Explainer: How the ACA will affect mental health and substance use disorder coverage
May 8, 2014 § Leave a comment
A shortened version of this piece is available at the Reporting on Health Affordable Care Act blog. This extended article explains how different pieces of legislation are working together to shape access to mental health care coverage.
Of the many projections made about the Affordable Care Act, one number stands out among the rest: 62 million. According to the Department of Health and Human Services (DPHHS), that’s the number of individuals who will either gain mental health and substance use disorder coverage under the ACA, or will benefit from federal parity protections for their existing coverage. It’s been over a year since that number was originally published, and with new insurance a reality for millions across the country, it’s time to take a closer look at how the ACA could potentially change access, affordability, and quality of coverage in this area of health care.
Breaking down broad barriers to coverage
According to data from the National Institute of Mental Health (NIMH) and the Substance Abuse and Mental Health Services Administration (SAMHSA), one in four adults – over 57 million Americans – experiences mental illness in a given year while one in 17 lives with a serious mental illness such as schizophrenia, major depression, or bipolar disorder. In California, about 1.2 million adults live with some form of mental illness.
All of these individuals could potentially benefit in some way from the ACA, depending on the state they live in and their health plan, if they end up acquiring one. Like many aspects of the ACA, the felt, on-the-ground experience of these benefits will be vary – there isn’t one list of illnesses or specific set of benefits that will apply to all Americans. However, what the ACA guarantees is that some form of mental health and substance use disorder coverage will be included in most plans. The law also puts measures into place that will ideally make that coverage easier to access and afford. Finally, the ACA builds upon previous legislation to ensure that treatment for such issues are covered at the same level as medical and surgical treatment.
Legislators have taken many different approaches to augment mental health and substance use disorder coverage, and it can be easy to get lost in the sea of evolving information and regulations. But a good place to begin to understand the changes is with the ways in which the ACA is addressing broad barriers to insurance:
- Individuals can no longer be denied coverage due to pre-existing conditions. The U.S. Government Accountability Office (GAO) found in 2012 that mental health disorders were the second-most commonly reported condition that led to private health insurance denials, higher-than-average premiums, or coverage restrictions. Now that insurers are required to be blind to pre-existing conditions, many with mental illnesses can gain access to insurance that was previously difficult to secure.
- Federal subsidies and out-of-pocket limits will help individuals manage the cost of treatment. The authors of a 2013 study published in Health Affairs found that many with serious disorders do not receive care. Pointing to data from the National Comorbidity Study, the researchers found that 47 percent of respondents with a mood, anxiety, or substance-use disorder who said they thought they needed mental health care cited cost or lack of insurance as a reason why they did not receive that care. Federal subsidies will help some individuals access the private insurance market, and ACA out-of-pocket limits will help these individuals with treatment that can become too costly. (Out-of-pocket maximums are $6,350 for individuals and $12,700 for families.)
Mental health and substance use disorder benefits are now “essential”
Prior to the ACA, those who successfully purchased insurance often found their plans limited in scope. Health plans were known to skimp on mental health and substance use disorder coverage, sometimes excluding one or both, or only covering the most extreme of cases. In fact, the DPHHS found that prior to the ACA, one-third of those with coverage from the individual market had no coverage for substance use disorder services. Nearly one-fifth had no coverage for mental health services.
HealthPocket’s March 2013 examination of 11,100 individual health plans across the country showed more optimistic numbers, but ones that still demonstrated a gap in coverage: Just 61 percent of plans provided mental health services and only 54 percent substance use disorder services.
By naming mental health and substance use disorder services among the Essential Health Benefits (EHB) – a benefit that must be included in every qualified individual and small group plan – the ACA is closing that gap. On the federal exchange, services include behavioral health treatment, such as psychotherapy and counseling, as well as mental and behavioral health inpatient services and substance use disorder treatment.
The DPHHS claims that this change alone will expand benefits to over 5 million who already had individual or small group plans. Of course, any individual who purchases insurance in the individual and small group markets or the state exchanges (or gains coverage through Medicaid) will also have benefits in both areas, potentially bringing that number to 32 million.
