Simple fairness: ending discrimination in health insurance coverage of addiction treatment.

• Author: Starr, Sonja B.

Consider these facts: An often-debilitating brain disease afflicts millions of Americans. This disease is one of the country's greatest killers. Its victims frequently suffer from depression and many physical ailments, and often become unable to work effectively. The disease costs the U.S. economy hundreds of billions of dollars annually--more than cancer, more than heart disease. (1) Fortunately, although no cure exists, medical treatment can enable recipients to live normal, healthy, and productive lives. Treatment is cheap compared to many other common medical procedures and is highly cost-effective. (2) Now consider this: For the vast majority of victims of this disease, effective treatment is inaccessible. Most health insurance plans either do not cover it or put a variety of limits on coverage that do not apply to other diseases. Unless they can pay out of pocket, victims cannot get the treatment they need. To make matters worse, they are often told that their condition is not a real disease, or that it is their fault, or that suffering from it makes them a criminal.

The disease is drug and alcohol addiction, and the facts are real. Ubiquitous benefit caps on insurance coverage of substance abuse treatment put effective recovery out of reach for most addicts. In this Note, I assess the nature of this problem and some possible ways to address it. The general principle that I advocate is substance abuse treatment parity, which means that insurance plans should provide coverage for addiction treatment that is equivalent to that provided for analogous conditions. In some cases, failure to provide such parity should be considered illegal disability discrimination on the part of employers and insurers. Moreover, new laws should be adopted to require insurance parity explicitly.

In Part I, I review the current status of insurance coverage of addiction treatment and assess the scope of the shortfall and possible reasons behind it. In Part II, I set forth the case for insurance parity, including the nature and costs of the disease of addiction and the efficacy and cost-effectiveness of treatment, and consider some counterarguments. In Part III, I analyze the requirements of the Americans with Disabilities Act (ADA) as they pertain to insurance parity, drawing on the precedents set by recent challenges to other types of insurance discrimination. I conclude that the ADA should be interpreted to require parity in some cases, but that the potential effectiveness of this litigation strategy is limited--new reforms are necessary. In Part IV, I consider the strengths and weaknesses of current legislative proposals to accomplish insurance parity, and focus especially on the Substance Abuse Treatment Parity Act. Finally, in Part V, I offer my conclusions and recommendations for legal change and advocacy.

1. CURRENT SHORTFALLS IN INSURANCE COVERAGE OF ADDICTION TREATMENT

   Most Americans benefit from health insurance plans provided by their employer or the employer of a family member. (3) Others are covered by Medicare or Medicaid, or purchase individual or family plans from a private insurer or health maintenance organization (HMO). (4) Among employers who provide insurance, some--generally very large companies--are self-insurers, meaning that they serve as their own insurance company, while others purchase group plans from third-party insurers. Approximately thirty-nine million Americans are uninsured.(5) Even among those who have insurance policies, however, coverage of alcohol and drug addiction treatment is often limited or absent. (6) In some cases, insurers entirely exclude coverage of addiction. More frequently, addiction treatment is subject to monetary caps and other limitations on coverage that do not apply to treatment of other diseases. (7) Frequently, coverage is limited to brief, one-shot treatment programs with no long-term maintenance care--a strategy with little chance of success. (8) The coverage gap is far more severe for employees of small businesses; although 90% of Fortune 500 companies have Employee Assistance Programs (CAPs), which are programs designed specially to deal with substance abuse treatment (although they may not provide insurance parity), few small businesses have them. (9) Substance abuse treatment may be most lacking for adolescents, for whom specialized care is rarely covered and whose parents may already have exhausted their family plan's lifetime addiction treatment allotment. (10) Overall, fewer than 10% of all American workers have a health insurance plan that treats addiction equivalently to analogous diseases. (11) Some estimates suggest that only 2% of substance abusers have health insurance plans that provide adequate coverage for treatment. (12)

