![handle is hein.congrec/cbo9244 and id is 1 raw text is: MEMORANDUM
To: Interested Parties
From: Jennifer Bowman and Stuart Hagen (Health and Human Resources Division)
Date: May 22, 2002
Re: CBO's estimate of S. 543, The Mental Health Equitable Treatment Act of 2001
The purpose of this memorandum is to clarify whether CBO's cost estimate for S. 543, released
on August 22, 2001, is consistent with the committee report (S. Rept. 107-61) or, alternatively,
interpreted the legislation as allowing the exclusion of specific illnesses or categories of illnesses.
The Committee Report states that the reported bill reflects the agreement of the committee and
the intent of the sponsors to require the coverage of services for all mental illnesses listed in the
most recent edition of the Diagnostic and Statistical Manual of Mental Disorders [DSM] with the
exception of substance abuse and chemical dependency. While the bill does not require a plan...
to provide any mental health benefits, it prohibits insurers to limit coverage on the basis of a
mental health diagnosis. That is, the bill does not allow insurers to choose specific illnesses or
categories of illnesses in the DSM to exclude from coverage... Thus, while S. 543 allows a plan
to exclude a specific mental health service... it does not allow a plan to exclude a specific mental
illness, disorder, or diagnosis if it is listed in the DSM...
CBO's estimate of S. 543 assumed that the bill's language requires affected group health plans to
cover all illnesses listed in the most recent edition of the DSM. This interpretation is consistent
with the language in the committee report. In estimating the cost to private group health plans of
complying with S. 543, CBO used claims data of health plan enrollees that are representative of
the private health insurance market in terms of their demand for and utilization of mental health
services. The health plan benefits of those enrollees did not exclude any mental diseases from
coverage.
Almost all of the increase in health plan costs associated with mental health parity is due to
increases in payments for plan enrollees suffering from severe mental illness. Covering or not
covering various non-severe mental illnesses would not have a significant impact on costs. Thus,
the question of whether S. 543 requires plans to cover all conditions in the most recent edition of
the DSM has little effect on the estimate of the cost of complying with the mental health parity
provision. The more important issue for estimating costs is whether the bill requires plans to
cover services that are not medically necessary, or to cover new services that they did not
previously cover. CBO concluded that, under the bill, plans would retain the ability to use
exclusions of specific services, as well as medical necessity and other cost management
techniques, for the following reasons:
5 . 543 does not prevent a group health plan or health insurance issuer from using medical
management of mental health benefits, including concurrent and retrospective utilization](ViewImageLocal?handle=hein.congrec/cbo9244&div=1&collection=&method=preview&ext=.png&size=3)
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