The New Mental Health Parity Law

• Published date: 01 June 2009
• Author: P. Edward French,Doug Goodman
• DOI: 10.1177/0734371X09333319
• Date: 01 June 2009
• Subject Matter: Articles

189

Review of Public Personnel

Administration

Volume 29 Number 2

June 2009 189-196

© 2009 SAGE Publications

10.1177/0734371X09333319

http://roppa.sagepub.com

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http://online.sagepub.com

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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