Bill Could Threaten State Parity Mandates

APA and other mental health advocacy organizations are fighting proposed legislation that threatens state parity laws and other consumer protections.

On April 8 the House Education and Workforce Employer and Employee Subcommittee voted to approve the Small Business Health Fairness Act of 2003 (HR 660) by a vote of 13 to 8.

The bill, which is intended to address the problem of the growing number of Americans without health insurance, would allow businesses in the same trade groups to form association health plans (AHPs).

Those plans would be exempt, however, from state laws that mandate parity and provide consumer protections.

In fact, in September 2002 the Department of Labor released a report that praised AHPs because “by operating under federal law, [they] can avoid the cost of state benefit mandates.”

The report, “Association Health Plans: Improving Access to Affordable Quality Health Care for Small Businesses,” lists as an “AHP advantage” the fact that other insurance offerings are hampered by the “high cost of having to comply with the requirements of up to 50 state insurance companies, including state-mandated benefit requirements.”

At that time, Labor Secretary Elaine L. Chao called on Congress to pass the AHP legislation. In a written statement, she said, “Association health plans would equalize the playing field for small businesses, but, more importantly, would result in health insurance coverage for millions of uninsured workers and their families” (Psychiatric News, November 1, 2002).

The report listed 32 organizations that support the legislation. Among them are the National Association of Manufacturers, U.S. Chamber of Commerce, and National Federation of Independent Businesses.

On January 16 APA joined other members of the Mental Health Liaison Group in a letter to Rep. Dennis Hastert (R-Ill.), speaker of the House, and Sen. William Frist, M.D., (R-Tenn.), Senate majority leader, opposing legislation that “would exempt association health plans from state regulation and thereby undermine state mental health parity laws and other critical consumer protections.”

The signatories argued that “AHPs would reduce costs by offering pared-down benefit packages excluding coverage of mental health services or prescription drugs, for example. These low-cost plans would appeal to those firms with primarily young, healthy employees, but as a result those in need of more comprehensive benefits would have to pay more for traditional coverage.”

Subcommittee Democrats introduced amendments to the legislation that would have required AHPs to adhere to state laws that require health plans to provide certain benefits, such as laws that require coverage for diabetes and substance abuse, and also to adhere to state laws concerning prompt payment of claims and external review of coverage decisions.

The subcommittee defeated the amendments.

Nicholas Meyers, deputy director of APA’s Division of Government Relations, said, “APA remains deeply concerned about the potential for AHP legislation to wall off underlying state coverage requirements and undermine successful state efforts to end discriminatory coverage of mental illness treatment. We’re trying to ensure that state gains are not sacrificed in the understandable desire in Congress to expand options for coverage of the uninsured. It’s not an easy sell right now.” ▪