The stormy debate over mental health: many groups are battling over how mental health treatment will be covered under health reform

The stormy debate over mental health: many groups are battling over how mental health treatment will be covered under health reform – includes related information on how President Clinton’s reform would cover mental health, and one example of the cost of universal mental health care

Maureen McKnight

Many groups are battling over how mental health treatment will be covered under health reform.

Coverage for mental illness has become a touchstone issue in the health care reform debate, one that is likely to loom larger in employers’ and the public’s minds in the months ahead as the debate begins to turn on more consumer-oriented issues.

The mental health issues in this debate were sharply etched recently in an exchange between the Wall Street Journal’s editorial page and Tipper Gore, the vice president’s wife and a chief architect of the Clinton administration’s approach to mental health.

In a lengthy editorial, the Journal said the President’s reform plan would help foster a “therapeutic state” in which millions of people with passing episodes of the blues or other mild emotional traumas would be seeking care and getting it paid for by employers and the government–costs the health care system can ill afford.

Gore fired back a letter saying the impact of mental health has been grossly underestimated in our society, including the toil it takes on business productivity and people’s general physical health, and that responsibly expanding coverage was long overdue and cost-effective.

The fact is, however, that while President Clinton’s health reform plan includes mental health in its standard package of benefits and bars experience-rating and pre-existing condition clauses thus expanding coverage to some 62 million Americans who have no mental health coverage at all today–the plan’s high copayments and deductibles will very likely perpetuate lack of access for the poor.

In addition, critics of the plan’s mental health benefits say it continues to treat mental illness as a lesser sort of illness than, say, heart disease, cancer, or diabetes. “The limit set on the number of days covered is arbitrary,” says Jay Cutler, a lobbyist for the American Psychiatric Association in Washington. “The only standard for limiting care should be medical necessity and clinical appropriateness. I don’t see anyone saying cancer treatment should be covered for only 30 days.”

The president’s plan defers mental health “parity” until 2001. In that year, all limits and restrictions specific to mental illness would be eliminated. But critics of this deferred action say full parity should not be put off. “The group that is going to suffer most from these restrictions is the seriously mentally ill,” says Bryant Welch, a lobbyist with the American Psychological Association. “That group consists of people who need intensive, long-term treatment.”

Some mental health groups also charge that the plan doesn’t go far enough to reverse the decades-old pattern of stressing inpatient care over more cost effective outpatient care.

For example, many employee benefit plans today pay 100% of the costs of psychiatric hospitalization (usually with a limit on the number of days) but reimburse only 50% of the costs for outpatient psychotherapy (also with restrictions on visits). “The Clinton plan continues to provide incentives to herd people into high-cost hospital treatment,” says Welch. “That wastes money.” He maintains that money saved from cutting back on unnecessary psychiatric hospitalization would more than fund expanded outpatient care to the currently uninsured.

Not surprisingly, officials at the National Association of Psychiatric Health Systems, a trade group in Washington, representing 300 psychiatric hospitals and residential treatment centers, disagree. The group feels the president’s plan places unfair limits on psychiatric hospitalization and would undercut the longer hospitalizations that some people with severe mental illnesses need.

The National Alliance for the Mentally ill, a patient advocacy group representing 140,000 families affected by severe mental illness, concurs with this criticism. But NAMI praises the president’s plan for expanding coverage for prescription drugs, often vital for those suffering from schizophrenia, recurrent depression, and severe anxiety disorders. The plan, for example, allows for unlimited “brief” visits to a physician for management of medication for a mental illness, with a $10 copay. However, psychotherapists and social workers who think drugs are overutilized in the treatment of mental illness believe this benefit will further promote the use of drugs.

The part of the Clinton plan’s mental health benefit that has garnered the greatest skepticism, though is the proposal to allow patients to trade full inpatient hospital days for community-based outpatient residential treatment and outpatient psychotherapy.

