Mental Health Parity is a Nice Obamacare Gesture, With a Big Price Tag
As Jacob Sullum points out, one of the Affordable Care Act's great failings is President Obama and company's refusal to admit that health coverage involves tradeoffs. Sure, it's upsetting when your copay is higher than you wish, or your policy doesn't cover everything under the sun, but the more you jam into a plan, the higher costs will be, and somebody has to pay for them. So when the government waves its hand and does away with what the president insists are "substandard" plans by mandating a generous wish list of coverage, it makes relatively affordable plans rather less so. The federal government did that in spades last Friday when the Department of Health and Human Services finalized rules enforcing mental health parity—a very expensive mandate—for most private health plans.
The mandate was expected, since it implements the Mental Health Parity and Addiction Act, which has been on the books since 2008, but which dwelt in statutory purgatory for five years because the Obama administration never issued guidance that would allow the law to be enforced. Secretary of Health and Human Services Kathleen Sebelius says her Friday announcement is "building on these rules" when it's actually overcoming a half-decade of bureaucratic inertia to put the law into effect. Because the law has been sitting there for so long, many of its costs may already be represented in the new heath plans available under Obamacare, though those plans might have to be tweaked, since the final rule was issued six weeks after individual plans went on sale on the exchanges. Not that anybody has been able to buy them, yet.
The costs that mandates add to health coverage are no mystery. the Council for Affordable Health Insurance estimates that, while each individual mandate might elevate costs by only a small amount, in aggregate "mandated benefits currently increase the cost of basic health coverage from slightly less than 10 percent to more than 50 percent, depending on the state, specific legislative language, and type of health insurance policy."
Mental health parity—which "ensures that health plans features like co-pays, deductibles and visit limits are generally not more restrictive for mental health/substance abuse disorders benefits than they are for medical/surgical benefits" in HHS terms—is among the more expensive mandates, raising costs by five to 10 percent (PDF), all by itself.
Looking at expenditures, the Health Care Cost Institute found that mental health and substance abuse treatment costs jumped after the passage of the Mental Health Parity and Addiction Act, even in the absence of final federal rules. The study looked at the time period after passage, rather than for a direct causative effect of the law.
That's not to say that people don't need mental health treatment or help with substance abuse problems. But there's no such thing as a free lunch—or free health care. Shedding a tear and promising people that all of their needs will be covered is cheap. Following through, not so much.
(H/T Sevo)