   These inequalities in treatment coverage have long been a part of the insurance landscape. Nonetheless, the gaps are becoming even wider as a consequence of the rise of managed care. Managed care has, over a short period of time, become the dominant force in American health care, representing a 29% share of the health insurance market for American workers in 1988 and over 80% today. (13) Unlike a traditional third-party insurance plan, an HMO (the most common form of managed-care plan) is both insurer and care provider--the doctors work for the same company that pays for treatment. This creates cost-cutting incentives that help control insurance premiums, but may compromise the quality of care. (14)

   These cost pressures appear to have had an especially serious effect on addiction treatment. A Hay Group report showed that between 1988 and 1998, employer spending on substance abuse treatment benefits declined by 74.5%, while employers' overall health benefit spending declined by just 11.5%. (15) A 1996 Village Voice article reported that, as a result of these pressures, over half of the country's private treatment centers had closed over the course of a decade. (16) In addition, quality of care may be declining. Whereas a twenty-eight-day inpatient program used to be common, today inpatient stays average only 7.7 days, which may be insufficient to provide the necessary care. (17) Some studies have found that relapse rates have increased as a result. (18)

   Despite the bleakness of this picture and the considerable obstacles to change, (19) recent years have seen the quiet growth of a pro-treatment movement. This movement is grounded in a coalition of people in recovery, treatment providers, medical experts, some sympathetic political leaders, and even a range of businesses that have found that providing treatment coverage makes economic sense. In terms of health insurance coverage, the focal point of this movement has been "treatment parity." The concept of "parity" implies equal treatment or, more simply, fairness. While allowing health insurance plans flexibility in terms of setting the actual amount of coverage for substance abuse treatment, parity advocates demand only that this amount be fair by comparison to coverage for analogous conditions. Parity advocates have won some victories in recent years. Eight states now have laws mandating some degree of substance abuse treatment parity, (20) although these laws have been criticized for their incompleteness. (21) In 1999, President Clinton announced that the Federal Employee Health Benefit Plan would adopt full parity for substance abuse and mental health treatment by 2001. (22)

2. THE CASE FOR INSURANCE PARITY

   The issues surrounding insurance coverage of addiction treatment are complex, in part because of the very nature of the health insurance business. There is no such thing as truly "comprehensive" health insurance--i.e., insurance that covers every medical treatment. Insurance companies routinely determine what procedures they will and will not cover on the basis of considerations such as the seriousness of the underlying condition and the cost and effectiveness of the treatment. Because of the constantly changing landscape of medical science, decisions about whether to cover certain procedures are frequently controversial. It is thus understandable that politicians are often reluctant to jump into the fray by issuing coverage mandates that would take discretion over coverage decisions away from insurance professionals.

   Nonetheless, considerable medical and economic evidence supports the argument that mandatory insurance parity for addiction treatment is an idea whose time has come. Studies have shown that treatment is both medically effective and cost-effective. The recovery movement's focus on parity sets a modest goal: requiring not that all insurers provide comprehensive coverage of addiction, but simply that they treat addiction equivalently to analogous diseases. This Part sets forth the medical, social, and economic arguments for insurance parity for drug and alcohol addiction treatment. (23)

   1. Addiction Is a Disease

      The first major barrier faced by proponents of drug and alcohol treatment coverage consists of convincing the public and policymakers that addiction is, in fact, a medical illness requiring medical treatment. Alive as it may be in the public mind, the idea that people are addicts by choice has long since lost currency among medical experts. Medical descriptions of addiction as a disease date to the eighteenth century. (24) The American Medical Association first officially recognized addiction as a disease in 1956. (25) Today, a remarkably uniform consensus in the scientific community supports this characterization. As Time recently reported: "Americans tend to think of drug addiction as a failure of character. But this stereotype is beginning to give way to the recognition that drug dependence has a clear biological basis. `Addiction ... is a disorder of the brain no different from other forms of mental illness.'" (26) This conclusion has been confirmed by a litany of scientific studies. (27)

      Recently, scientists have begun to acquire a greater...