Requiring insurance coverage of mental-health services



The Business Council opposes A.8301 because it is an expensive health-insurance mandate that, if passed, would further drive up health-insurance costs and increase the total number of uninsured New Yorkers.

This bill would require that every insurance policy in the state provide full coverage for the diagnosis and treatment of mental disorders, including nervous disorders, emotional disorders, and dependency on alcohol or other drugs. The bill would also mandate that policies impose no limits on the coverage of mental disorders that are not imposed on physical disorders.

If passed, the mandate would add at least $200 million to skyrocketing insurance costs. That $200 million is in addition to $130 million in new taxes, fees, and "assessments" on health care that are part of the state budget.

The bill is cost-prohibitive for most businesses. Companies that believe they would like to—and can afford to—offer a higher level of mental health benefits already can buy an insurance rider. Many insurance plans offer mental health and substance-abuse benefits. In 1983, the legislature passed a law mandating that insurance cover outpatient substance- and alcohol-abuse treatment.

Already the state has over 30 mandated benefits that significantly increase the cost of health insurance. The average family in New York pays more than $1,000 per year to cover the cost of mandated services, according to a recent study by the Employer Alliance for Affordable Health Care.

Passing this new mandate would increase premiums by another 3 percent, according to the study.

Moreover, there is not a consensus that mandating full mental-health coverage would be the most effective health-policy option.

"This [mandate] could lead individuals to receive services that are not shown to be effective or have been shown to be ineffective leading to wasted health care dollars and false hope," said Donna Novak, author of the Employer Alliance study.

Employers in the state will face the real possibility of dropping coverage or passing the cost along to employees as rates continue to rise. These added costs will also contribute to an increase of uninsured New Yorkers—a figure that already stands at more than three million. As health insurance becomes more expensive, New Yorkers drop out of insurance plans because the cost, even when shared with their employer, is too high.

In 2000, the legislature recognized what rising health-care costs mean to small businesses by enacting Healthy New York. Passing this new burdensome mandate flies in the face of that initiative and further burdens small businesses that already buy health insurance, and by definition are not eligible to buy into Healthy New York.

The Business Council is supporting efforts to create a health-benefit cost commission (S.1447-Seward). This commission would study the cost and effectiveness of all proposed health care mandates. Twenty-two other states have mandate review boards that serve the same function.

The absence of a commission in New York is problematic. Advocates who support this new mental-health mandate maintain that the new burden would affect premium costs only minimally. But a variety of expert groups have estimated that it could drive up premiums as much as 3-5 percent. Enacting a health-benefit commission would help legislators accurately estimate the true costs of mandates before enacting them.

The Business Council respectfully opposes enactment of A.8301—because increasing the cost of insurance benefits is not healthy for businesses or families.