State Senate OKs Insurance Bill on Mental Health

Over opposition from the insurance industry, the state Senate approved legislation Thursday requiring health insurance companies to cover severe mental illness as they cover physical ailments.

Gov. Pete Wilson is vowing to veto the measure, saying that the new requirement would be too costly to employers.

The measure, similar to laws approved in 19 states in recent years, would go further than federal legislation that took effect in January. It would require health insurance plans to provide equal coverage for physical and mental illnesses, including prescriptions, doctor visits and hospital stays.

Among the illnesses that would be covered are schizophrenia, manic-depression, also called bipolar disorder, and severe depression. The bill has a broader definition of childhood mental illness that also would be covered.

In all, seven disorders are listed in the bill, each considered biologically based. Many people who have the diseases can be effectively treated with prescription drugs.

Only four of the largest 100 California-based companies surveyed in March by a mental health advocacy group said they provided the range of benefits embodied in the Thomson-Perata legislation, proponents of the measure say.

Some legislators backing the bill, AB 1100, said they are motivated by experiences with family members stricken by mental illness. Without insurance coverage, their families have paid the high cost of care.

The bill’s authors, Assemblywoman Helen Thomson (D-Davis), a former psychiatric nurse, and Assemblyman Don Perata (D-Alameda), whose sister has schizophrenia, said they will continue negotiating with the Wilson administration.

The legislation passed on a 22-8 vote and now moves back to the Assembly, which approved an earlier version last year.

Although Wilson appears willing to support coverage that pays for medications, the Republican governor is balking at other provisions, including one requiring unlimited hospitalization coverage. Most states with such laws limit hospital stays.

“We’re not outright rejecting this issue,” said Wilson’s spokesman, Sean Walsh. “But we are rejecting a blanket, undefined remedy that has no cost controls, no ability to assess costs, doesn’t control fraud and requires a universal mandate.”

Insisting that hospital stays are a vital part of the bill, Thomson said people with mental illness sometimes need hospitalization, just like people with a chronic physical illness.

“Are you going to tell someone with heart disease that they can’t go to the hospital?” Thomson asked. “What about someone with diabetes? If they get gangrene in their toe, they can’t go to the hospital to have it amputated?”

Thomson contends that new costs to employers would be less than 1%, and would be offset by workers’ ability to obtain treatment and stay on the job. State and local government would also save money, she said, because government often ends up responsible for the care of severely mentally ill people.

Sen. Richard Polanco (D-Los Angeles) pushed the bill in the Senate. Calling it one of the most important measures he has been involved in, Polanco recalled that when he was 10, his mother had a bout with mental illness.

“There was no referral, no support group,” Polanco said. “This bill provides something that is very, very much needed. This cuts across all income levels.”

The measure is backed by an array of mental health advocates, physicians, psychiatrists and psychologists. They face significant opposition from major health insurance industry groups and companies, and the influential California Chamber of Commerce.

“This is going to reduce the number of employers who can afford to provide health coverage,” said Maureen O’Haren of the California Assn. of Health Plans, which represents insurance companies. “We care about that because we want to do more business. We want more people to have coverage.”

Opponents contend that mental illness is difficult to diagnose, and that there are disputes over what constitutes effective treatment. Opponents also predict that the measure would raise health care premiums by at least 2% and as much as 11%.

“I can’t imagine any circumstance under which we would support the bill,” said Fred Main, lobbyist for the state Chamber of Commerce. Calling it a cost issue, Main said: “Employers can negotiate with their employees and insurance companies to provide [mental health coverage] today.”

With opposition from the business groups and a likely veto by Wilson, the measure received scant support from Republicans. Sen. Jim Brulte of Rancho Cucamonga, among the more influential members of the Legislature, was the only Republican senator who voted for it.

“I don’t want to suggest that every problem in life is related to mental illness,” Brulte said. “But there are some people who are unable to perform because of an imbalance that is chemically caused and can in fact be treated.”

In the lower house, where the measure appears to have more Republican backing, Assemblyman Brett Granlund (R-Yucaipa) said: “The Chamber of Commerce needs a come-to-Jesus meeting.”

“The cost of a schizophrenic kid, emotionally and financially, is huge,” Granlund said.

Among those watching the Senate vote was Lori Holman, 49, a former money manager diagnosed with manic depression at the age of 26. She gave up her job in 1994, and now works full-time for the California Alliance for the Mentally Ill.

“My insurance policy is completely useless,” said Holman, noting that the policy pays $20 per visit to a psychiatrist, who charges $115. “Almost anybody would wind up bankrupt.”

She has spent as much as $20,000 in a single year for treatment. She and her husband, a physician, have been able to pay the bills. However, many others are simply unable to pay, and turn to the state Medi-Cal program and other public assistance.

“The rich and poor can get help, but the middle class winds up poor,” Holman said.

Scientists have little doubt that severe mental illnesses are brain diseases, as physical in their roots as Parkinson’s disease or epilepsy. Like many diseases, they often are amenable to treatment, researchers say.

Yet in the realm of public policy, there is disagreement over whether employers and insurers should be required to cover them on par with other illnesses.

For mental health advocates, the first significant breakthrough in this debate came with passage of a federal parity law in 1996, which outlawed dollar caps in most employers’ mental health coverage.

However, the victory was largely symbolic. The federal law that took effect in January applies to employers with 51 or more employees, and exempts employers whose health care costs rise by 1% or more in a year.

Advocates now have turned to the states, pushing stronger parity legislation in the hope that they can build support for more sweeping federal legislation.

“California is critical to this whole parity strategy because of the size and complexity of the health care marketplace,” said Laurie Flynn, executive director of the National Alliance for the Mentally Ill. “To win in California is a huge watershed.”

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Health Insurance for Mental Illness

The state Senate approved legislation requiring health insurance companies to provide equal coverage for mental and physical illnesses. The measure would not extend to mental disease induced by drug abuse. It would cover specific disorders including:

* Schizophrenia.

* Bipolar disorder, also called manic-depressive illness.

* Schizoaffective disorder, a cross between schizophrenia and manic-depression.

* Major depression.

* Panic disorder.

* Obsessive-compulsive disorder.

* Pervasive developmental disorder or autism.

The bill defines childhood mental illnesses more broadly and includes each of the seven illnesses, or psychiatric symptoms, that result in “substantial impairment.”