High Court Says States Can Require Mental Insurance : Millions Across U.S. Affected

The Supreme Court, in a decision affecting millions of workers nationwide, said today that states may force employers with company insurance plans to provide benefits for treating mental illness.

The 8-0 ruling in a Massachusetts case said neither federal labor law nor federal pension law pre-empts states from requiring specific forms of insurance coverage.

Most of the states have such laws, including at least 20 that specifically mandate insurance benefits for mental health services or alcoholism and drug abuse treatment.

The decision leaves the way clear for states like California to require a wide range of insurance coverage. California law mandates that treatment for pregnancy complications, mastectomies and prenatal diagnosis be included in group policies. But while treatment for alcoholism and mental illness must be offered to group plan purchasers, it is not required.

More than 100 major corporations said the ruling will force American businesses “either to assume the great burden and expense of conforming their insured employee benefit plans to ever-changing laws of 50 different states or to abandon insured employee benefit plans altogether.”

Justice Harry A. Blackmun, writing for the court, said the Massachusetts law does not violate collective bargaining rights protected by the National Labor Relations Act even though the law “potentially limits an employee’s right to choose one thing by requiring that he be provided with something else.”

Opposition Argument

Insurance companies opposed the mandated mental health benefits in part on grounds that it could force workers to give up other health benefits, such as dental or eye care.

The insurance firms also said the Massachusetts regulation violated the 1974 federal Employee Retirement Income Security Act, which protects workers covered by on-the-job benefit plans.

Blackmun said ERISA does not preempt such state rules.

Before ERISA, pensions and health and welfare plans were regulated for most part by the states.

In 1973, the Massachusetts Legislature passed a law requiring employee health and welfare plans and insurance policies sold to such plans to provide at least $500 in benefits for treatment of mental and nervous disorders.

Required in 12 States

Blackmun said the state concluded that the voluntary insurance market was not providing mental health coverage.

Metropolitan Life and The Travelers insurance companies refused to provide mental health coverage automatically but did so when requested by employers.

At least 12 states, including Massachusetts, require such coverage for mental health services, and at least 20 states, including 10 of the first 12, have mandated coverage for alcoholism and drug abuse treatment.

The states in the first category are Colorado, Connecticut, Maine, Maryland, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, Oregon, Virginia and Wisconsin.