The draft plan released in September allowed 60 days of hospitalization, 120 days of “intensive nonresidential” treatment (including partial hospitalization, an increasingly popular mode of mental health treatment), and 30 outpatient visits. But in the legislative proposal handed to Congress in late November, hospital days must be exchanged for days of communitybased nonresidential treatment, at the rate of one inpatient day to two nonresidential days.

“Forcing the seriously mentally ill to trade off their inpatient days is not in the best interest of the patient,” says Elliot Weiner, senior legislative fellow for health policy for Sen. Paul Wellstone (D-Minn.) By giving up coverage they may need later, patients could be left without a safety net, he argues. “Patients should be able to access whatever care is most appropriate not whatever care they have left,” Weiner adds. Sen. Wellstone and Rep. Mike Kopetski (D.-Ore.) plan to submit legislation that would remove the “arbitrary” restrictions on mental illness coverage in the president’s plan.

Administration officials say it was cost considerations that led them to modify their originally stated set of mental health benefits, and to extend the “trade off” concept. “The actuaries hit us very hard on this,” says Ira Magaziner, the president’s chief health policy adviser. “Originally we wanted to cover mental health like other health care services [in organized delivery systems] but they told us that would cost $720 per person per year. What we have comes in at around $240 a year.”

Mental health groups are also worried about the impact of managed care and capitation on mental health services. Providers are already chafing under what they view as excessively intrusive and unfair utilization review. “A system where payment is capitated produces a great incentive to undertreat,” says the APA’s Welch.

But managed care organizations claim they are saving employers millions of dollars each year with careful “carve out” mental health management-increasingly without setting limits on hospital days or visits.

In fact, the Psychiatric Association and other mental health groups say administration officials used outdated figures from traditional indemnity plans to calculate the cost of mental health care. They didn’t take into account the savings from managed care, notes John McIntyre, M.D., the APA’s president.

Critics counter that managed mental health care has other “inherent restrictions” such as lists of providers that may not be convenient for all of a health plan’s or employer’s enrollees. Says Weiner, “If you tell a patient, ‘Ok, you have to drive 100 miles to see the doctor in your network,’ and you do that to someone who already feels that life is not a very safe place, they will be very difficult to treat or they will not undergo treatment.”

Moreover, they may not come because they have to pay too much out of pocket. Outpatient psychotherapy visits cost from $75 to $150 a visit, or $300 to $600 a month. With a 50% copayment, that costs the client $150 to $300 a month, clearly beyond the means of most lower and many middle income people.

The Cost of Universal Mental Health Care: One Scenario

If President Clinton’s reform plan were enacted, mental health costs would increase around 70% in managed care plans. primarily because of “pent up demand” by the uninsured and Medicaid populations being folded into the system, according to a new study, Mental Health Care Reform–Can Everyone Win? from Milliman & Robertson Inc., a health care consulting and actuarial firm in New York.

In addition, most managed care plans would begin to enroll populations in general that will utilize more mental health care. Many now have enrollee populations that are low utilizers of mental health services.

The M&R analysis projects costs under the Clinton proposal in the range of $92 to $122 per person per year in the low cost plan and $53 to $76 per person per year in the high-cost plan.

These projected costs may be offset, however. by savings from more effective and timely treatment of the mentally ill. M&R estimated potential savings at around $27 per person per year. The savings stem from such benefits as higher productivity levels among employees; fewer premature deaths from suicides; lower general medical expenses; fewer people using high-cost treatment options, such as emergency rooms; fewer people in the judicial system and in jails; and less use of welfare programs.

However. Stephen Melek, a principal with M&R and author of the study, cautions that the projections did not include substance abuse treatments nor administrative expenses.

Melek calculated the current average costs for employers’ mental health coverage in different plan settings as follows: $225-$275 per covered life in fee-for-service plans; $125-$150 per covered life in PPOs and point-of-service plans; and around $45-$65 per covered life in HMOs.

COPYRIGHT 1994 A Thomson Healthcare Company

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