coverage. Employers of fewer than 49 employees have one additional option, which is to justify to the insurance division of the Public Regulation Commission that a premium increase is the result of the added coverage, and thus, allows for an exemption for the provisions of the bill. "Mental health services" excludes substance abuse, chemical dependency or gambling addition.

Significant Issues

Similar bills were passed by the Legislature last year: House Bill 489 from the regular session and Senate Bill 26 from the special session. Both were vetoed by the Governor because the legislation gave employers the option of excluding mental health services from their plan and because parity will result in an increase of insurance costs. However, House Bill 452 has addressed these concerns by developing options for small businesses to better manage the transition to parity in insurance coverage.

FISCAL IMPLICATIONS

House Bill 452 does not contain an appropriation.

OTHER SUBSTANTIVE ISSUES

Insurance coverage for mental health services has never been on par with other physical ailments. The insurance industry has often argued against including or expanding mental health benefits due to the risks of increased cost potential.

Research has shown that inaccessibility to clinically necessary mental health interventions does not reduce the cost of care to an individual; rather, the cost shifts to treating increased prolonged physical care needs and services including expensive, inappropriate hospitalization. Lack of parity has societal costs with respect to publicly funded health-related programs often absorbing those clients the private sector refuses to address. Treating individuals with chronic, severe mental illness is often challenging, given the unique needs of these individuals. Unfortunately, the insurance industry has historically focused on medical conditions and is extremely limited in its knowledge of rehabilitative or recovery-based care, especially to those with chronic mental illness.

The lack of adequate insurance for these individuals has, and will continue to be, another form of discrimination until parity is addressed. However, the limitations of this legislation do not promote parity. Section 1.B allows the insurer to institute limitations such as pre-admission screening prior to authorization of mental health services if covered under a plan. Individuals with a prior history of mental illness may be denied access through the pre-admission screening process.

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