BILL ANALYSIS
AB 88
Page 1
Date of Hearing: March 9, 1999
ASSEMBLY COMMITTEE ON HEALTH
Martin Gallegos, Chair
AB 88 (Thomson) - As Amended: February 24, 1999
SUBJECT : Health care coverage: mental illness.
SUMMARY : Requires a health care service plan contract or
disability insurance policy to provide coverage for the severe
mental illnesses of a person of any age, and for the serious
emotional disturbances of a child. Specifically, this bill :
1) Requires every health care service plan (health plan) or
disability insurer contract issued, amended, or renewed on
or after January 1, 2000, that provides hospital, medical,
or surgical coverage, to provide coverage for the diagnosis
and medically necessary treatment of severe mental
illnesses of a person of any age, and for the serious
emotional disturbances of a child.
2) Defines "severe mental illnesses" as including:
a) Schizophrenia;
b) Schizoaffective disorder;
c) Bipolar disorder (manic depressiveness);
d) Major depressive disorders;
e) Panic disorder;
f) Obsessive-compulsive disorder;
g) Pervasive developmental disorder or autism;
h) Anorexia nervosa; and
i) Bulimia nervosa.
3)Defines "serious emotional disturbances of a child" as a child
who has one or more mental disorders, other than substance
abuse or developmental disability, identified in the
Diagnostic and Statistical Manual of Mental Disorders.
4)Requires severe mental illness benefits to include outpatient
and inpatient services, hospital services, and prescription
drugs if a plan contract or insurance policy otherwise covers
prescription drugs.
5)Requires terms for maximum lifetime benefits, copayments and
deductibles to be applied equally to all benefits under a plan
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contract or insurance policy.
6)Provides that the requirements of this bill do not apply to a
contract between the Department of Health Services and a
health plan for Medi-Cal beneficiaries.
7)Exempts specialized health plan contracts and insurance
policies, including Medicare supplement policies, from the
requirements of this bill.
8)Neither prohibits nor limits the use of case management,
managed care or utilization review in the provision of mental
health coverage
EXISTING LAW requires a health plan contract or disability
insurance policy covering hospital, medical or surgical services
to cover the diagnosis and treatment of specified physical
conditions.
FISCAL EFFECT : Unknown
COMMENTS :
1)PURPOSE OF THIS BILL . The author argues that this bill will
prohibit discrimination against people with biologically-based
mental illnesses, dispel artificial and scientifically unsound
distinctions between mental and physical illnesses, and
require equitable mental health coverage among all health
plans and insurers to prevent adverse risk selection by health
plans and insurers. The author stresses that mental illness
is treatable in a cost-effective manner and that the failure
of the health care system to provide adequate treatment for
persons with mental illness has been costly not only to
mentally ill individuals and their families, but to society as
a whole and particularly to state and local governments.
2)RELATED LEGISLATION . This bill is substantially similar to AB
1100 (Thomson) of 1998, which was vetoed last year by the
Governor. In his veto message, Governor Wilson argued that
mandating mental health coverage would lead to increased
insurance costs, and thereby result in reduced access to
health insurance for many Californians. SB 468 (Polanco) has
also been introduced this session to require equitable
coverage for all mental disorders and illnesses, and serious
emotional disturbances of a child. SB 468 is awaiting
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referral to a policy committee in the Senate.
3)FEDERAL MENTAL HEALTH PARITY ACT . The federal Mental Health
Parity Act (P.L. No. 104-204), which went into effect on
January 1, 1998, prohibits health plans from setting annual or
lifetime dollar limits on an enrollee's mental health benefits
that are lower than any such limits on other medical care.
The federal requirement does not apply to employers with fewer
than 50 employees. A recent New York Times article reports
that some health plans have responded to the prohibition on
monetary limits by instituting limits on patient visits,
treatment sessions, and hospital lengths of stay.
4)THE COST OF MENTAL HEALTH COVERAGE . In April 1998, the U.S.
