Mental Health Parity Act:

Despite New Federal Standards, Mental Health Benefits Remain Limited

HEHS-00-95: Published: May 10, 2000. Publicly Released: May 18, 2000.

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William J. Scanlon
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Pursuant to a congressional request, GAO reviewed the implementation of the Mental Health Parity Act of 1996, focusing on the: (1) extent to which employers comply with the law and how they have revised their health plans; (2) law's effect on claims costs; and (3) steps federal agencies have taken to ensure compliance with the law.

GAO noted that: (1) 86 percent of the responding employers in the 26 states and the District of Columbia reported that as of December 1999 their plans were in compliance with the federal parity requirement that annual and lifetime dollar limits for mental health benefits be no more restrictive than those for all medical and surgical benefits; (2) GAO's survey found that 14 percent of plans were noncompliant--a noncompliance rate similar to Department of Labor's preliminary estimates based on investigations of employer-sponsored plans; (3) although most employers' plans now have parity in dollar limits for mental health coverage, 87 percent of those that comply contain at least one other plan design feature that is more restrictive for mental health benefits than for medical and surgical benefits; (4) in addition, many employers may have adopted newly restrictive mental health benefit design features since 1996 specifically to offset the more generous dollar limits they adopted as a result of the federal law; (5) about two-thirds of these newly compliant employers changed at least one other mental health benefit design feature to a more restrictive one compared with only about one-fourth of the employers that did not change their dollar limits; (6) only about 3 percent of responding employers reported that compliance with the law increased their claims costs, and virtually no employers have dropped their mental health benefits or health coverage altogether since the law was enacted; (7) federal agencies have made varying progress in performing their oversight roles under the parity law; (8) Labor is in the process of expanding its oversight role to include not only the complaint-driven approach used in its oversight of private employer-sponsored health plans but also one that in the future may include randomly selected employer investigations to gauge overall compliance with parity and other federal standards; (9) the Health Care Financing Administration (HCFA) reported that 4 out of 7 states identified as not having a parity law are enforcing the federal standards through conforming legislation or other means and that it is still working with the three other states to assist them in enacting similar protections; and (10) HCFA has determined that laws in 20 states appear to fully conform to the federal standards and is still evaluating whether laws in the remaining 24 states fully conform to the federal standards.

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