BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 88|
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THIRD READING
Bill No: AB 88
Author: Thomson (D), et al
Amended: 8/17/99 in Senate
Vote: 21
SENATE HEALTH & HUMAN SERV. COMMITTEE : 5-1, 6/30/99
AYES: Escutia, Figueroa, Hughes, Polanco, Solis
NOES: Mountjoy
NOT VOTING: Haynes, Morrow, Vasconcellos
SENATE APPROPRIATIONS COMMITTEE : 8-1, 9/3/99
(Roll Call Vote not available)
ASSEMBLY FLOOR : 59-18, 6/3/99 - See last page for vote
SUBJECT : Health care coverage: mental illness
SOURCE : California Alliance for the Mentally Ill
DIGEST : This bill 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.
ANALYSIS : 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.
This bill:
CONTINUED
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1.Requires every health care service 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 contract or insurance policy.
6.Provides that the requirements of this bill do not apply
to a contract between the State Department of Health
Services and a health plan for Medi-Cal beneficiaries.
7.Authorizes a health care service plan or disability
insurer to provide the required mental health coverage
through a separate specialized health care service plan
or mental health plan subject to certain conditions.
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8.Exempts specialized health plan contracts and insurance
policies, including Medicare supplement policies, from
the requirements of this bill.
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 action in the
Senate Appropriations Committee.
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.
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 one percent. The premium increase projected for a
composite of health plans and insurers, including
fee-for-service reimbursement, is an average of 3.6
percent. The study further specifies that the projected
premium increase, for full parity of mental illness and
substance abuse, in a health maintenance organization
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(HMO), is .6 percent.
In a 1996 study, the Congressional Budget Office (CBO)
projected premium increases of 3.2 percent would result
from implementation of mental health parity, and increases
of four percent 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 results in an increase of less than
one percent in total health care costs during a one-year
period.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 1999-2000 2000-01 2001-02 Fund
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State employee and unknown
costs General/
retiree health benefits Others
Comments
Studies estimating the cost impact of providing mental
health coverage range from 1.5 percent to 6.5 percent,
depending upon the current benefit package offered to
employees. Information provided by CalPERS indicates that,
based upon 1999 member enrollments, an increase of 1.5
percent could result in costs to employers and members of
$25 million. The State might experience some cost savings
if the provision of mental health services by health plans
and insurers creates less reliance on state-supported
programs which currently serve the mentally ill.
SUPPORT : (Unable to verify at time of writing)
California Alliance for the Mentally Ill (source)
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
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
Mount San Jacinto
NAMI Inland Valley
National Alliance for the Mentally Ill, Sacramento Chapter
National Association of Social Workers
Novartis
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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
Many Individuals
OPPOSITION : (Unable to verify at time of writing)
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
Picture Publishing
Precision Systems, Inc.
Printing Industries of California
Quality Equipment Rentals
Renaissance Academy
Numerous individuals
ARGUMENTS IN 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.
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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 percent of
disability in women is caused by depression, and four of
the five leading causes of disability of women are brain
disorders required to be covered under the provisions of
this bill. 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.
ARGUMENTS IN 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
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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 percent of penalties collected for
healthcare fraud and abuse in 1994 was attributable to
fraud by psychiatric providers.
The Association of Calfiornia Life and Health Insurance
companies oppose unless amended to:
"(1) limit the bill to biologically-based mental disorders;
(2) limit to thirty the number of annual hospital inpatient
days; (3) allow PPO's the option of providing coverage
either through a strict managed care format, or under a PPO
option with differing copays and deductibles, with all
other terms and conditions the same, and (4) exclude small
employers and individuals from the mandate, similar to the
Texas approach."
ASSEMBLY FLOOR : 59-18, 6/3/99
AYES: Aanestad, Alquist, Aroner, Baugh, Bock, Calderon,
Cardenas, Cardoza, Cedillo, Corbett, Correa, Cox,
Cunneen, Davis, Dickerson, Ducheny, Dutra, Firebaugh,
Florez, Floyd, Frusetta, Gallegos, Granlund, Havice,
Hertzberg, Honda, House, Jackson, Keeley, Knox, Kuehl,
Lempert, Longville, Lowenthal, Machado, Maldonado,
Margett, Mazzoni, Migden, Nakano, Papan, Pescetti, Reyes,
Romero, Scott, Shelley, Soto, Steinberg, Strom-Martin,
Thomson, Torlakson, Vincent, Washington, Wayne, Wesson,
Wiggins, Wildman, Wright, Villaraigosa
NOES: Ackerman, Ashburn, Baldwin, Battin, Brewer, Briggs,
Campbell, Kaloogian, Leach, Leonard, McClintock, Olberg,
Oller, Robert Pacheco, Rod Pacheco, Runner, Strickland,
Thompson
NOT VOTING: Bates, Maddox, Zettel
CP:kb 9/5/99 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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