The Business Council opposes this legislation, which would make the Timothy's Law mental health insurance mandate permanent. Timothy's Law became effective on January 1, 2007 and is set to expire on December 31, 2009.
At a time when many of New York's employers are struggling to simply maintain their current level of coverage and in light of $700 million in new and increased taxes on health insurance passed as part of the 2009-10 State budget that are driving premiums even higher, we urge the Legislature to wait until the complete, financial impact of Timothy's Law on large employers is known before taking further action.
An analysis by the state Department of Insurance and Office of Mental Health on the effectiveness of Timothy's Law, including the costs associated with providing coverage through Timothy's Law, was released in May. The study found that while the law expanded mental health coverage, it increased the cost of health insurance. Yet, the study focused almost completely on the law's impact on employer groups of two to 50 workers – a market segment on which the cost impact is largely subsidized by the state.
But, it did not include the mandate's cost impact on employers with more than 50 workers. Until a complete analysis now underway by the Harvard Research Team of the mandate's cost impact – including the impact on large employers - is known, The Business Council recommends that this bill be rejected.
The report notes that in light of the federal parity law that goes into effect in October, which may require benefits above those required by Timothy's Law, there was no need to examine the cost impact of New York's mandate on employers with more than 50 workers. However, the new federal law does not require health plans to provide coverage for mental health services; it requires parity between mental health benefits and medical/surgical benefits only if the plan provides mental health benefits.
Timothy's Law requires that employees of small (50 employees or fewer) and large (51 or more employees) businesses covered under group health insurance are entitled to care for mental, nervous, or emotional disorders for no less than thirty days of inpatient care and twenty visits of outpatient care per year. The deductibles, co-payments and coinsurance applied to these benefits may be no greater than those applied to other benefits under the employer's policy agreement.
In addition, groups with more than 50 employees are entitled to mental health benefits for the following biologically based mental illnesses comparable to their level of coverage for other health benefits under the policy. These illnesses include: schizophrenia/psychotic disorder; major depression; bipolar disorder; delusional disorders; panic disorder; obsessive compulsive disorder; bulimia; anorexia.
The law includes additional provisions for children under age 18, exempts small businesses from mandated coverage of the above-listed biologically based illnesses, and does not apply to those covered under self-insured plans or who purchase coverage on their own in the direct pay market.
It is widely acknowledged that while mandates make health coverage more comprehensive, they also make coverage more costly – prompting some employers to drop coverage or shift more of the cost to their workers. By increasing the cost of coverage, mandates add to the cost of doing business and make New York less competitive.
Until the full impact of Timothy's Law is known, The Business Council recommends that S.5672 be rejected.