Groups Push for Healthier State of Mind : Debate Heats Up Over Poor Mental Health Insurance Protection

Mel Goldberg’s 26-year-old daughter has been suffering from a costly mental disorder for 13 years. But because her ailment is not the kind that responds to surgery or pills, Goldberg’s health insurance pays only a small fraction of the cost to treat it.

“It took less than two weeks after my daughter was hospitalized for the (insurance) benefits to run out,” said Goldberg, a Los Angeles television and motion picture writer.

His health insurance policy paid 50% of his daughter’s $75-an-hour psychiatrists fee, but set a $20,000 maximum on lifetime benefits.

Goldberg said he and his wife, Orpha, have spent more than $200,000 for their daughter’s care.

Forced to Sell Home

The bills have forced the family to sell their four-bedroom home, forfeit a penthouse condominium they moved into in 1981 and relocate in a rented house--the first time the family has rented since 1961.

Though the Goldbergs’ case may be extreme, they are not alone in struggling through the financial hardship of paying for mental health treatment, a hardship that has come to rival the emotional trauma of the disease itself.

In the last five years, new austerity programs in the $400-billion a year health-care industry have pushed psychiatric coverage further behind other kinds of health insurance, experts say.

Today, most Americans have more health insurance coverage to pay for physical ailments, such as a broken leg or cardiovascular disease, than for mental disorders. Yet the odds of needing mental health treatment are five times higher than needing open heart surgery, the experts say.

Recently, however, several groups--including the California Coalition of Mental Health--have begun pushing to improve psychiatric coverage in the wake of last year’s U.S. Supreme Court decision giving states the authority to force employers to provide certain levels of mental health insurance benefits.

In its ruling last June regarding the Metropolitan Life Insurance Co. vs. the State of Massachusetts, the Supreme Court held unanimously that federal law does not preclude states from requiring wider health insurance coverage than mandated by Congress.

The ruling gave states broad authority to require employee insurance coverage for certain areas--such as mental illness, dental care and the like--under company health plans.

“I think the Supreme Court decision has given a shot in the arm to constituency groups that are lobbying for improved mental health coverage,” said John Ambrose, a public policy specialist for the National Mental Health Assn. in Washington, which has been leading the push for increased psychiatric coverage. “We’re in an enhanced position because the court has said the states can clearly regulate” insurance coverage.

In California, the Legislature is preparing to consider a proposal that would require all health insurance sold in the state to contain minimum coverage for mental health treatment.

The bill, co-sponsored by Assemblyman Bruce Bronzan (D-Fresno) and Larry Stirling (R-San Diego), would require all mental health insurance co-payments and deductible charges to be the same as for other health insurance.

The bill would place a lifetime maximum benefit per individual at 20% of the total major medical insurance coverage or $100,000, whichever is less.

Similar measures have been enacted in 14 other states.

Bronzan, pointing to the bill’s bipartisan sponsorship, is optimistic about passage.

Learned the Hard Way

“Thousands of families in this state have learned the hard way that the health insurance they carry runs out in a matter of days when a family member has a serious mental illness,” said Bronzan. “The teen who needs a heart transplant gets coverage but the teen with schizophrenia does not,” he added.

But industry lobbyist Lewis Keller, president of the Assn. of California Life Insurance Cos., doubts that there is sufficient demand in California for such insurance.

Keller argues that employers should be given the freedom to choose what insurance plans best suit their work force. And he notes that the measure comes at time of widespread retrenchment in the health-care industry.

Federal employees’ psychiatric coverage was cut about 10% in 1982, for example. Only 34% of U.S. workers with some type of mental health coverage were fully insured for hospital charges in 1984, compared with 80% in 1975, according to the Health Insurance Assn. of America in Washington.

Keller’s opposition to mandated mental health insurance benefits is seconded by diverse and powerful groups--including insurance companies, businesses, some physicians and, surprisingly, the AFL-CIO.

For the most part, the groups argue that the free market should govern insurance benefits for workers, not legislators.

They add that mandated benefits drive up overall insurance costs and force more companies to drop regular insurance policies and set up self-insurance pools, which under federal law are exempt from state insurance mandates.

In California, for example, 40% of the 12-million-strong work force is employed by companies that are self-insured, according to the Assn. of California Life Insurance Cos.

Opposed to Mandates

“We are opposed to mandates because they force policy holders to take benefits regardless of their wishes and their willingness to pay” for the coverage, Keller said. Mandated benefits, he added “make no sense at all.”

Adds Karen Ignagni, health specialist at the AFL-CIO headquarters in Washington: “We believe that decisions about health insurance should be made at the bargaining table, not by government agencies. Mandating on a state-by-state basis . . . leads to an administrative nightmare” in the industries that must negotiate national contracts covering workers in several states.

For supporters of increased benefits, the greatest obstacle comes from workers and employers who would pay the increased health-care insurance premiums.

“The problem with mental illness is nobody is going to stand up and say ‘I want mental illness coverage,’ ” said Robert J. Trosler, administrator of Woodview-Calabasas Hospital in Calabasas, Calif. “People are embarrassed about it. We still have that puritanical ethic.”

Medical costs of all kinds rose to 9.1% of employers’ pretax profits in 1983 from 3% in 1970, and employers’ annual health-care premiums rose to $101 billion in 1984 from about $82 billion in 1983.

The trends have prompted employers to cut back on benefits and require workers to shoulder a bigger share of health-care costs.

