Parity: the new buzzword in mental health.

• Author: Vatz, Richard E.

Newly enacted legislation guarantees that physical ailments and mental illnesses now will receive equal insurance coverage, in effect legitimatizing all psychiatric diagnoses.

If a Camel is a horse put together by a committee, then the mental health amendments tacked on to a Congressional appropriations bill and signed by the President in September, 1996, resemble a camel that doesn't know if it is coming or going. The amendments appeared to guarantee what the mental health industry had been after for years--parity. In other words, as the new law states, no treatment limitation or financial requirement would be permitted "on the coverage of mental health services if similar limitations or requirements are not imposed on coverage for services for other conditions."

The Psychiatric News, the newspaper of The American Psychiatric Association (APA), simply called the legislation in its Oct. 18, 1996, headline, "Parity." While the legislation may pave the way for future equality of coverage of physical and mental illnesses, the newly adopted legislation is confusing and inconsistent. Lawrence Sack, the president of the American Association of Private Practice Psychiatrists, conceded that, "Unfortunately, there are large loopholes in the bill," including the fact that it "may make a parody of parity." The provisions include:

* Lifetime or annual limits for mental health coverage must not be greater than those for physical ailments, like cancer or heart disease. However, health plans do not have to cover mental health at all, and they may set higher deductibles and co-payments for treatment for those diagnostic categories of mental illness for which coverage is provided.

* The mental health benefits do not include the treatment of drug abuse and alcoholism. Moreover, if a health plan can show that its costs have risen one percent or more as a result of the elimination of mental health care coverage limits, it can be exempted from the law's provisions.

* The bill exempts businesses of 50 or fewer employees.

If the provisions reveal a two-headed camel, predictions of its likely impact are just as disparate. For instance, Michael M. Faenza, president of the National Mental Health Association, unambiguously crows, "This is an incredible victory."

David Friend of Watson Wyatt Worldwide, a management consulting firm, expresses fear that the new law will lead to a dramatic rise in mental health care. Meanwhile, the Congressional Budget Office and some mental health advocates predict that the increase will be nominal. A typical fee-for-service plan, they maintain, would go up about four-tenths of one percent. Yet, Susan D. Moriconi, health benefits manager for Hewlitt-Packard, foresees that "a large number of employers and plans will have an increase of more than one...