CALIFORNIA -- Two recently passed state Assembly bills will require private health insurers to cover the diagnosis and treatment of mental illnesses and developmental disorders such as autism.
The bills' chief proponent and author, Assemblyman Jim Beall, D-San Jose, and other supporters contend that the new laws are necessary because people with mental illnesses and substance abuse problems are often denied claims to their insurance companies, despite existing state laws. They also say individuals facing such issues often quickly reach coverage limits, which leaves them with little or no choice but to turn to public health programs.
But the bills, while laudable in their respective goals, have the potential to increase costs by mandating additional coverage and could come with unintended consequences, according to brokers.
"Mental health is an important illness to be treated, and not treating it can lead to increased claims with other illnesses," said Victor McKnight, a principal with Edgewood Partners Insurance Company's Petaluma branch who has lobbied both the state and federal government on health bills. "However, (the Assembly) needs to understand that increased mandates will increase premiums and, unfortunately, as premiums rise we see more people and businesses drop coverage."
Supporters of the laws say it will extend coverage for non-severe mental illnesses to some 4.5 million to 6.3 million across the state and contend that it would add 6 cents to 61 cents per month to insurance premiums.
"Severe mental conditions should be treated the same as physical illness or injury," Mr. Beall said upon the Assembly passing the bills, which now await approval in the Senate.
The bills were passed along partisan lines in the Democratic controlled Assembly. Republican opponents cited potential cost increases in voting against the bill.
Yet the bills could prove to be unnecessary or even premature, as federal health care reform takes shape over the next few years. The Affordable Care Act calls for individual states to determine "essential health benefits," which will help shape the benchmark for plans offered through state-run health exchanges come 2014. States will have a fair bit of latitude in determining what counts as "essential," and California could easily include mental health and substance abuse conditions that are similar to the two new laws, making them redundant and potentially costly.
But first the health law must pass muster with the Supreme Court, which will hear arguments in late March on the legality of the bill and whether or not Congress overstepped it's boundaries in requiring individuals purchase health insurance.
"It may not be an issue if Affordable Care Act stands through SCOTUS and the (presidential) election, and the state could include this in their essential benefits," Mr. McKnight of EPIC said. "Essential Benefits will be an interesting issue to watch as there will be a real battle from special interests to see what will be included and not be included."
Patrick Johnson, president of the California Association of Health Plans, echoed that notion, saying AB 154 could mandate coverage for almost 400 mental conditions.
The Assembly also passed AB1000, which would require insurers to cover oral chemotherapy at the same rate as intravenous chemotherapy. Another bill, AB 137, would require health plans to cover mammograms based on medical need regardless of a person's age.
In 2010, the federal mental health parity law went into effect after being approved by Congress and signed by the president in 2008. Mr. Beall said AB 154 updates California’s statute to bring it in compliance with federal law while filling gaps in services not addressed in the federal law. AB 171 includes autism and other "pervasive developmental disorders for medically necessary, basic healthcare services — including speech, occupational, and physical therapy," according to Mr Bealle's office. Last year, SB 946 addressed behavioral health treatments for these individuals, and the new bill builds on that framework.