Los Angeles-based Atlantic Richfield Co., which has one of the most-generous mental health insurance policies in the state, is currently examining its mental health insurance plan with an eye toward restructuring benefits, said Charles F. Bisett, Arco’s manager of employee benefits.

“Currently we don’t have any realistic limitations (on utilization of psychiatric services) other than medical necessity,” he said.

Increased Deductibles

Arco has increased deductibles from $100 five years ago to $225 now and boosted hospitalization co-payments to 20% from 10% in the same period, and Bisett said the company is not opposed to placing more of the financial cost of the coverage on its employees.

Bisett says companies may require their workers to pay a larger share of the insurance cost if “special interest groups keep running to Sacramento to lobby” for various forms of mandated health insurance coverage, thereby pushing up the overall cost of company-provided programs.

Worse, he said, rising costs could force some companies to end their participation in health insurance plans for workers altogether. “My view is that not having mental insurance benefits is preferable to having no medical benefit at all,” he said.

Some people trace employer reluctance to a general wariness of psychiatry itself--a profession that critics say has been its own worst enemy because practitioners often disagree over the nature, frequency and value of psychiatric treatment.

“In medicine and dentistry--for the vast majority of situations involved--there is a scientific method to diagnose the existence of an abnormality,” Richard Hedlund, a vice president at Los Angeles-based Transamerica Occidental Life Insurance Co.

“With psychology and psychiatry it’s much different. . . . It’s more difficult for us to figure out what kind of risk we are involved in. I’ve even seen experts who disagree on whether a person has a mental illness.”

Lengthy outpatient therapy, in particular, is especially worrisome to insurers and employers alike.

The ‘Worried Well’

Some insurance analysts jokingly refer to seemingly well-adjusted but frequent psychiatric patients as the “worried well.”

They label problems shared by these patients as the “Woody Allen Syndrome,” a reference to the actor’s nervous self-absorption and acknowledged penchant for psychoanalytic treatment.

Another problem, experts say, is exasperated parents who pack their teen-agers off to the psychiatrist whenever their child becomes uncooperative.

John C. Garner, an insurance benefits specialist in the Los Angeles office of Towers, Perrin, Forster & Crosby, a New York-based insurance benefits consulting firm, said a client in Arizona became concerned recently after discovering that teen-age psychiatric visits paid for by the company ballooned during the summer and dropped in the fall when school resumed.

Similarly, a Florida company paid $650,000 during two years for the care of two teen-agers who were diagnosed, respectively, for “conduct disorder” and schizophrenia, said Gregory Armer, vice president of the California Wellness Plan. His company was called in to apply more stringent cost controls.

“It may be that these two kids needed acute care,” said Armer, but the company was paying the bill without any way of knowing if utilization was excessive.”

The fear that patients will abuse their benefits has become a key issue in the battle to secure more health insurance coverage.

Yet, experts with extensive experience in managing psychiatric coverage say the jury is still out on the benefits of expanded coverage.

They say the industry has only recently accumulated the database needed to make accurate cost comparisons between psychiatric-care utilization and general health-care utilization.

Small Increase Forecast

Researchers at the Rand Corp., a Santa Monica-based think tank, reported in 1983 that employers or insurance companies would face only a small increase in costs if they offered full mental health coverage to participants in health-care plans.

The federally funded study of 7,706 randomly selected people found that a full coverage health-care plan paid out an average of only $24 a year per insured family for mental health treatment--about 5% of the amount paid for all health services. Only 5% of those with full coverage underwent psychotherapy.

Likewise, a study published in the June edition of the Archives of General Psychiatry estimated that a doubling of yearly psychiatric benefits from $500 to $1,000 in Massachusetts would produce a net increase in insurance premiums of only $3.66 for each of Blue Cross and Blue Shield’s 3.4 million subscribers.

But Brent Barnhart, a senior attorney for Blue Cross of California, said increases in benefits are followed by expanded use of the health-care system and ballooning insurance payments.

In Massachusetts, for example, total payments for mental health care for Blue Cross subscribers in that state jumped from $1 million in 1975 to $28.4 million in 1982, he said.

Based on the experience of Blue Cross and other large insurers, “It’s clear that the costs go up enormously when coverage is mandated,” Barnhart said.

One solution to the cost issue may be offered by a group of prepaid psychiatric plans that operate much like health maintenance organizations (HMOs).

Such plans give health-care providers financial incentives to hold down costs and discourage patients from overuse of psychiatric services.

Pioneer in Field

Santa Monica-based California Wellness became one of the nation’s first prepaid psychiatric plans to open its doors when it began operation in 1984.

Gregory Armer, vice president of California Wellness, said his company designed a benefits package with an eye toward encouraging early treatment but discouraging over-utilization.

It offers members five free visits, with additional visits at progressively higher co-payment levels.

“Before they get their sixth visit they must submit a treatment plan that gives a full diagnosis and prognosis for recovery,” said Armer, who added that his company expects revenues of $1.3 million for the fiscal year ended May, 1986. “Our program is aimed at giving incentives to use outpatient care rather than (more expensive) inpatient care.”

The plan covers about 50,000 workers in the western United States, including employees of Pacific Stereo and Transamerica, under an agreement with 600 psychologists and psychiatrists who provide limited service for $60 an hour.

Daniel Patterson, chief of the department of psychiatry for a similar plan operated by Kaiser-Permanente in the Washington area, believes that such services are the wave of the future.

“I think most insurers are moving to managed mental health systems, which are HMO-like,” he said. “We can treat 90% of the people with mental health problems through short-term psychotherapy.”