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May 11, 2004

Senate Republicans propose 'mental health' insurance mandate-with some cost protection for employers

Senate Republicans have proposed requiring health insurers to provide coverage for most mental illnesses, but with exemptions for small businesses, and for other employers that could show the mandate increased premiums by at least 2 percent.

Senate Majority Leader Joseph L. Bruno (R-Rensselaer County) and Senator Thomas Libous (R-C, Binghamton) said their proposal would also require coverage for a broad range of "biologically based" mental illnesses and specific conditions in individuals 18 years old or younger. The Senators announced their plan May 11.

The bill would exempt any company or organization that can show the state Superintendent of Insurance that its insurance rates have increased two percent or more as a direct result of this mandate. Nine states with such parity laws provide such an exemption, with thresholds ranging from 1 percent to four percent,the Senate release said.

In addition, the bill would exempt businesses of 50 or fewer employees from having to provide mental health coverage. Fifteen states with parity laws provide a similar exemption, the Senate said. In addition, the federal government's mental health parity law includes an exemption for businesses of 50 or less employees.

The bill would also require the state Insurance Department and the Office of Mental Health to conduct a two-year study to determine the effectiveness and impact of mental health parity legislation in New York and other states. If enacted, the bill would take effect January 1, 2005 and expire on December 31, 2007, to provide for an opportunity to amend the law based on the findings and recommendations of the study.

"We appreciate the recognition that the original mandate proposal would be quite costly, and that small businesses would be especially hard hit," said Elliott Shaw, The Business Council's health-policy lobbyist.

Shaw said The Council is continuing to advocate passage of another bill that would ease health insurance costs for small businesses.

That bill, which was proposed in February by Senator Bruno and Senator James L. Seward (R-Oneonta), would create a health insurance tax credit that would help many businesses with 50 or fewer employees provide health insurance for their employees.

The new 43 percent tax credit, when combined with the existing health insurance tax deduction, would result in an effective tax credit of 50 percent for health insurance costs. The new credit would be available only to businesses with 50 or fewer employees and with earned net income of $290,000 or less.

The credit would be phased in over ten years and, when fully implemented, would result in an investment of almost $1.6 billion to provide health insurance coverage for hundreds of thousands of uninsured New Yorkers, the Senate said in a release.

Details on the Senate's health insurance tax-credit proposal.