Insurance coverage for selected mental illnesses is now the law in Orange County and the rest of California. And employers will have to dig into their pockets a bit more to pay for it.
California Assembly Bill 88, authored by Assemblywoman Helen Thomson, D-Sacramento, and co-authored by state Sen. Don Perata, D-Oakland, requires healthcare plans to cover the diagnosis and treatment for nine severe mental illnesses. That includes outpatient treatment, hospitalization, partial hospitalization and drugs, if the policy includes those for other illnesses. The law took effect July 1.
Industry observers said the new law is going to raise healthcare premiums, which already have been on the rise. Meanwhile, some plans are preparing for the law by adding specialists and expanding service offerings.
“Any time we see the state or federal government mandate benefits, it increases costs to the employer,” said Julie Puentes, executive vice president of public affairs for the Orange County Business Council. “It’s a threat to coverage for their workers.”
The council considers such laws competitiveness issues that bear watching, Puentes added.
“The fact of the matter is, when you include a benefit that strong, the costs are going to go up,” said Bobby Pena, spokesman for the California Association of Health Plans.
“On average, (costs) will go up 1% to 5%, based on where you start,” said Dr. Jerry Vaccaro, vice president and corporate medical director for PacifiCare Behavioral Health, a subsidiary of Santa Ana-based PacifiCare Health Systems Inc.
Support From Providers, Patients
Dr. Sonja Gray, a psychiatrist in private practice in Yorba Linda, said she understands the business argument.
“My concern is that they’re going to tell the medical groups what to cover, but not give them extra resources,” she said.
Gray added that she believes there may be access-to-care issues in the short term “because there aren’t enough trained professionals to manage the disorders.”
Gray said, however, that she thought the new law is “great for mental health” and could save healthcare dollars in the long term, because people with severe mental illnesses could get treated sooner rather than later, when their conditions are more advanced and care is more expensive.
And Donna Constantine, executive director of the Orange County chapter of the National Alliance for the Mentally Ill, said the new law will help eradicate stigmas surrounding mental illnesses and get more people into treatment.
Constantine said there was “such a discrimination thing” about mental healthcare and that those who needed treatment ended up “having to pay so much more in co-payments” prior to the new law.
Narrowly Drawn
Meanwhile, Don Goldmann, president of the Orange County Association of Health Underwriters, is more measured in his analysis than some of the other business groups and mental health advocates.
“AB 88 is fairly narrowly targeted,” Goldmann said, adding that the disorders specified in the law are “very severe and almost preclude working.”
Goldmann also said the law’s impact might not be heavy on small businesses.
“Historically, small businesses have not had a massive percentage of participation at the dependent level,” he said, adding statistics he’d seen recently showed that 52% of small employers didn’t offer health insurance at all.
And Pena said larger businesses probably will not be greatly affected by the new law’s implementation, either, because most of them already offer mental health coverage in order to attract and retain employees. Nevertheless, he said, his association feels that California lawmakers are “forcing employers to buy” mental health coverage that has traditionally been offered as policy riders.
Implementation Unclear
Peter Gambee, director of government affairs for the California Psychological Association, said it is not yet clear what the law will mean in terms of how plans will offer mental health coverage. The association has approximately 300 active members in Orange County.
“Some health plans will take a minimalist approach,” Gambee said, covering only the illnesses listed in the law. Others, he said, may take a middle ground approach, offering full coverage for the specified ailments and limited coverage for others.
Severe mental illnesses, as defined by the law, include schizophrenia, schizoaffective disorder, bipolar disorder (manic depression), panic disorder, obsessive-compulsive disorder, pervasive developmental disorder or autism, anorexia nervosa and bulimia nervosa.
Adding Provider
The last three diseases can affect health plan members’ children or adolescent dependents. Several health plan representatives said they have had to find physicians who specialize in treating such conditions.
“The main area is autism, but we’ve added other things,” said PacifiCare Behavioral Health’s Vaccaro. Vaccaro said his organization added psychologists, psychiatrists and other providers in anticipation of the bill becoming law.
Health Net expects to add more providers, but doesn’t yet know how many, spokesman Brad Kieffer said. He also said, like several others interviewed, that a clearer picture of the law’s effects will come in January, because most employers renew their health plans at the beginning of the calendar year.
The Association of Health Plans’ Pena said the Sacramento-based trade group made some suggestions during the process that weren’t incorporated in the final law, including a small-business exemption, reducing its scope to six major biologically based illnesses, limits on inpatient and outpatient visits and higher co-payments.
Nevertheless, “as it stands now, our plans are ready to implement it, period. We’re moving forward,” Pena said. n