Department of Health and Human Services released a report,
"The Costs and Effects of Parity for Mental Health and
Substance Abuse Insurance Benefits." The report estimates
that full parity for mental health and substance abuse
services in managed care health plans would increase family
insurance premiums less than 1%. The premium increase
projected for a composite of health plans and insurers,
including fee for service reimbursement, is an average of
3.6%. The study further specifies that the projected premium
increase, for full parity of mental illness and substance
abuse, in a health maintenance organization (HMO), is .6%.
In a 1996 study, the Congressional Budget Office (CBO)
projected premium increases of 3.2% would result from
implementation of mental health parity, and increases of 4%
would result from full parity including chemical dependency
coverage. However, these findings are disputed in a November
12, 1997, RAND study published in the Journal of the American
Medical Association. RAND notes that the CBO projections "did
not incorporate any cost distinction between managed care or
fee-for-service care and relied on a 1986 report from the
National Institute of Mental Health for practice patterns" and
further concluded that the CBO projections were "likely to
overestimate the cost effects of parity legislation . . . ."
In its 1998 report, "The Costs and Effects of Parity for
Mental Health and Substance Abuse Insurance Benefits," the
National Advisory Mental Health Council (NAMHC) reviewed state
parity laws, and the effect of such laws on premium increases
in five states. The NAMHC concluded that in systems already
using managed care, implementing full mental health parity
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results in an increase of less than 1% in total health care
costs during a one-year period.
5)SIMILAR LAWS IN OTHER STATES . At least 19 states have laws
requiring equitable coverage for mental illnesses. These
benefits range from covering all mental illnesses, plus
chemical dependency, to only a selected number of severe or
biologically based illnesses. This bill requires equitable
coverage for selected severe mental illnesses.
6)SUPPORT . The California Alliance for the Mentally Ill (CAMI),
the sponsor, argues that this bill would benefit employers by
improving worker productivity, would reduce homelessness, and
significantly lower costs to the criminal justice system.
CAMI also argues that increased private coverage will reduce
costs for the state and counties. The Orange County Coalition
for Mental Health notes that Californians diagnosed with
mental illnesses quickly discover that their health insurance
coverage for psychiatric treatment is limited. Strictly
limited inpatient days and inadequate outpatient allowances
become exhausted, forcing them to pay out of pocket and
eventually to rely on Medi-Cal or programs for indigents.
The California Psychiatric Association (CPA) argues that
nearly all health plans discriminate against patients with
genetic biological brain disorders such as schizophrenia,
depression and manic depression. This discrimination takes the
form of higher co-payments, fewer allowable inpatient days,
and caps on doctor visits. CPA states that this
discrimination began when it was believed that these disorders
were not medical problems. Research now shows that the severe
mental illnesses covered by this bill are analogous to
diabetes and heart disease. Brain scans show clear
differences between normal brains and the brains of patients
with schizophrenia, manic depression, depression, bulimia,
anorexia and obsessive-compulsive disorder. CPA argues that
with managed care, controls are in place to assure that
services required to be covered in this bill are limited to
those that are medically necessary. CPA further notes that
depression is second only to heart disease in causing absence
from work. Nearly 20% of disability in women is caused by
depression, and 4 of the 5 leading causes of disability of
women are brain disorders required to be covered under the
provisions of this bill.
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The California Nurses Association reports that many patients
and families are paying significant out of pocket expenses for
basic treatment and medication for mental illnesses that
should have been covered by health plans. Without coverage,
many patients cannot afford medication and therapy associated
with a disease, and they suffer needlessly. The National
Association for the Mentally Ill Sacramento contends that due
to the high market penetration of managed care in California,
there is no danger of frivolous and unchecked utilization of
services or that costs will spiral out of control.
While the California Psychological Association supports this
bill in concept, the Psychological Association argues that all
mental illnesses should be covered equitably, along with other
physical illnesses. The Psychological Association is
concerned that patients who do not suffer from one of the
disorders specified in this bill will nevertheless be labeled
with one of those diagnoses in an effort to gain third party
payment. The Psychological Association is sponsoring SB 468
(Polanco), which would require coverage for all mental
illnesses.
7)OPPOSE UNLESS AMENDED . The California Association of Health
Plans (CAHP) is opposed to this bill unless amended. CAHP is
urging the author to exclude individuals and small employers
from the coverage requirements in this bill because they are
harder hit by cost increases than are larger group purchasers.
