Washington Report

April 1, 2008

The congressional debate over expansion of the landmark 1996 Mental Health Parity Act (MHPA) rounded the bend on March 5 when the House passed a bill (HR 1424) that is considerably different from one passed last year by the Senate (S 558).

The congressional debate over expansion of the landmark 1996 Mental Health Parity Act (MHPA) rounded the bend on March 5 when the House passed a bill (HR 1424) that is considerably different from one passed last year by the Senate (S 558). The House passed the Paul Wellstone Mental Health and Addiction Equity Act by a vote of 268 to 148 despite statements of opposition from the Bush administration and the employer community.

Groups such as the American Benefits Council support the Senate bill, which was the product of compromise and, in two respects, is considerably less prescriptive and probably less costly than the Senate bill.

Rep Patrick Kennedy (D, RI) had been negotiating behind the scenes with his father, Sen Ted Kennedy (D, Mass) to come up with a consensus bill that would expand the MHPA to apply to deductibles, co-payments, out-of-pocket expenses, coinsurance, covered hospital days, and covered and outpatient visits. The 1996 law requires companies with more than 50 employees only to offer the same annual and lifetime dollar limits for mental health expenses as for other medical expenses.

The Democratic leadership in the House had delayed bringing Rep Kennedy's bill to the floor while he negotiated with his father, the chief Democratic sponsor in the Senate of S 558. That bill passed the Senate by unanimous consent last September and was a careful compromise between business groups and many, but not all, mental health groups. Business groups are diametrically opposed to the House Wellstone bill because it limits their flexibility with regard to mental health benefits and may raise their costs, although an estimate by the Congressional Budget Office says any increase in corporate costs for expanded benefit packages would be minimal. Advocates of the bill argue any increased costs would be more than offset by the amount companies would save when emerging psychiatric problems are nipped in the bud, obviating the need for hospitalization, for example.

Having failed to get a Kennedy-Kennedy compromise, House leaders apparently decided to press the issue. A spokesman for Rep Kennedy stated the congressman's goal "is to get a strong parity bill to the President's desk by the end of this year. Passing the bipartisan House bill is the next step in moving this process forward."

In the week leading up to the House floor vote, Sen Kennedy was quoted as saying that a compromise was still some way off. Sen Pete Domenici (R, NM), the longtime, leading mental health advocate in the Senate and a co-sponsor of S 558, apparently called the passage of the House bill the "death of parity in this Congress," according to one mental health lobbyist, who referred to Domenici's "temper tantrum."

Nick Meyers, director of government relations at the American Psychiatric Association (APA), says the APA supports both the House and Senate bills. "Clearly, some sort of compromise will have to be worked out, and we are hopeful this will happen in this session of Congress, but how they will go about doing this is not clear to me," Meyers stated.

Pamela Greenberg, president and chief executive officer of the Association for Behavioral Health and Wellness (ABHW) and chair of Coalition for Fairness in Mental Illness Coverage, said intensive negotiations between the 2 Kennedys never occurred, and passage of the House bill will kick-start that process, which she expects to be unofficial, meaning there will not be a formal "conference," which generally happens when the House and Senate pass different bills on the same subject.

While they will be conducted out of public view, apparently those negotiations will be watched closely by mental health and business groups. Greenberg says the US Chamber of Commerce has decided to make the House floor vote on the Wellstone bill a "key vote." That means when the Chamber publishes its ratings of House members for 2008, that vote will be included as a reflection of business friendliness.

While the Wellstone bill passed the House, Democrats will face pressure to tone it down not only from mainline business groups such as the Chamber of Commerce and the American Benefits Council but also from pharmaceutical companies. That is because the House pays for the "cost" of the parity expansion to the federal government by reducing drug company rebates from the Medicaid drug program. The cost of the House bill is $4 billion over 10 years, based on revenue the Treasury Department loses because companies have bigger tax deductions for employee health expenditures. Of that $4 billion, about $800 million is an added cost for Medicaid. Congressional legislation has to be, in most instances, budget neutral. In order to get that $800 million back for Medicaid, the Wellstone bill describes reductions in Medicaid payments to drug companies. The lion's share of the $4 billion offset is recovered by banning the growth of specialty hospitals, which would ostensibly reduce the number of medical procedures for Medicare and Medicaid patients.

After the House passed HR 1424, Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America (PhRMA), said, "Establishing mental health benefits in line with medical and surgical benefits is a much needed improvement for patients seeking coverage of mental illnesses. This is a laudable goal, and would be an important step forward for patients. However, PhRMA and its member companies do not support an unwarranted increase in the Medicaid rebate to pay for the House mental health parity legislation."