Mental Health Parity

There's a bill working its way through Congress to require private insurers to cover mental illness identically to physical illness. You can read the National Alliance for the Mentally Ill press release about it here.

I am very sympathetic to the motives of the backers of the bill. They want insurance companies to stop ducking the problem of mental illness--which doubtless plays some part in why a lot of mentally ill people end up homeless on the streets. But I am also not comfortable with the federal government telling insurance companies how to run this, and there are three reasons why.

Unnecessary Tying Of Hands

For a very long time, insurance companies paid vast sums of money out, without asking too many questions, for psychoanalysis. In the 1980s, the government threatened to "do something" if insurers didn't get rising medical care premiums under control. Well, they did. The insurers started doing cost-benefit analyses on various procedures and lengths of stay. They start pressuring hospitals to send new mothers home the day after, or in some cases, the day of delivery, based on evidence that longer stays weren't really needed. And then the same bunch of activists that whined about high medical costs started whining that the insurance companies were doing something about it.

Similarly, in the 1980s, insurance companies started noticing that the evidence for the effectiveness of psychoanalysis was missing. (And no surprise--psychoanalysis seems to be built on false premises.) So they started limiting what they would pay for--no more of paying for twice a week visits for years on end. I won't call psychoanalysis fraud--I think many of the psychiatrists who do it actually believe in what they are doing, and it probably does provide some benefit to some. But I'm a bit suspicious that more than a few doctors became psychiatrists so that they could be paid well without having to get blood and pus on their clothes. And now, psychiatry is no longer such a well-paid specialty.

I think there's a lot of merit to what non-psychoanalytic psychiatrists do, and I would like to see more insurance companies provide mental illness coverage. But I am a bit reluctant to tie insurers' hands with a law mandating this.

Federalism Issues
This particular bill originally preempted state laws on this subject, so that a state that already had a mental health parity law (as several do) might actually have that law wiped out by a federal law. In some cases, this could have reduced the mental illness coverage that some states currently mandate.

The bigger issue, however, is that as much as possible, laws need to be done at the state level. If something truly involves interstate matters (and some things clearly do), then the federal government has to take action. But it isn't clear to me that such laws necessarily need to operate at the federal level. I might oppose an individual state passing a particular law like this, but at least with 50 laboratories, there's a chance to see what works, and what doesn't. More importantly, 50 different states are likely to have 50 different circumstances. What might be necessary in one state might not be necessary in another.

Why Doesn't Medicare and Medicaid Have This Requirement?

Perhaps I am mistaken on this, but I believe that Medicare (and probably Medicaid) still treats mental illness in an inferior manner to physical illness. At least, that was the state of the law in 1965, when Congress created Medicare, and this statement from this year suggests that this hasn't been changed:

As you know, Medicare has perhaps the out of date and discriminatory benefit for mental illness and substance abuse treatment of any public or private sector program. The most widely recognized restrictions are the discriminatory limit of 190 lifetime days on inpatient care under Part A and the 50% cost sharing requirement for outpatient services under Part B. These restrictions – which apply only to mental illness treatment – were unacceptable intolerable in 1965, and are even more troubling in 2007.

If this law forcing mental illness parity on private insurance companies is such a good idea--why is that Medicare doesn't have the same requirement imposed on it? At least if Congress forces Medicare to do this, they have the legal authority to do so, and no one would question that this is the case. But I see no reason why a private insurer should be forced to do something that the federal government won't force Medicare to do.