CAHP cites a Barents Group study indicating that for every 1%
increase in the cost of health care coverage, at least 40,000
Californians lose their coverage. CAHP member plans estimate
that this bill would increase the cost of coverage by 1.5 to
6.5%, depending upon the type of health plan (HMO or preferred
provider organization, for example). CAHP also argues that
employers already have access to mental health coverage, since
most health plans offer this benefit to employers who wish to
purchase it. Federally qualified HMOs must cover 20
outpatient visits per year for crisis intervention and
substance abuse, and the Health Insurance Plan of California
(HIPC) offers a mental health benefit of 10 inpatient days and
20 outpatient visits. Finally, CAHP argues that this bill
provides coverage for mental disorders, such as autism, that
lack accepted guidelines for treatment.
The California Network of Mental Health Clients is opposed to
bill unless it is amended to exclude coverage of involuntary
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treatment. The Network argues that although the aim of this
bill is to reduce discrimination, involuntary treatment in
health care coverage for persons with psychiatric disabilities
enhances discrimination. The Network contends that this bill
perpetuates a double standard, reinforcing prejudicial views
of mental health clients as childlike and incompetent. The
California Association of Mental Health Patients' Rights
Advocates (CAMHPRA) makes similar arguments, and contends that
coverage for involuntary inpatient treatment will create an
incentive for hospitals to keep detained patients for longer
periods of time than are therapeutically necessary.
8)OPPOSITION . The Citizens Commission on Human Rights (CCHR),
established by the Church of Scientology to address
psychiatric violations of human rights, argues that this bill
will mandate dubious science, increase the ranks of the
uninsured, and provide a gateway to insurance fraud. CCHR is
concerned about over-drugging of children, and questions the
existence of Attention Deficit Hyperactivity Disorder (ADHD)
in particular. CCHR argues that mental health coverage is not
cost-effective because there are difficulties in diagnosis,
disputes over what constitutes effective treatment, a lack of
results measurement, and unnecessary care. CCHR contends that
since the diagnosis and treatment of mental illness is murky,
there are more opportunities for fraudulent billing in
psychiatric care versus other medical treatments. According
to CCHR, 79% of penalties collected for healthcare fraud and
abuse in 1994 was attributable to fraud by psychiatric
providers.
REGISTERED SUPPORT / OPPOSITION :
Support
California Alliance for the Mentally Ill (sponsor)
Alliance for the Mentally Ill
Alliance for the Mentally Ill of San Mateo County
Alliance for the Mentally Ill of Santa Clara County
Alliance for the Mentally Ill of Shasta County
California Association of Catholic Hospitals
California Nurses Association
California Professional Firefighters
California Psychological Association (in concept only)
California Psychiatric Association
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California School Employees Association
California Society of Industrial Medicine and Surgery
California State Association of Counties
California State Employees Association
California Teachers Association
County Health Executives Association of California
County of Sacramento
Family Service Council of California
League of Women Voters
Many Individuals
Mount San Jacinto Alliance for the Mentally Ill
NAMI Inland Valley
National Alliance for the Mentally Ill, Sacramento Chapter
National Association of Social Workers
Novartis
Older Women's League of California
Orange County Coalition for Mental Health
Pharmacia and Upjohn
San Diego Alliance for the Mentally Ill
San Gabriel Valley AMI INC.
Santa Clara County Board of Supervisors
Solano County Board of Supervisors
Union of American Physicians & Dentists
Opposition
Apple Valley Chamber of Commerce
Association of California Life and Health Insurance Companies
(unless amended)
Basic Life Institute
Blue Cross of California (unless amended)
California Association of Mental Health Patients' Rights
Advocates (unless amended)
California Manufacturers Association
California Network of Mental Health Clients (unless amended)
Citizens Commission on Human Rights
Law Offices of Michele Ball
Numerous individuals
Picture Publishing
Precision Systems, Inc.
Printing Industries of California
Quality Equipment Rentals
Renaissance Academy
Analysis Prepared by : Ann Blackwood / HEALTH / (916)319-2097
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