A landmark mental health care law took effect in California this month, finally giving some teeth to mental health parity laws that have been ineffectual for years.
SB 855, signed by Gov. Gavin Newsom in September, requires commercial insurance companies to provide full coverage for treatment of all mental health conditions and substance use disorders, creating "parity" with coverage of physical medical conditions. The law builds on state and federal parity laws that have huge limitations and loopholes that insurance companies frequently use to shortchange its customers.
Lawmakers have sought for decades to create a semblance of equity for mental health care in the commercial insurance market. The largest such effort is the Mental Health Parity and Addiction Equity Act in 2008 -- a federal law signed by former President George W. Bush -- which was the basis for stronger insurance mandates baked into the Affordable Care Act.
California has its own mental health parity law to build on federal rules, but advocates at the Steinberg Institute and the Kennedy Forum argue it has major gaps. Coverage only extends to medically necessary treatment for a narrow list of nine severe mental illnesses including schizophrenia, major depressive disorders, bipolar disorder and serious emotional disturbances in children.
The list does not include any drug or alcohol-related disorders, and it allows insurance companies to draft health plans that use restrictive definitions of what is medically necessary. Taken altogether, it creates "huge loopholes" that are used to deny care to patients, according to State Sen. Scott Wiener (D-San Francisco), who authored the bill.
"SB 855 sends a powerful message to the nation that California prioritizes the mental health of its residents," Wiener said in a statement following the bill's passage. "I'm proud of my colleagues and the Governor for getting it and enacting this legislation into law."
Under the law, which took effect Jan. 1, health insurance companies are required to cover all mental health conditions and substance use disorders defined by the American Psychiatric Association, an all-encompassing list of illnesses that greatly expands California's party laws. The list includes substance-related and addictive disorders, eating disorders, dissociative disorders and numerous anxiety and depressive disorders.
SB 855 also broadened what insurance companies must cover as "medically necessary" mental health treatment, which was complex and flexible enough to make it easy to apply limits on patients that would be unacceptable for physical medical conditions. The definition is now ironclad, and encompasses any service or drug that can prevent, diagnose or treat a disease, including minimizing the progression of an existing ailment.
An estimated one in five adults in America experience a mental health disorder, but few receive treatment services.
Even under the previous rules, state officials found frequent violations of mental health parity laws. California's Department of Insurance adopted a report in December 2019 that found Blue Shield had committed dozens of violations, including one in which a patient was denied mental health services for treating a major depressive disorder.
An investigation into Aetna found in July last year that the company ran afoul of federal laws by putting a restrictive cap on the number of drug tests a customer could receive in a year. Experts say eight tests per year is a minimum and that many patients require more, yet Aetna applied the eight-test limit "indiscriminately in all settings of care" regardless of diagnosis or medical condition, the report found.
Similar statewide efforts to expand mental health parity over the last decade have failed, either dying in committee or getting vetoed by the governor. In the case of AB 154 in 2011, the legislation brought together a broad coalition of mental health professions and local political support, including the Santa Clara County Board of Supervisors, but nevertheless died in the state Senate.
The uphill battle is partly blamed on significant lobbying by the insurance industry, which has long opposed these reform efforts. Health insurance companies, along with the California Chamber of Commerce, have long argued that SB 855 and similar bills would increase health care costs while doing little to improve access to health care providers. One Southern California group, Advocates for Responsible Treatment, suggested that the bill would open the door for endless addiction treatment and could attract people from outside the state.
The debate is partly a symptom of too few in-network mental health workers to meet the demand for services, making the goal of mental health parity a practical challenge regardless of legislation. Low reimbursement rates and burdensome contracts are often cited as a reason why many psychiatrists and psychologists do not accept insurance, leaving many patients to pay out of pocket for the full cost.
The shortage is even more acute for youth mental health care, with few child and adolescent psychiatrists available throughout the Bay Area.