Separate from the new EHB requirements, the ACA also ensures free preventative screenings for depression and alcohol misuse as well as alcohol counseling.
Parity, a generation in the making
So the ACA aims to get a lot of people on some kind of insurance plan, and it also says that mental health and substance use disorder services are a requirement for those plans. Where those services start to become more defined for the policyholder is through the implementation of the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which originally applied to group health plans but under ACA, now applies to individual and small group plans. The general thrust of the MHPAEA is to treat mental health and substance use disorder benefits as equal to other medical and surgical benefits. Notably:
- Insurance companies cannot charge higher co-pays or deductibles for mental health and substance use disorder benefits as medical and surgical treatment. For example, if your co-pay is $20 to see an in-network internist for a physical issue, then your co-pay for an in-network psychiatrist should also cost $20.
- Visit limits such as the number of inpatient days or outpatient visits must be consistent between physical and mental issues. If there’s a limit on psychiatrist visits, the same limit ought to be applied for, say, primary care physician visits.
- Geography cannot be a limitation. If your coverage allows you to go to another state for medical or surgical treatment, then you should also be able to get substance abuse or mental health treatment in another state.
Prior to MHPAEA, efforts to mandate mental health coverage were often circumvented by insurers who basically shifted much of those costs onto the insured at a less generous rate or with stricter limitations than what was covered for physical issues. So the MHPAEA does a lot of the heavy lifting when it comes to the scope of coverage for mental health and substance use disorder benefits, defining the extent of those benefits from plan to plan.
Again, that means individuals might experience greater or lesser gains, depending on their plan.
The new parity rules apply to most health plans, including Medicaid managed care plans. According to the DHHS, 30.4 million people with existing coverage for both mental health and substance use disorders will benefit from federal parity protections.
Gains in substance use disorder benefits
Assessing the level of impact that the ACA will have on mental health coverage would require a complicated calculus, but what experts generally agree upon is that large gains will be made for those who need substance use disorder treatment.
According to 2011 SAMHSA findings, an estimated 19.3 million Americans ages 12 or older needed but did not receive substance abuse treatment. Of those who were admitted for treatment – a little over a half million people – three-fifths reported having no insurance. Not only will coverage be available for these individuals, but ideally, treatment will no longer be siloed off in specialty service centers separate from the rest of the health care system. The ACA seeks to integrate substance use treatment into primary care, taking these kinds of services mainstream.
Additionally, the ACA clarifies “intermediate” care such as residential treatment and outpatient services. According to Andrew Sperling, the Director of Federal Legislative Advocacy for NAMI, “Previously, there was total exclusion of sub-acute care, particularly for substance abuse.” Now, residential substance abuse treatment must be covered in a way that parallels post-acute nursing home care.
Medicaid, the states, and challenges ahead
If there’s anything that’s true about the implementation of the ACA, it’s that it’s still very much a work in progress. As coverage becomes a reality for millions across the nation, there are a few things to keep in mind:
- The exact composition of mental health services will vary from state to state. Each state is defining its own Essential Health Benefits package, though all qualifying plans are subject to parity. Many states already have parity rules for mental health and substance use disorder coverage, and whichever is stronger – state rules or those of the MHPAEA – will apply. What insurers still have control over are their network providers, treatment centers, and brands of medication.
- How states embrace Medicaid expansion will affect the coverage of millions. Medicaid is the single largest payer for mental health services in the United States. Currently, all state Medicaid programs provide some form of mental health services, but the ACA sought to expand Medicaid by increasing the eligibility level so that adult residents with a household income below 138% of the federal poverty line – about $15,400 – would be eligible for coverage. The ACA left it up to the states to make the final call on expansion, and thus far, 21 states have decided against. Some that have embraced expansion are broadening their services. Previously in California, only severe illnesses were covered under MediCal. Now, mild and moderate illnesses are encompassed in that list.
While the ACA and MHPAEA captures many plans, there are still some that are not subject to EHB requirements (grandfathered individual health insurance plans, for example) or parity (Medicaid fee-for-service plans).