The New Mental Health Parity Law

Published date01 June 2009
AuthorP. Edward French,Doug Goodman
Date01 June 2009
Subject MatterArticles
Review of Public Personnel
Volume 29 Number 2
June 2009 189-196
© 2009 SAGE Publications
hosted at
The New Mental Health
Parity Law
Issues and Concerns for Public and
Private Sector Employers
P. Edward French
Doug Goodman
Mississippi State University
On October 3, 2008, Congress passed the Mental Health Parity and Addiction Act
(MHPAA) as part of the Emergency Economic Stabilization Act of 2008. The MHPAA
does not require insurance providers to offer insurance coverage for mental illness and
addictions, but if they are covered, there must be parity with other health coverage. This
article summarizes the MHPAA and discusses the possible consequences to public sec-
tor employers. The authors also explore the possible court challenges to the MHPAA
under the Eleventh Amendment.
Keywords: mental health parity; state sovereignty; unfunded mandates
In October 2008, Congress passed HR 1424 as part of its $700 billion financial
bailout package of Wall Street. Although the controversial Emergency Economic
Stabilization Act of 2008 was headlining news everywhere, HR 1424 was the vehicle
used for this historical effort undertaken by Congress to help alleviate the current
fiscal crisis. HR 1424 is a piece of mental health parity legislation that requires
health plans and self-insured employers to offer the same level of coverage in both
their physical health and mental health benefits. As health care advocates celebrate,
the long-term effects on private employers, public and nonprofit sector employers,
and insurers remain to be seen. Most of the opposition to this legislation stemmed
from concerns regarding the cost of the equal coverage requirement, as lowering
out-of-pocket costs for individuals with mental health problems most likely will
increase their benefit utilization. The Paul Wellstone and Pete Domenici Mental
Health Parity and Addiction Act of 2008 (HR 1424) attempts to address financial
concerns by ensuring the employer’s right to manage the mental health benefit and
by providing an opportunity to opt out of the equal coverage requirement if the cost
exceeds 2% of the total plan cost in the first year or 1% in any subsequent year.
Proponents suggest that providing mental health care and substance abuse coverage
may actually result in a more productive workforce, and some studies have shown
that mental health treatment costs that result from parity may be contained through
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